💀 Drop Shipping Isn't Dead

📰 Industry News

• Wish launches WishPost, a small parcel delivery service allowing sellers who don’t use their e-commerce platform to use its logistics services. (Retail Dive)

• Retail stores are holding out for one big final weekend to drive Christmas sales, as forecasts for new year spending look poor. (RetailWeek)

• Walmart is expected to expand its share of the online grocery market to nearly 27% by the end of 2024, widening its gap with Amazon. (Retail Dive)

• Adobe and Figma have called off their multi-billion dollar merger. The move would have seen Adobe acquire Figma for $20 billion, however, Adobe must now pay a reverse termination fee to Figma for $1 billion. (The Verge)

• Superdry has issued a profit warning after trading ‘significantly below management expectations‘ (RetailWeek)

• Etsy is laying off 225 staff (11% of its total workforce) as part of organisational restructuring. The news comes after Etsy sales stayed ‘essentially flat‘ for the second year in a row. (MarketingWeek)

👎🏽 X-odus: Major Brands Withdraw, Ad Revenue Plummets

It has been just 6 months since Linda Yaccarino was brought in to rebuild X’s relationship with advertisers.

A tough task and one which, arguably, Elon Musk is making increasingly difficult.

Brand safety is at the front of advertisers’ minds. The platform for free speech is causing concern for brands, who understandably do not want to be associated with content which can harm their reputation.

In November, inflammatory behaviour from Musk himself continued to give the platform a bad name, as he endorsed an anti-Semitic post on the platform.

But brand safety aside, increasingly poor customer acquisition costs on the platform is an issue in its own right, giving more reason for advertisers to re-issue their budget on trusted, well-performing platforms such as Facebook and Google.

To date, 100+ big-name brands are said to have either paused or permanently walked away from the platform, with many more considering pulling the plug too.

Companies who have stepped away from advertising on the platform include: Apple, CNN, Disney, AirBnB, Sky, Coca-Cola, Microsoft, Walmart, Paramount, Sony, Warner Brothers and IBM.

According to The New York Times, X may lose up to $75m by the end of the year in advertising revenue. A far worse forecast than what would have been proposed earlier in the year.

For Yaccarino, she has her work cut out. The task at hand is colossal and advertisers are firm on their position. Despite many years of expertise from her previous role as Chairman of Global Advertising and Partnerships for NBC Universal, her time at X will be what hangs over her if things do not improve.

Musk seems less concerned, though. When asked on the issue of advertisers boycotting his platform, he candidly replied that they can ‘go f*** themselves‘.

The Outpost’s Opinion: Understandably, brand safety is the priority of advertisers, who are pulling away from X due to its content moderation and controversial leadership. The balancing act of platform governance and commercial viability seems to be a surprisingly difficult one for X to get right.

📦 Drop Shipping Isn’t Dying, It’s Thriving

Drop shipping is often seen as a dark art in the e-commerce space, with the industry overshadowed by shady courses from loud-mouth ‘gurus‘ selling empty promises to hard-working individuals.

Many have declared the business model dead. But the statistics suggest that not only is it still alive, it’s thriving.

Like any robust business model, if you think it’s dead, you’re probably just doing it wrong.

With the year almost behind us, let’s look at some stats to see where it’s taken us.

• Drop shipping now makes up approximately 23% of the multi-trillion-dollar e-commerce market. (Truelist)

• In 2023 the drop shipping market is worth an estimated £197.15 billion, up 29% YoY. (Research & Markets)

• This trend will continue. By 2027, it is expected to grow to £464.96 billion. (The Insight Partners)

• Approximately 23% of all online sales are fulfilled by drop shipping. (Meteorspace)

• Electronics account for 30% of the North American drop shipping market. (Truelist)

• The average conversion rate for drop shipping is 2.45%, with an average order value of £18.38. (MarketSplash)

That all sounds positive, but this is one crucial statistic - only 15% of drop shipping stores succeed.

So why is that?

The real art of drop shipping lies in mastering the nuances of marketing, from engaging social media ads to creating compelling user experiences. A single misstep in these areas can spell disaster for wannabe dropshippers.

Many more fail by targeting too narrow a niche, hoping to uncover a unique market segment. In reality, aligning with proven products and strategies often yields better results.

What Does The Top 1% Of Drop Shipping Stores Sell?

One of the biggest challenges those looking to find drop shipping products face is finding the right product. Then find a suitable supplier of the product.

Looking at the top 1% of drop shipping stores, this is what they sell. It’s no surprise to see the $1.7 trillion fashion industry coming out on top.

So let’s take a look at a brand smashing it in the drop-shipping space - Meowingtons.

This dropshipping-based store specialises in pet products, with a focus on all things feline.

Meowingtons cleverly extends its reach beyond just pet supplies. They've tapped into the 'cat-mom' and 'cat-dad' market, broadening their appeal and capturing a more diverse audience.

Operating out of the US, Meowingtons attracts impressive traffic numbers, with tens-of-thousands coming to their store every month.

And what sets Meowingtons apart is its strong brand identity.

They've transcended the typical e-commerce drop-shipping approach of simply selling products through landing pages; they've created a brand experience centred around a love for cats.

Clever additions to their site, such as Milton The Cat Daily Comics keep their audience returning to their site every day.

They have a strong presence on social media too. On Instagram, they’re hurtling towards 1 million followers and share cat memes with their target audience.

This strategic focus on branding, along with a well-targeted product range makes Meowingtons a prime example of a dropshipping store that's not just surviving, but thriving.

The Outpost’s Opinion: Is drop-shipping dead? Far from it. It's a dynamic, growing segment of the e-commerce world, but one that requires skill, strategy, and some marketing savviness to navigate successfully. 2024 is as good a time as any if you take the right precautions and research before entering the market. Build a brand, think long-term, see the bigger picture and create your own success.

If you’re looking to get started in drop-shipping, this is a good starting point: Shopify’s Ultimate Guide To Drop Shipping.