Will Dropshipping be Profitable in 2023

Introduction

If you are asking will dropshipping be profitable in 2023 the short answer is: yes, but profitability requires strategic choices, lean testing, and real operational discipline. The industry has matured; margins have tightened; and customer expectations on shipping and service have risen. That makes casual or copycat approaches much less likely to work.

This article covers the current economics of dropshipping, how to structure a profitable setup, where to source suppliers, and the marketing and scale tactics that produce repeatable returns. You will get concrete numbers for startup and operating costs, supplier selection checklists, example product margins, platform pricing, and a realistic timeline for validating a store. This matters because many entrepreneurs treat dropshipping as a low-effort cash flow model; in 2023 it behaves like a low-capital retail business that still needs investment in traffic, testing, and customer service to be profitable.

Read on for actionable steps you can implement in the next 90 days to test product-market fit, manage supplier risk, and reach sustainable unit economics.

Will Dropshipping be Profitable in 2023

Market dynamics in 2023 favor disciplined operators. Consumer adoption of e-commerce remains high: global e-commerce sales were projected to exceed 5 trillion USD in 2022 and continue growing. At the same time, customer expectations on shipping times and returns have risen thanks to Amazon and major retailers.

Profitability depends on three core variables: gross margin per order, customer acquisition cost (CAC), and operational efficiency.

Example economics on a simple product:

• Average retail price: $35
• Cost of goods sold (COGS) including landed shipping and platform fees: $12
• Gross margin before ads and fulfillment: $23 (66%)
• Paid ad cost per purchase (CAC): $18
• Net margin per order after ads: $5 (14%)

In that example you are profitable per order but margins are thin.

• Lower CAC via organic channels, email, or cheaper creative
• Higher average order value (AOV) with bundles or upsells
• Lower supplier costs or better shipping terms

Where profits commonly leak:

• Long shipping times increase refunds and returns.
• Poor product quality increases support costs.
• High ad spend without optimization results in negative unit economics.

Niche selection matters more than ever. Commoditized products with thin margins and intense competition (generic phone cases, cheap jewelry) are harder to scale.

• Bundled consumables (pet supplies with repeat purchase potential)
• Vertical-specific accessories with identifiable buyers (home fitness add-ons)
• Higher perceived value electronics accessories (not mainstream headphones)

Practical benchmark targets for profitability:

• Target gross margin before ads: 50% or higher.
• Target CAC to be <= 50% of gross margin (so CAC <= 25% of retail price).
• Aim for a conversion rate (store-wide) of 1.5% initially and 2.5%+ post-optimization.
• Aim for 3x return on ad spend (ROAS, return on ad spend) when scaling paid channels.

If you can consistently hit those numbers and control refunds/chargebacks to under 3% of revenue, dropshipping can be profitable in 2023. If you cannot, either change the product mix or the acquisition strategy.

Setting Up a Profitable Dropshipping Business in 2023

Overview and lean setup timeline

60-180 days: scale winners, set up systems for fulfillment and subscriptions or repeat purchases.

Step 1 - Business basics and costs

• Register a business if required for your country (LLC in the United States is common). Expect $50 to $300 in filing fees depending on state.
• Domain name: $10 to $15 per year.
• Store hosting and platform: see tools section for pricing. Rough startup range: $29 to $500 for store setup and essential apps.
• Initial ad test budget: $300 to $1,500 for 2-4 products (small multivariate tests).
• Product samples and quality assurance: $50 to $200 per product.

Step 2 - Choose the platform and stack

• Shopify is the easiest for dropshipping at scale; plan for Shopify Basic at $39/month (Shopify recently raised prices; check current plans). Add apps for dropshipping, reviews, and email automation.
• WooCommerce (WordPress) is lower recurring cost but higher maintenance and technical setup.
• Alternatives: BigCommerce, Wix eCommerce, or marketplaces like Etsy for certain categories.

Step 3 - Legal and financials

• Payment processors: Stripe, PayPal, and Shopify Payments are common. Expect transaction fees of 2.9% + $0.30 per transaction when using Stripe in the US.
• Refund and returns policy: explicit policy on the site reduces disputes. Factor return rates of 2% to 10% depending on product complexity.
• Taxes and import duties: understand where your supplier ships from to your customer base and who is responsible for duties.

Step 4 - Store setup checklist

• SSL and fast hosting.
• Mobile-first theme with clear call to action.
• Product pages with 3 high-quality images and at least 3 benefits, specifications, and shipping timeline.
• Trust elements: returns policy, shipping times, contact info, and social proof.
• Checkout optimized for conversion: minimize steps, enable mobile wallets.

Example cost breakdown first 90 days (basic):

• Business registration: $100
• Domain: $12
• Shopify Basic: $117 (3 months)
• Apps and plugins: $60 - $300
• Ad testing budget: $900
• Product samples: $150

Total estimated: $1,300 - $1,600

Profitability hinges on lean testing. Start with one product, validate with small-budget ads, and avoid heavy customization or expensive inventory until you have positive unit economics.

Sourcing Suppliers and Product Selection

Types of suppliers and tradeoffs

1. AliExpress and general marketplaces

• Pros: massive product variety, low unit cost, no minimum order quantity (MOQ).
• Cons: long shipping times (15-30+ days), variable quality, higher returns.
• Best use: low-cost impulse items for markets tolerant of longer delivery (or when using ePacket).

2. China wholesalers and manufacturers (Alibaba, direct factories)

• Pros: lower unit cost at scale, better customization.
• Cons: MOQ, longer lead times, more complex logistics.
• Best use: when you plan to hold some inventory or private-label at scale.

3. US / EU domestic suppliers (Spocket, SaleHoo, local wholesalers)

• Pros: faster shipping (2-7 days), lower return friction, higher perceived trust.
• Cons: higher unit cost, smaller product selection.
• Best use: higher AOV products where fast delivery improves conversions.

4. Print-on-demand and white-label (Printful, Printify)

• Pros: no inventory, brandable products, simple returns.
• Cons: lower margins per item, quality depends on provider.
• Best use: apparel, accessories, designed products where brand matters.

5. Dropship fulfillment partners (CJdropshipping, ShipBob hybrid)

• Pros: some handle sourcing, QC, and warehousing for faster fulfillment.
• Cons: costs and potential complexity.

Sourcing checklist for each supplier

• Request product samples: confirm build quality, packaging, and shipping time.
• Check product tracking capability and shipping options (ePacket, tracked courier).
• Ask about returns and defective item policies.
• Confirm lead times and out-of-stock communication processes.
• Verify payment methods and fraud protections (escrow, trade assurance).

Pricing and margin examples

• Example product A (LED strip lights)

• Supplier unit cost: $6.50

• Retail list price: $29.99

• Platform fees and payment processing: $1.20

• Shipping to customer (dropshipped): $4.00

• Gross margin before ads: $18.29 (61%)

• Example product B (custom pet bowl via print-on-demand)

• Unit cost: $12.00

• Retail price: $34.00

• Shipping: $5.00

• Gross margin before ads: $17.00 (50%)

Tip: Always include platform fees, transaction fees, and expected shipping costs when computing margins. Factor a 10% buffer for refunds and chargebacks.

Quality control process

• Order 1-3 samples per SKU from shortlisted suppliers.
• Create a supplier scorecard with ratings for packaging, build quality, shipping consistency, and communication.
• Use photos and a short video recorded on receipt to document issues and return to supplier if needed.

Supplier comparison example (summary)

• AliExpress: best for initial tests; expect 15-30 day shipping; sample $5-$30.
• CJdropshipping: faster shipping with fulfillment centers; sample $10-$50.
• Spocket: higher cost but US/EU suppliers with 2-7 day shipping; sample $15-$60.
• Printful: POD with integrations; no MOQ; unit cost varies by item type.

Negotiation tips

• After a winning product, negotiate better pricing for volume or faster shipping.
• Offer to consolidate orders or pay faster for discounts.
• If ordering from factories, request a small pilot run with branded packaging.

Traffic, Conversion, and Scaling Strategies

Traffic channels and realistic budgets

Paid social and search remain the fastest path to validation. Organic channels build durable value but take longer.

Channel overview and recommended budgets

• Meta (Facebook and Instagram): best for visual products and retargeting. Test with $10-$30/day per ad set. Expect 1.5% to 3% conversion rates initially.
• TikTok Ads: strong for viral creative and younger demographics. Test budgets $20-$50/day and focus on engaging short videos.
• Google Search and Shopping: high intent traffic for certain categories. Use broad match and smart bidding with $20-$50/day tests.
• Influencer marketing: micro-influencers with 10k-100k followers can cost $50-$500 per post; pay on performance when possible.
• Organic SEO and content: long term. Plan 3-6 months before organic traffic pays off.

Key performance indicators (KPIs) to track

• Conversion rate (store-wide and by landing page)
• Average order value (AOV)
• Customer acquisition cost (CAC)
• Return on ad spend (ROAS, return on ad spend)
• Repeat purchase rate and customer lifetime value (LTV, lifetime value)

Conversion optimization checklist

• Improve product page clarity: 3 benefits, clear images, bullet specs.
• Add urgency and social proof: stock indicators, recent purchases, and reviews.
• Use post-purchase upsells and bundles to increase AOV.
• Implement email flows: welcome series, cart abandonment, and post-purchase sequences.

Example scaling scenario

• Validation phase: Spend $900 over 30 days testing 3 creatives across Meta and TikTok. Produce 45 purchases at an average CAC of $20. If average order value is $45 and product COGS plus shipping equals $15, gross margin before ads is $30. CAC $20 leaves $10 net per order - validation successful.
• Scaling phase: Increase daily ad spend to $100-$300 across top-performing creatives while optimizing targeting and creative. Aim to improve ROAS to 2.5x+ before adding new creatives.

Retargeting and retention

• Retarget website visitors with dynamic product ads and messenger campaigns. Retargeting typically yields much lower CAC.
• Use email marketing and SMS for retention. Klaviyo or Omnisend are common choices; plan for ~1-3% monthly unsub rate and 15-25% open rates for welcome flows.
• Aim for repeat purchases: add consumable components or subscription offers to lift LTV.

Fulfillment KPIs and costs

• Average shipping cost per order: $3 to $8 depending on supplier and market.
• Expected refund/return rate acceptable range: 2% to 8% depending on category.
• Customer support cost: $2 to $10 per order in labor and processing for low-touch products.

Scaling checklist

• Double down on creatives that achieve target ROAS.
• Move winning SKUs to faster suppliers or warehouse partial inventory if unit economics improve.
• Automate routine support with knowledge base and canned responses.
• Implement inventory alerts and reorder triggers for hybrid inventory models.

Tools and Resources

Platforms and pricing (typical as of 2023; confirm current pricing before purchase)

Store platforms

• Shopify Basic: $39/month (transactions 2.9% + $0.30 if using external payment processors).
• WooCommerce (WordPress): free core plugin, hosting $5-$30/month, plus plugin costs.
• BigCommerce Standard: ~$29 to $39/month variable pricing.

Dropshipping sourcing and fulfillment

• AliExpress: free to browse, pay per order; sample costs $5-$50.
• CJdropshipping: free to join; pay per fulfillment; warehouses in US/EU/China.
• Spocket: plans from $24/month for premium access to US/EU suppliers.
• Modalyst: free tier plus paid plans $35+/month for premium catalogs.
• Printful: no monthly fee; product costs vary by item.

Advertising and analytics

• Meta Ads Manager: free to use; budget controllable; creative production costs vary.
• TikTok Ads: free to start; recommended test budgets $20+/day.
• Google Ads: CPC depends on niche; shopping feed setup may have costs.
• Google Analytics 4: free for standard use.

Email and SMS

• Klaviyo: free up to 250 contacts, then priced by contact count.
• Omnisend: free tier available; paid plans scale with contacts and SMS credits.

Customer support and operations

• Gorgias: helpdesk built for e-commerce; plans from $60/month.
• Zendesk: scalable support platform; pricing varies.
• ShipStation: multi-carrier shipping management; plans start around $9/month.

Creative and productivity

• Canva Pro: $12.99/month per user.
• Adobe Photoshop/Lightroom: subscription pricing.
• Dropshipping automation: DSers (AliExpress automation), Oberlo was sunset; DSers alternatives vary in pricing.

Market research

• Jungle Scout and Helium 10 for Amazon product research (paid).
• Google Trends: free for demand signals.
• Exploding Topics: subscription-based trend alerts.

Free starter resources

• YouTube channels and blogs from established dropshippers.
• Facebook groups and Reddit subcommunities for niche feedback.
• Supplier directories like SaleHoo (paid) for verified wholesaler lists.

Common Mistakes and How to Avoid Them

1. Mistake: Choosing products only by low cost

How to avoid: Select products with perceived value, room for upsells, and repeat purchase potential. margin before scaling.

2. Mistake: Ignoring shipping times and returns

How to avoid: List accurate shipping times on product pages and consider US/EU suppliers for faster delivery. Offer tracking and a simple returns process to reduce disputes.

3. Mistake: Over-reliance on a single paid channel without creative variety

How to avoid: Test multiple creatives and platforms (Meta, TikTok, Google). Diversify ad spend and build an email list to lower long-term CAC.

4. Mistake: Not ordering samples

How to avoid: Order samples before listing a product, especially where fit, material, or functionality matters. Use sample photos and videos on your product pages.

5. Mistake: Scaling before quality control and fulfillment are reliable

How to avoid: When a product wins, move to a faster supplier, test fulfillment at scale, and consider warehousing a safety stock if margins justify it.

FAQ

Will Dropshipping Still Make Money in 2023?

Yes, dropshipping can make money in 2023 for operators who optimize margins, choose the right suppliers, and control customer acquisition costs. Success depends on product selection, shipping expectations, and effective marketing.

How Much Money Do I Need to Start a Dropshipping Store in 2023?

Expect to spend $1,000 to $2,500 for a lean validation including business setup, store platform fees, sample orders, and an ad testing budget. You can start cheaper if you focus on organic traffic and small-scale social promotion.

Which Suppliers are Best for Fast Shipping to US Customers?

Spocket, CJdropshipping with US warehouses, and select AliExpress suppliers offering ePacket or tracked courier options can provide 2-7 day options. Domestic wholesalers and 3PL (third-party logistics) partners deliver the fastest times.

What are Realistic Profit Margins for Dropshipping?

Target a gross margin of 40% to 60% before advertising costs. After CAC, healthy net margins per order commonly range from 10% to 25% depending on niche and efficiency.

Should I Use Shopify or Woocommerce in 2023?

Shopify is generally faster to launch and easier for dropshipping with many apps and integrations. WooCommerce can be cheaper long term but requires more technical maintenance. Choose based on your technical comfort and budget.

How Long Does It Take to Validate a Dropshipping Product?

A basic validation can take 2 to 6 weeks with an initial ad test and sample orders. Expect 1 to 3 months to iterate and achieve stable unit economics before scaling.

Next Steps

1. Validate one product in 30 days

• Order 2-3 samples, set up a simple Shopify or WooCommerce store, and run $300-$900 in ad tests across Meta and TikTok. Track CAC, conversion rates, and refund rates.

2. Build your supplier scorecard

• Test two suppliers for the same SKU, document shipping times, packaging quality, and communication. Choose the one with the best tradeoff between cost and reliability.

3. Optimize the funnel for conversion

• Implement product page improvements, add a simple upsell, and set up a cart abandonment email flow. Aim to increase conversion rate by 25% in the next 30 days.

4. Create a 90-day scaling plan

• If unit economics are positive, plan incremental ad increases, negotiate supplier discounts, and consider partial inventory for top SKUs. Set ROAS and CAC targets before increasing daily spend.

Checklist to print and use

• Order product samples and take photos.
• Launch a mobile-optimized product page with clear shipping info.
• Run low-budget ads to validate CAC and conversion.
• Document supplier terms and create a reorder trigger.
• Set up email automation for cart recovery and post-purchase follow-up.

Further Reading

• Dropshipping Where to Buy Guide
• Dropshipping Where to Sell Guide 2025
• How to Start Dropshipping with Shopify Guide
• How to Start Dropshipping with No Money Step by Step