Dropshipping is the practice of selling products online without holding inventory. Instead, you rely on suppliers or manufacturers to do all the heavy-lifting work and deliver items to customers.
It sounds like a dream business model for entrepreneurs to make money online without investing tons of upfront capital.
But, is there any risk involved? How much can you realistically earn? And, can you make a living out of it?
In this article, we’ll help you decide whether dropshipping is a good side hustle in 2021.
8 Reasons Why Dropshipping Is A Good Side Hustle
Below are the 8 reasons why dropshipping is a great side hustle.
1. It’s Never Too Late For Dropshipping
Dropshipping is not dead, and never will be dead. It’s a legal business model that has been around since the 1960s and adopted by globally recognized brands like Wish, Gymshark, Zappos, or Wayfair.
Until the launch of AliExpress, the model started gaining popularity among entrepreneurs.
According to GrandViewResearch, the global dropshipping market size is expected to rise from $102.2B in 2018 to $557.9B in 2025, registering a whopping CAGR of 28.8%.
This growth is attributed to the increasing popularity of smartphones, the escalating trend in online shopping, and the rapid expansion of cross-border trade.
Given all of those insights, we 100% guarantee that it’s never too late for you to start dropshipping as a side hustle.
2. It’s Easy And Fast To Get Into Dropshipping
The second reason why dropshipping is a good side hustle is that it only takes a couple of hours or days max to create a full-fledged dropshipping store.
This is thanks to advanced and affordable dropshipping tools like Shopify, Oberlo, CJDropshipping, Klaviyo, etc. They have done all the heavy-lifting work behind the scene to help you start selling as quickly and easily as possible.
Additionally, you don’t need any skills beforehand either. With a big community and abundant free tutorials on the internet, you can always learn the ins and outs of dropshipping along the way.
Regarding a business license, you aren’t required to register one. The primary meaning of a business license is just to ensure that your personal assets are not at risk if your business gets sued.
For instance, in the event of a lawsuit between you and your customers (which is very rare), they can only go after the assets of the legal entity (in this case, your dropshipping business), and that’s all they can get. They cannot get to your personal assets (e.g, your houses, cars, bank accounts, etc).
Concerning taxes, you don’t need to worry about them when you’re just getting started.
You pay income tax to your country’s government only when you make a considerable profit from your dropshipping store (e.g., $12,400 for people under the age of 65 in the US). And, sales tax can easily be managed by using Shopify’s built-in tax system or other automated tax software like TaxJar.
All in all, it’s simple and quick to start a dropshipping side hustle.
3. Dropshipping Is A Fast Feedback Loop Business Model
In business, a feedback loop refers to the process of taking responses from customers and using that information to improve products or services.
In the case of dropshipping, you can quickly see the demand for a specific item by promoting it via Facebook Ads or Pinterest Ads for a few days and make informed decisions on what to do next.
Optimizing your dropshipping store for maximum conversion rates also becomes easier with all the data provided by these advertising platforms.
In comparison, for example, if you start a blog, it might take you at least 6 months to see any results.
4. Dropshipping Allows You To Work From Anywhere, At Anytime
One of the greatest advantages of starting dropshipping as a side hustle is that you can operate your business entirely online, wherever you like, whenever you want.
All you need is a laptop and an internet connection.
This freedom enables you to better manage your work-life balance and essentially translates into more time for you to do whatever you want, such as playing with your kids or traveling the world.
5. You Can Make Passive Income With This Side Hustle
It’s possible to set up a fully automated system to help you promote products, collect payments, and fulfill customer orders.
This means you can literally make money dropshipping while sleeping, which is the holy grail of every side hustler and business owner.
6. There’s Virtually No Ceiling To How Much You Can Earn
Dropshipping allows you to sell products to customers from all over the world. Hence, whether it’s an extra $100/month or $10,000/month, you can do it with the right strategies and mindsets.
7. It’s Possible For You To Publish A Real ECommerce Brand
Ben Francis started Gymshark – a famous fitness apparel startup – as a side hustle dropshipping store. Back in 2021, he spotted a gap in the sportswear market, which is the lack of affordable activewear for young gym-goers.
By keeping the focus on this niche, and successfully partnering with social media influencers and celebrity trainers, he has turned the small project into a billion-dollar brand.
Now, Gymshark distributes its own range of fitness wear with print-on-demand and private labeling, and still heavily employs dropshipping to reduce operation costs.
As you can see, dropshipping can be much more than just a side hustle to make extra money online. It can be a stepping stone for you to build a real eCommerce brand that people recognize for years to come.
The potential is there. So, if you want to dream big, don’t be afraid to do so.
8. You Will Gain Valuable Knowledge Even If You Fail
Even if you fail, dropshipping is not a waste of time and money.
The dropshipping side hustle enables you to acquire precious skills, including time allocation, supply chain operation, product research, marketing, copywriting, branding, and financial management to name a few.
Each of the skills above is monetizable on its own, or you can apply them to any other project and work opportunity in the future.
“We learn wisdom from failure much more than from success. We often discover what will do, by finding out what will not do; and probably he who never made a mistake never made a discovery.”Samuel Smiles
5 Reasons Why Dropshipping Is Not A Good Side Hustle
Here’re the 5 reasons to not start dropshipping as a side hustle.
1. You Put Your Business On Other People’s Shoulders
Since you hand over the entire backend to your suppliers, they might end up sending inferior products to your customers or introduce slow shipping. As a result, it could damage your brand image in the long run and even worse, make your whole business fall apart.
A solution to this problem is to pick reliable and highly-rated suppliers. However, even so, there’s no guarantee that they will always meet your expectation.
Hence, dropshipping is not a good side hustle if you want fine control over every bit of your business.
2. Dropshipping Is Highly Competitive
Because of the nature of dropshipping, everyone can start this side hustle in a blink of an eye and compete with you on the same products.
But, that’s not all. ECommerce giants like Amazon, eBay, or Walmart are established and trustworthy. Therefore, shoppers are very likely to go to them to find and purchase an item they see on the internet.
Unless you have your own competitive advantages (e.g., lower prices, unique products, or added benefits), it’s difficult to stand out and actually make profits.
3. It’s Hard To Generate A sizable profit margin
An0ther reason why dropshipping is not a good side hustle is that it usually generates a low profit margin.
Many consumers have a general idea of how much an item should cost. Hence, you cannot mark up the price of your product too high. Otherwise, no one would buy from your dropshipping store.
In addition, you have to cover the operating expenses, payment processing fees, and especially advertising costs, which will leave you with humble profit margins.
As reported by ECommerceFuel, the average dropshipping net profit margin is 15%. In comparison, you can enjoy an 80%-90% profit margin if you start a blogging business.
4. It Might Take A Long Time To See Significant Results
On average, it takes 3 months for beginner dropshippers to make noticeable profits. And, if you want to make 5-6-figure/year, you might need to spend at least 2-3 years working diligently on your store.
That’s the time necessary to learn dropshipping comprehensively as well as experiment with various strategies to see what works best for your dropshipping niches and situations.
5. You Could Get Banned Left And Right By Third-Party Services
The final reason to not start dropshipping as a side hustle is that many payment services like Paypal or Stripe consider dropshipping as a medium-risk or high-risk business model. If you have a lot of disputes and chargebacks, they can ban your accounts at any time.
Facebook also regularly bans dropshippers for advertising fake or defective items.
Again, it’s crucial to pick trustworthy dropshipping suppliers with proven track records to combat this problem.
Dropshipping As A Side Hustle – Conclusion
Dropshipping is a good and easy-to-start side hustle for you to make passive income online without investing huge upfront capital. It’s also possible to build a real eCommerce brand out of dropshipping. And, even if you fail, you will gain valuable knowledge for any work opportunities in the future.
However, don’t get into dropshipping and expect it to be a get-rich-quick-scheme. It takes dedicated time and effort as well as the right mindsets and strategies to stand out in this highly competitive market.