Is Dropshipping Still Profitable in Australia?

Australia has been among the leading nations in eCommerce, particularly dropshipping, since the 90s alongside Japan, China, and the United States. According to statistics, the country amassed $25.7 billion in 2020, representing a 15.5% increase from the previous years.

While this may be the case, there are still challenges that impede the rapid growth of eComm in the country, and most prominently, competitions with nearby Asian countries. And the global market share is expected to decrease in the following years if the trend continues. 

So does this mean that investing in eComm in digital service marketing Australia is not a good choice? The answer is yes and no, and there’s a thin silver lining that you have to consider before deciding to delve into the industry. These factors will be discussed in this article, and hopefully, it will help you determine whether they’re the right choice or not.

The Dropshipping Process in Australia

The first stage involves brainstorming the niche or determining which market to target. The next step requires you to create an online store through a dropshipping platform, such as Shopify or Oberlo. 

You also have to search for supplier and fulfilment services companies to carry out the deliveries. Some examples include Amazon Prime and eBay, but the most prominent fulfilment service in Australia today is AliExpress due to its affordable shipping rates and a wide array of product offerings.

The business can be a profitable investment, but the only disadvantage is that it is also very expensive in regard to its initial startup cost and maintenance. In addition, it is mildly risky. The potential of losses is high if the store owner cannot manage the business effectively or fails to modify their plan when necessary.

The Challenges Australian Dropshippers Face

There are several challenges you have to bear in mind. And how you tackle them may help you succeed in the business.

Quality Control

The inability to check the quality of the products before shipment and packaging is the number one dilemma most Aussies face. In a traditional setting, store or warehouse supervisors oversee the process, while in eComm, this may all go out the window entirely.

Since it may be challenging for dropshippers to quality check their products, they have to rely on the quality of their customer service. Therefore, business consultations and having the right agency to work with is essential to growing your store.

Store Credibility

Another challenge many Aussie dropshippers encounter is building store integrity. It could be especially difficult to improve credibility during its inception phases. Considering the number of competitions, you will have to work hard on advertisements and product testing to achieve an admirable store rating.

Low-Profit

Many try dropshipping because of the promise of high returns and reliability. Australia won’t be among the top eComm industries in the world if this isn’t the case. However, the risk of losses is great as well since it would also require you to invest a huge amount of money. Even if the marketer incurs high profits, they may still experience losses if the operating cost is high.

To give you a better perspective, a typical dropshipping store only gains a 20% profit margin which is only about 40% of the average gross margin. It indicates that you have to invest a huge amount of work and money to least earn your expected profits.

Is Dropshipping Dead in Australia?

Dropshipping is alive and kicking in Australia. It is the top form of eComm platform in the country, and the market share is still growing as we speak. Most people fail because many newbies are disillusioned with the promise of high returns and fail to recognize the work and money involved.

If you are firm to make things work out, you have to consider several factors to stand out from the rest of your competition.

  • Marketing strategy
  • Sufficient funds
  • Building brand trust and recognition
  • Excellent customer service

The potential net profit in dropshipping is promising, but it could be very difficult to work with compared to other eComm platforms like affiliate marketing or kindle publishing. However, it could deliver the financial stability you are seeking if you have the determination to succeed and the willingness to change course for the better from time to time.

But if you are not sure where to begin or struggling to keep up, you can seek business consultations from a digital marketing agency Australia to help you gain traction.

 

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