You’ve probably read online that dropshipping coffee is profitable. Sorry to break the bad news to you but it’s a bad idea!
The reason why so many beginners fall for this trap is it sounds like a tempting business model. Coffee is one of the world’s most consumed beverages and appears like the perfect product to dropship.
If you’re considering a coffee dropshipping business, I suggest you read this article first before making your final decision.
Can you Dropship Coffee?
As long as the coffee supplier has approved you to dropship their coffee, you can dropship coffee. You will need to comply with any rules or regulations the supplier makes such as minimum advertised pricing (MAP).
Dropshipping is simply a more streamlined way of fulfilling orders by having a supplier ship products directly to your customer, This means you can dropship virtually anything, however, that does not mean everything should be drop shipped.
The profit margins are lower with dropshipping because you are paying a supplier to pick, pack and ship individual products. For it to be worth their time, they need to charge more per sale compared to bulk wholesale purchases.
Products need to meet specific criteria in order for them to be viable products to dropship and coffee does not meet this criteria.
Is Dropshipping Coffee Worth it?
The coffee industry is enormous and is growing exponentially. For this reason, beginners assume it’s the ideal product to dropship and just a tiny piece of that coffee industry pie can be life-changing money, but the truth is dropshipping coffee is not worth it for several reasons.
Coffee is an extremely competitive niche to break into. Coffee drinkers have access to coffee everywhere in the physical world including grocery stores, restaurants and even drive-thrus. As an online business, you can’t compete with this in terms of convenience or price.
Restaurants and grocery stores buy in bulk and don’t have to pay for shipping on each sale as an online store does. This makes competing online extremely difficult.
So if you can’t compete with brick-and-mortar stores on price or convenience, how do online coffee stores succeed? They provide something unique that you can’t get in the real world.
Let’s take a look at a few examples.
Online Coffee Store Examples
Hawaii Coffee Company’s unique selling point (USP) is the region in which its coffee beans are produced. Kona coffee beans have a reputation as being one of the best tasting coffee in the world due to the prime farming location in which it’s produced.
Kona is a region of Hawaii’s big island and is said to produce a rich coffee flavor that is rare and desirable among coffee lovers.
The next example is Black Rifle Coffee Company. They source the highest quality coffee beans and have a ton of different varieties including expresso in a can as well as apparel and coffee products.
The main USP for Black Rifle Coffee Company is its branding. They are clearly targeting the Alpha male audience and the branding is perfect. The store design and color scheme as well as the product names and packaging will resonate with men who love coffee.
The last example is BulletProof Coffee. The USP for this store is the type of coffee they’re selling which is in its health benefits.
The coffee beans themselves are sustainably sourced as well as being mold and toxin-free. The coffee is made with grass-fed butter and MCT oil which has health benefits and works as upsells to increase average order value.
As you can tell, these online coffee stores are successful because they have something that sets them apart from regular coffee and is the reason consumers are willing to pay premium prices and wait for delivery.
Nobody will buy regular coffee online if they can buy the same or a similar alternative from their grocery store for a lower cost.
Is Dropshipping Coffee Worth Profitable?
You’ve probably read or heard online that dropshipping coffee is profitable, you need to ask yourself who is telling you that.
- Is it someone who has never done dropshipping before?
- Is it a coffee supplier trying to get you to buy their coffee?
- Is it a website trying to get you to sign up and earn a commission from you?
To be clear, I am not an affiliate of any coffee suppliers and it makes no difference to me whether you pursue a coffee dropshipping business or not.
Dropshipping coffee is not a profitable business model. After product cost, shipping and marketing expenses, the overall profit margins are very low and will make dropshipping coffee unsustainable in the long term.
As a dropshipping business, your profit margins are already low as you are shipping individual products as opposed to buying in bulk. Now you’re trying to compete with the biggest coffee brands online who are sourcing their own coffee direct from the source at lower shipping rates than you and they already have a reputation and customer base.
Let’s assume you overcome the odds and still managed to find a niche audience of buyers and start making some consistent sales. What will happen next?
Other online coffee stores will notice your success and see how your marketing strategies are working, they will see your traffic sources and your products. Now they can copy your sales tactics except they can go directly to your supplier and buy in bulk and undercut you and before you know it, your coffee store is no longer profitable.
Is a Private Label Coffee Business Worth it?
There are several private-label coffee suppliers online such as Dripshipper which is a Shopify app, Temecula Coffee Roasters and many more.
These suppliers sound very enticing to beginners who are looking into a coffee dropshipping business. They take care of the custom packaging, shipping and sourcing suppliers. All you have to do is market the coffee products and watch the money roll in.
The problem is these private label suppliers are another unnecessary middleman taking a piece of your already small profit margins. As a business, you want to minimize the number of links in the chain and source your coffee as direct as possible to maximize profit margins.
A private-label coffee supplier charges a monthly fee to use their service, a percentage of each sale and often additional costs including building your website for you. The private label part of the business they offer is usually just printing a label you create and sticking it onto a coffee package.
Let’s take a look at an example of the types of profit margins you can expect with dropshipping coffee. Below is a screenshot of the coffee prices at Dripshipper.
In addition to the price you pay for the coffee, you also have to pay for;
- Shipping if it’s outside of the USA
- Monthly subscription fees to Dripshipper
- Monthly subscription fees to Shopify
- Any apps you use
- Payment gateway fees
- Advertising costs
Add all these costs together and you would need to be selling several hundred bags of coffee each week to be profitable.
If you are still determined to dropship coffee, I recommend not using a private-label coffee supplier. Creating your own Shopify store is a simple process and sourcing your own custom stickers for your product is easy and much more cost effective.
I would only recommend dropshipping coffee if it’s done in the short term to test and validate your strategies before transitioning into building a brand and buying coffee wholesale. The amount of established coffee roasters online makes it virtually impossible to compete for a brand-new dropshipping store.
Don’t fall for the private label suppliers that offer custom labels for coffee packaging. This is a profitable deal for them, not you. The only profitable coffee dropshipping is not done with coffee itself, it’s done with coffee products.
There are endless unique coffee products that can be sourced from AliExpress and Alibaba which can be drop shipped profitably. Many successful stores have created merchandise and apparel which targets coffee lovers using print-on-demand platforms such as Printify and Printful.
High ticket dropshipping has become increasingly popular and dropshipping coffee machines and related products is another coffee-related product that can be profitable. If this interests you V-Commerce has one of the best high-ticket dropshipping courses I am aware of.
If I am wrong and you have been making a good income dropshipping coffee, please reach out to me as I would love to hear from you.