In the eCommerce world, Dropshipping has become one of the buzzwords that everyone has on their minds. With e-commerce revenue projected to reach nearly $2.5 trillion worldwide in 2022, it is not a big surprise that small businesses started dropshipping their products or many individuals tried to set up their dropshipping websites, while some others are using various available platforms like Instagram.
Feel free to read my other blog: “Instagram for Small Businesses: Make a Successful Marketing Strategy”.
However, contrary to popular belief, dropshipping is not a get-rich-quick scheme.
It seems like easy money — you sell other people’s goods and take a cut for yourself — but when you factor in all the drawbacks, obstacles, and day-to-day management, it’s far from easy.
In this blog, I am going to share some concerns to be considered before and while you are stating your dropshipping business, after all, this is a still a profitable online business and worth trying.
1) What is Dropshipping concept?
Dropshipping is an eCommerce business model where you can sell physical products online without having to deal with inventory, without having to own a warehouse to store your products and without having to deal with shipping and handling.
Theoretically, your supplier handles all of your product fulfillment needs. When an order comes in, you notify your dropshipper and they ship your products directly to the customer on your behalf.
On the face of it, dropshipping sounds like a no-brainer: no upfront investment and no inventory to store. In most cases, the seller never even comes into contact with the products he or she sells. But in reality, it’s more complicated than that.
2)Why drop shipping is not as easy as it’s advertised to be?
As a retailer, you are responsible for providing customer service, placing orders, maintaining your website, and bringing in online traffic.
Therefore you will be dealing with several areas which can be totally new for you. The website itself needs a considerable amount of time to create and also it comes with some technical issues that you must solve to make your website looks good and works probably with photos, links, and Call to actions.
In the term of traffic generation, you also need to have a good knowledge of SEO. For sure, you can outsource all of these activities, but then you need to consider a sperate budget for them
Make sure you have a good grasp of business, customer service, and eCommerce technology before you begin. I personally believe It’s much more reasonable to approach dropshipping when you already have a regular source of traffic.
3) Consider quality control
Quality control is necessary, and this is the responsible thing to do as a store owner. You always want to provide your clients with a product that delivers what it promises from the product description, and nothing less. Not meeting customer expectations will mean negative repercussions for your store, and you don’t want to deal with an unhappy customer.
Always consider below thoughts:
- Perform test orders; buying products yourself and have them shipped out to your address
- Educate your Customers; not to cause unpleasant surprises that may lead to negative reviews
- Reliable suppliers who maintain a certain quality level ( no variation in quality)
- Check customer Reviews; not only from your customer but also read the reviews on your supplier page as well
4) Return products
Returns are the reality of eCommerce and for sure, dropshipping. At least 30% of all online purchases are returned. There are several major reasons why a specific product must be returned:
- The item doesn’t match the online description
- The product is damaged and/or defective
- The product doesn’t fit or incorrect product has been ordered
Remember, when you own a dropshipping business, your customer should be a top priority and you must work in conjunction with your supplier to offer a fast solution and make the extra efforts to make your customer happy during return product. This actually can differentiate your store from others, and convince customers to come back to you for other purchases in the future.
I have found “How To Take Care of Returns With Dropshipping” from Dropified very useful guideline for return issues in general, feel free to have a look at it
5) Supply-chain control
In dropshipping, you’re more or less 100% depends on your supplier. But you’re the one who still has to talk to your customers directly. If for whatever reason, stock levels have dropped dramatically, and you’re unaware of it, you may end up selling products you don’t actually have on hand. So you will end up with an unhappy customer.
On the order hand, there’s also a delay in communication as the dropshipper goes back-and-forth between the customer and the supplier. If one answers slowly, all communication grinds to a halt and the problems take longer to fix.
If your supplier gives you the access to check their stock level, or provide guarantee/payment penalty for any shipment delay compare to their original commitment, then you should consider this as a reliable supplier and this resolve most of the issues related to supply chain
6) You will face a high level of competition
As I mentioned earlier, because there’s such a low barrier to entry, you will be faced with an overwhelming amount of competition, even within your very own niche. Many of your competitors will be taking the lowest-price-possible approach to selling, which can also impact your profit margins.
For example, if the size of your online business venture is not big enough, then chances are you don’t have an exclusive deal with your suppliers. That means any number of competitors could be selling your exact same products. And if you’re just starting out, your rivals with years of experience have the resources you don’t to undercut your prices.
That means customers can buy the exact same thing from someone else for cheaper, so why would they buy from you?
What to do then? Well, I have some suggestions:
- Find not so popular products (still within your niche)
- Learn effective pricing techniques
- Consider a reasonable profit margin; 15% to 30%
- Filter good reputation suppliers and make sure to get exclusive deals to make your final price more competitive.
In order to find these outstanding suppliers:
- Check your products on the platforms like Oberlo or Shopify. Find related suppliers for your specific products. Then you can have peace of mind knowing that they’re reputable and have prior experience handling dropshipping customers.
- Check for AliExpress and look for suppliers who are providing similar products. Those top-selling suppliers can be your potential supply chain.
The bottom line
It’s been said that 20 percent of new businesses fail in their first year, and it’s not hard to imagine that statistic is much higher for dropshipping stores, especially given how saturated the market has become. It doesn’t mean e-commerce success is impossible. Smart product research and sourcing and picking a sales platform that will help you reach your target audience will be key to whether your dropshipping business will boom or go bust.
Focus on providing exceptional customer service where possible and encourage shoppers to leave you a review if they’re happy with their purchase. As consumers become increasingly skeptical of strange brands on Instagram, a great reputation will go a long way toward building your business.
Whatever you decide, I wish you luck! I hope you find a metaphorical beach to relax on, in whatever form it may take.
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