Is Dropshipping Mainstream Now?

2011 Was Too Early To Market
In 2011, I worked at a small ecommerce start-up called Ixtens in NYC. The company had recently raised a $5 million Series A round led by Ian Sigalow at Greycroft Partners.
The unique value proposition was this: a SaaS platform that enabled anyone to sell products and integrate all elements of the supply chain without ever touching physical inventory.
Does that sound like a few companies thriving today? It should.
Perhaps Eugene Nikiforov (the mastermind behind Ixtens which was later rebranded to Merchantry) was too early to market. The early adopters to were existing retailers looking to expand online but market adoption didn’t naturally expand to mid-market, small business, and first-time sellers. Also, Ixtens didn’t offer what was actually the simplest part — the frontend store. That was the realm of WebSphere, BigCommerce, Magento, Volusion, and many others.
Where We Are Today
Today, Shopify has stepped into dropshipping in a big way. The more I speak with Shopify sellers the more I hear about dropshipping. Shopify allows anyone to create a simple online store that integrates with dropshippers who manage inventory and shipping.
Ever further, Shopify is smartly running under a press-friendly banner of entrepreneurship. So long as anyone starting a new business in any capacity (even part-time) is labeled an entrepreneur, Shopify is activating loads of new entrepreneurs every day. The latest stats are over 350,000 Shopify entrepreneurs in total.
But, dropshipping has its drawbacks. The most cost-effective dropshippers are overseas (e.g., AliExpress) and require 2–3 weeks to deliver a product once it’s sold. If quality is poor, returns and refunds are problematic.
Amazon Is The Dropshipping Leader
As with anything ecommerce, Amazon is probably the leader in dropshipping. Based on the research I had done while employed at Ixtens, nearly one-third of all sales on Amazon are for products not housed in Amazon warehouses.
These third party sellers are effectively dropshippers on behalf of Amazon. If you’ve ever sold a used book on Amazon, you’ve dropshipped.
The percentage of sales for products not housed in Amazon warehouses has likely decreased over recent years. Fullfillment by Amazon (FBA) is an incredibly compelling way for third party sellers to become eligible for Prime 2-day shipping.
What’s All This Mean?
We’re in the middle of massive wave of retail growth and arbitrage. It’s a great time for anyone who can source and curate products, reach a targeted audience, and capture a healthy margin on top of dropshipping (or light bulk wholesaling).
It’s not a matter of picking one platform, either. Sellers are apt to use Amazon, Shopify, eBay, and other platforms simultaneously to reach more potential customers. While fees vary by platform, most sellers will take the incremental sale so long as the margin is positive.
