Average dropshipping income and profit margin research summary: Dropshipping can be a fantastic retail fulfillment method for any entrepreneur looking to cut costs and streamline their business.
If you’re an entrepreneur or current dropshipper who wants to know more about the method, we’ve got you covered. We’ve investigated the average dropshipping income and profit margins in the US, and according to our research:
Key Takeaways:
-
The average dropshipper has an annual income of $40,000 per year.
-
Dropshipping has an average profit margin of 20% to 30% per sale.
-
Dopshippers earn 50% greater profit when dropshipping when compared to those holding their own inventory.
-
The value of the dropshipping industry has increased by 53% since 2020.
Average dropshipping income
The average dropshipping income can vary greatly from person to person, with some making under $35,000 annually and others making up to $100,000. To find out more about the average dropshipping income, here is a comprehensive chart:
Average monthly and yearly dropshipping income
| Earning percentile | Average monthly income | Average annual income |
|---|---|---|
| 25th percentile | $2,800 | $34,000 |
| Average | $3,300 | $40,000 |
| 75th percentile | $3,700 | $44,000 |
| Top Earners | $4,000+ | $48,000+ |
While it is true that some dropshippers can earn up to $100,000 per year, the vast majority do not. Instead, the average income for a dropshipper is around $40,000 annually.
That means the average dropshipper only makes around two-thirds of the average US income ($60,000). Though, compared to other similar types of work, dropshipping can be very lucrative.
Average dropshipping profit margin
Dropshipping may provide a lower average income, but it has impressive profit margins. The average dropshipping profit margin is between 20% and 30% per each sale.
Comparably, the average retail fulfillment profit margin as a whole is only 3% to 10%, meaning a dropshipper can expect to have 2x to 10x higher profit margins than others in the industry.
Ultimately, dropshipping businesses offering superior products often enjoy a greater profit margin, albeit with lower sales volume.
As a business owner, it’s vital to strike a balance between pricing and demand, as that will allow you to maximize revenue and business growth. For example, conduct thorough demand planning prior to selecting a product and supplier for optimal results.
What is dropshipping?
Dropshipping is a retail fulfillment method where sellers offer products on their website that aren’t in their inventory. Instead, once the seller receives an order, they buy the product from a third-party supplier, who then ships it directly to the customer. This is the dropshipping process, where the seller serves as an intermediary between the supplier and the buyer.
This simplified method of order fulfillment allows entrepreneurs the benefit of launching a business, without the need for warehouse space, supply chain coordination, or inventory management.
Average dropshipping income FAQ
-
How much do dropshippers make a day?
Dropshippers make anywhere from $50 to $5,000 per day. Though, the average amount is closer to between $100 and $150 per day.
A higher daily income will depend on listing products with high demand, pricing for good profit margins, quality marketing strategies, and recurring purchases. Examples of profitable products include:
-
Food
-
Clothing
-
Office Supplies
-
Beauty Products
Above all, it’s important to remember that it takes time to develop a dropshipping business. Steps you can take to increase your daily dropshipping income over time include building a solid website, posting key products, and low-cost, high-impact marketing (email and content marketing).
-
-
What are the benefits of dropshipping?
Dropshipping offers many benefits, from less overhead and lower costs to flexibility. Here are some of the key benefits to becoming a dropshipper:
-
Easy and cheap to start. Because you won’t have to drop hundreds or thousands of dollars on your initial inventory, starting a dropshipping business requires far less upfront capital than other options. Additionally, when you start your business you won’t have to fret about:
-
Paying for and maintaining a warehouse
-
Packaging and shipping orders
-
The accounting process that goes into your inventory
-
Dealing with returns and other shipping issues
-
Managing your stock levels and making new orders
-
-
Low overhead expenses. Since you won’t have to spend all your money on inventory, accounting, and packaging, your overhead expenses will be far lower than non-dropshipping operations.
-
Flexible location. As a dropshipper, you won’t have to pay for large storage for your inventory. In turn, this allows many dropshippers to work successfully from home, or any other location of their choosing.
-
Variety. Dropshippers aren’t bound to inventory costs and inventory management, allowing you to offer a much wider range of products, or choose to change the products you offer at any time.
-
Easy Scaling. Typical businesses would have to put in 5x the amount of effort when they receive 5x the number of orders. Dropshippers, on the other hand, utilize their suppliers to expand with fewer issues and less incremental work.
-
-
Is dropshipping profitable?
Yes, dropshipping is profitable in 2023. While dropshippers don’t have the highest average incomes, the average dropshipping profit margin is 2x to 10x higher than others in the retail fulfillment industry.
Dopshippers also earn 50% greater profit when dropshipping when compared to those holding their own inventory.
-
Is dropshipping worth it?
Yes, dropshipping can be worth it. While prospective dropshippers will need to understand what customers want, marketing strategies, and how to price their products based on dropshipping fees, anyone with this know-how can easily make a profit.
When all expenses are properly accounted for, dropshipping can be one of the quickest and easiest ways to grow quickly. Fast growth and high profit margins will be driven by the lack of overhead expenses and inventory management.
Conclusion
Dropshipping has become a popular and profitable retail fulfillment method. While dropshippers only have an average annual income of $40,000 per year, their average profit margin of 20% to 30% is between 2x to 10x higher than other methods in the industry.
In fact, dropshippers earn 50% greater profit when dropshipping when compared to those holding their own inventory. This, combined with the method’s increased use, makes it a great choice for any entrepreneur.
Overall, when you’re looking to kickstart a new business it’s important to research your potential market, needs, and the cost of doing business. Even if dropshipping has much lower overhead costs, you’ll be far more successful when you do your homework.
References
Author
Jack Flynn is a writer for Zippia. In his professional career he’s written over 100 research papers, articles and blog posts. Some of his most popular published works include his writing about economic terms and research into job classifications. Jack received his BS from Hampshire College.
