It feels like dropshipping has never been at a higher point than now. It makes sense—look at the some of the top Google searches related to it:
You got excited and decided to research more? Then you undoubtedly came across these not so positive suggestions, too:
The thing about dropshipping is that it seems like a quick and easy way to become a profitable location-independent business owner, but there are some downsides that might detract you from pursuing this venture.
In this guide, we talk about the five most common challenges of dropshipping and our solutions to them.
This is a common myth, and the one that isn’t hard to understand—the popularity of dropshipping has multiplied over the past 5 years:
However, dropshipping has actually been around for a long time—around 15 years!—and has also been known as white-labeling for decades. The increase in the popularity of dropshipping definitely has a lot to do with the rapid growth of internet availability and eCommerce as a business model in general.
A while ago, most people weren’t quite as quick to type their credit card information. In 2008, eCommerce was at 5.1% of total retail purchases; now, it accounts for 13% of total retail sales!
With that in mind, dropshipping up the opportunity for essentially anyone with a laptop to start an eCommerce business without risky investments or a warehouse.
Here’s an interesting fact: Zappos, one of the most well-known online fashion retailers, actually started out with a dropshipping model!
The popularity of dropshipping happened because many see it as the way to build a successful and profitable online store quickly.
The problem? Those who want to get their store up and running as quickly as possible typically end up rushing through the product selection process. It seems like a quick and easy hack to get profitable: pick the cheapest products, mark the price up, rinse, repeat, and watch the money come in.
Here’s the reality: this can only work for a short amount of time. That’s because once customers start receiving products of poor quality, they won’t only lose trust in that retailer—they will also make sure to tell others not to buy from it.
Word travels fast, and customers are usually quicker to share bad experiences than shouting about the good ones.
Luckily, there is a solution: instead of rushing the product selection process, it’s important to spend time before even launching your dropshipping store on ordering and testing sample products. By doing this, you can test out factors like delivery time, ordering experience, packaging and, of course, the quality of the product itself.
This way, you will never end up adding a low-quality product to your store, and you will only sell what you’d personally buy. That’s a great way towards positive customer experiences!
For a step-by-step guide on finding profitable dropshipping products of great quality, check out our guide.
In the world of Amazon Prime and same day deliveries, shipping products from overseas can seem like an impossible way to win customers over.
While it’s a challenge it’s not impossible—you are a unique store, and your customers will buy from you because of a mix of elements like products you offer and the way you answer customer queries.
These customer experiences are a huge factor, but that doesn’t mean long delivery time won’t have an impact on your sales. You can sort this in one of the two ways.
First, you can communicate longer delivery times upfront, all across your store and product pages. The lack of express shipping option is among the 10 reasons customers abandon their carts, and it’s typically because they postpone their shopping until last minute.
This doesn’t have to be anything extreme or negative; simply take the time to add text like “order now to receive in [number of weeks]/by [date]” to your product descriptions and the checkout process. You don’t want this information to only become obvious once it’s time to complete the purchase.
The second option is to source your product from locally-based suppliers. You can find them by searching manually or looking through supplier directories, both free and paid. You still want to follow the same procedure of ordering sample products and testing them out, but this time it’s imperative that the products are delivered sooner.
In an ideal world, you’d pick products for your dropshipping store and mark them up to any price that would make you crazy profitable. But you know there are better deals with your competitors and that it wouldn’t work.
The average profit margin for a dropshipping store is usually around 15-20%; gross profit margin for standard eCommerce store lies around 40%. That’s twice as much!
This is where the upside of dropshipping—not buying in bulk—may seem like a downside. Yes, you need more sales to have the same profit as you would with a standard store, but there is a huge advantage to dropshipping: there is no initial risk for you.
There are so many actions you can take in case something isn’t working out. Dealing with a difficult supplier? Find a better one. Your niche doesn’t sell? Look for a more profitable one. Shipping time too long, shipping cost too high? Find a supplier that’s closer.
You don’t have to order or store a single product and you can think on your feet and adjust to the circumstances of the market. We call that a win!
The fact you never see or touch the product before it reaches the customer seems like a dream—you run the store, but don’t run the logistics.
However, it’s also a fertile ground for customer support nightmares. Here are some of the most common mistakes that you’ll have to take the fall for in customer’s eyes:
Some of these you might be able to catch before the products even leave the warehouse (obviously not the last point, though). The tip here is to always review the invoices you receive from the supplier, as this will help you ensure the right products and the right amounts are going to the correct address.
Another tip is to know your suppliers’ return policies to the word. In this case, when mistakes happen, you will be able to communicate this to your customer, take ownership of the mistake, and solve it quickly.
Finally, if the products arrive damaged, most suppliers will ship out replacements for free, but knowing their policies comes in handy again, because not everyone operates the same way.
Most importantly, you want to make sure you’re in full control over these scenarios when it comes to talking with your customer—even though you aren’t truly in control over most of them. However, coming across confident and taking the responsibility will create a positive experience for your customers and build their loyalty to you.