We all want to have our own business and become financially free. I bet you have thought about it too!
However, starting a business is not an easy task. It can be really competitive, costly, and risky. At that point, the online business model becomes extremely popular nowadays.
When it comes to the eCommerce business, we all think about dropshipping because it is considered one of the most profitable and easy business models ever. But is this really true?
Millions of people start their dropshipping business, and only some of them succeed!
In this blog, we will discuss some of the main cons and mistakes of dropshipping business and ways to avoid them.
Let’s dive right in!
The true face of a dropshipping
Dropshipping business with the highest success rate is around 10% during the first year so, you may wonder about the other 90%? – yes, most of them are facing failure. Most of the time because they dive into the dropshipping business without proper knowledge.
The modern world brought a lot of possibilities, including creating and managing a business without any inventory. Of course, I am talking about dropshipping. While this is so fun and cool, thousands of people start launching their shops and face numerous difficulties.
We should not underestimate the value of the dropshipping model. It gives us a chance to start a business with almost zero resources – no need for inventory, warehouse, a lot of amount of cash, the only thing you actually need is knowledge about business structure and how to manage it correctly.
Let’s face dropshipping’s true identity without any embellishment:
- Hard to control supply-chain and shipping
- Highly competitive
- Difficulty to market
- Profit issues
Dropshippers do not have control over supply-chain because it’s mostly up to suppliers. When your customer purchases any product from your store, the supplier is responsible for sending the item. That’s why choosing your suppliers is the essential step for your business success.
We all have heard the stories of dropshippers who got a significant profit from the eCommerce platform. After these stories, more and more people got interested and started small businesses. Nowadays, competition is at its peak.
Not every dropshipper has the knowledge and experience of marketing. Some of them find it hard to expand their customer base and manage ad campaigns, which is problematic for a newly started company.
Profit issues are worth discussing. From every sale you make, most of the money goes to the supplier, and the difference between wholesale and trade price is your profit. Well, at first, it sounds great, but everyone is looking for the cheapest opportunities. If your product prices are higher than they should, you will lose potential clients.
Being a successful business person is challenging, but do not be afraid of these difficulties. We will walk you through some of the proven steps to help you reach your goals!
How to avoid mistakes in dropshipping
We have discussed a lot about dropshipping already. If you are a freshman in this field probably, you need to check some beginner tips about dropshipping first. By now, you should have enough information to get started your online shop.
Given how easy it is to start an online store using dropshipping, you might skip some of the essential rules for running an eCommerce outfit. That is why we give you five frequent mistakes and ways to avoid them.
1.start operating without research
Research is a vital step for your success. You will be shocked to know how many people start a business without proper research. Being informed is the main factor in this journey.
Think about which product will be in high demand to start with it. Don’t forget about your potential audience – you need to know its characteristics as well.
How to conduct researches? – information is easy to find. For example, you can check how some products are doing on other eCommerce sites. It will give you a clear view of the list of items on the customer’s interest radar.
Some drop shippers go wrong when searching for items that don’t have any competition. That is the sign that demand for that product is so low or zero.
There are some logical reasons why products don’t have a big competition, for example, high prices, shipping costs, manufacturing issues, or unstable profit margins. As a thoughtful dropshipper, you should look for products in medium or high competition, as it’s a sign that you can get a considerable profit.
Because of the low entry barrier, you may think it’s easy to run an online store. Mostly it is the case when you start dropshipping business and do not need to manage all the storage and warehouse staff.
Unrealistic expectations might cost you in dollars and harm your mindset. When you have high hopes, even a few setbacks can affect your motivation.
What happens when the first month ends and you have only a few sales or zero? You are going to feel unmotivated and hopeless.
Don’t forget that it’s just the beginning! Set clear goals at first, like making $100 for the first month and increase it step by step.
You should always think positively, but do not forget to be prepared for a difficult period too.
3.rely on one supplier
Having reliable suppliers is a gift. But imagine what happens if suddenly they do not want to work with you for any reason.
Or, in the worst case, they belly up.
You will be in a difficult situation, as clients are waiting for their items and you have hundreds of customer orders to fulfill.
You have only a few options here:
- Cancel the orders
- Find another supplier
- Inform your clients about the delay
Neither of them seems pleasant, I know. Here is how you can avoid this mistake.
Always have a few suppliers in the backup.
Find great suppliers is essential for your business. At the beginning of your planning stage, you should use the abovementioned research to find niches, products, and suppliers.
When you are looking for a supplier, it’s best to choose someone reliable and responsible. But never forget to have another backup supplier who can help if something goes wrong. This will help you to improve customer service.
Another option is to have multiple suppliers from the beginning. To do that, you need to find several suppliers with the same price and reliability. It requires additional work from you, but sometimes it’s the best option.
Shipping is the hardest part for most drop shippers. You never know when your supplies will arrive, and it’s hard to take responsibility for something so inaccurate.
Most of the time, suppliers do not have the exact date for delivery. They use a wide range of time, which is even more confusing.
Here are some options which will help you to manage shipping times:
- Contact your suppliers
We already mentioned how important it is to have several reliable suppliers. Let’s say you accomplished this task very carefully.
When it looks like the shipping process is not going as planned, you should contact your supplier directly. That way, you can get information about the stages and possible dates.
It’s also a nice gesture to have a close relationship with your suppliers. Open communication space will encourage the suppliers to be more involved in all activities and improve their services. Well, it will also give you some information about the supplier. If they disappear and avoid the responsibilities, it’s a true sign that you need to find other suppliers.
- Order items by yourself
The only way to see how shipping gets processed is to order products by yourself. This way you can take a close look at the product lines.
Don’t be frightened of this process. As a dropshipper, you might think that you do not need to have any kind of contact with the items, but you are a businessman after all.
You need to be aware of every stage. When you order the products, it will give you two benefits. Firstly, you will understand how the shipping process works in real-time, and you will have the opportunity to explore the products.
- Indicate delivering period
When people buy something, that means they need it right now. No one likes delays and waiting.
Setting your customer’s expectations is vital. Try to give them a realistic range of time.
Some drop shippers think they start their e-commerce business, use Facebook ads or google ads, and that is it. But to be precise, how you represent yourself is way more important.
Your brand’s reputation and growth are essential for long-term business. In this process, you should think about your brand as a human. What it looks like and how it operates.
These are some of the characteristics you should look at:
- Brand heart (vision, mission, values)
- Brand messaging (tone of voice, personality, tagline)
- Brand identity (logo, colors, typography)
Don’t forget that entrepreneurs who know how to brand have a high competitive ability. You should focus on building trust and expand your brand’s awareness.
A strong, reliable brand will help you increase the value of your company and get more customers.
Let’s sum up
A successful dropshipping store starts with an understanding of its real nature.
We just covered up some of the most frequent mistakes, but there can be more. Always remember not to give up on your dreams and try to avoid them as much as possible.
Remember: make your decisions based on research. Try to find the best niches, items, and suppliers through some analysis.
Don’t let yourself create false expectations. Find more than one good supplier, try to communicate with them, and control shipping periods.
In the end, build your brand carefully and think of it as your company’s personality.