The drop shipping business is fast-growing and with that there are more chances for your store to fail. There are so many aspects of drop shipping that are overlooked and often left out of discussion. I’m going to talk you through some of the big reasons drop shipping businesses fail and how you might want to avoid them.
Obviously one of the most important things to master is your website. In an industry with costs this low, you really want to make sure that the things you are paying for are actually worth it. If you have an unattractive web design, you’ll immediately start losing custom. You need to think deeper than just creating a platform to sell products; it’s also about your brand. If you were a shop on the high-street, you wouldn’t just lay out your products so they’re visible and leave it at that. You need to think about all the aesthetics from the layout to the colours and how easily accessible the site is for different types of people. You need to think of your site as if it were an actual store to ensure it looks good and, just as importantly, feels good once you’re in there. Try not to rely too heavily on your own personal preferences either. You may really like the layout but if it doesn’t entice your target audience, you won’t be successful.
In addition to having an attractive website, you’ll also need to build a brand to match. Much like songwriters, drop shippers must understand and accept that the credit of their work will, more often than not, go to someone else. If the product(s) you’re selling are amazing, your customers are probably going to focus on the product’s brand instead of the shipping experience. In the end, it’s not going to be your logo on the box. That being said, when it comes to ecommerce, branding is crucial because shoppers tend to go to their favourite stores first. Without customer loyalty, you’ll never get the regular traffic you need to sustain a drop shipping business.
Combining these two aspects successfully can ensure that customers like and enjoy using your site to the point that they’re not only happy to use you as an option for their needs, but may actively seek your site specifically for your services. It also ensures that they know who they’re looking for and where to find you. Having your audience like your business isn’t much help if they don’t know who you are or how to get to your store.
As a business, you’re going that have a lot of decisions to make that will have big effects on your success. If you make the wrong call, you may end up folding. Make the right call, you could reach the success you’re aiming for. One very important thing to consider is your niche. This has a huge part to play when it comes to drop shipping failures. You need to make sure that the niche is right for you and the audience alike. For example, if one of your chosen products is a ‘dashiki’ and you’re selling in Italy, you may receive little to not orders at all. However, move this over to the African market, or even the right states in America, and it could be a very successful target. It’s not just about the niche, but where you target it too. Targeting the wrong country or demographic can destroy your business; the best way for you to overcome this is simply to try, try and try again.
Another choice you’ll be forced to make in the early stages of your business is what platform(s) to use. Some of the leading platforms to market your products on are; Google AdWords, Facebook Ads and Bing Ads. If you’re not sure where you should go, it’s often a good idea to find a product that’s already selling in high volumes on other drop shipping stores. It then becomes as simple as marketing them! If you’re still failing, then you’re most likely on the wrong platform. You can also use multiple platforms to market your product(s) and narrow them down based on how much ROI they provide you with. In no time you’ll be able to see which platform will work best for you.
When drop shipping, you don’t want your eagerness to earn money to get in the way of the natural growth of your business. Having patience and discipline doesn’t mean that you need to take forever and a day to create your site, it just means that you need to think through your decisions; don’t rush into anything if you aren’t sure it will aid your success. If you aren’t seeing profits, you should evaluate your business; don’t assume you’ve failed right away. Sometimes you just need to switch up your marketing techniques or target a new audience. Try to determine why you’re not succeeding and how you can change that instead of giving up straight away.
It’s not just about the choices you make, it’s also about the kind of person you are. If you lack patience, persistence and discipline, you’re unlikely to succeed. A lot of drop shippers don’t have the patience to get their store off the ground.
When it comes to discipline, you need to have a lot of it for any business to be successful. It’s essential that you’re putting in the hours to build your store from the get-go. There’s a lot of work to be done and, if you’re not disciplined enough, you’ll be unsuccessful. Opening up your store isn’t all that hard, it’s the making and maintaining of sales that takes non-stop dedication and determination. A lot of issues you’re likely to incur are out of your control, so you’ll need to constantly adapt to succeed. Without discipline, this is near-on impossible.
As cliché as it may sound, you’ve got to believe to succeed! If you don’t have belief in yourself and your business, you’re almost certainly going to fail. It’s as simple as that, so don’t invest into anything you don’t believe in. If you want to set up a drop shipping store, make sure it’s one you can put your faith in before you start; if not, you’re just going to waste your time and money.
Having faith in your own business doesn’t mean you should automatically have it in others; you’ll need to be able to spot fake ‘experts’ and ‘entrepreneurs’. It’s one thing to take advice from a genuine, verified expert in the field but if you listen to every Tom, Dick and Harry that claims to be an expert, you can almost guarantee the information you’ll get will be useless. These online mentors that claim to make millions in their first week are almost certainly lying to gain memberships from those that need help building their business, with no care or regard for their ‘students’ at all. A lot of these fake expert’s lack teaching skills and, in some cases, over all people skills too. However, they are extremely good at selling their program(s) / live events. There are even a few that don’t even know what they teach! Try not to buy into these ‘get rich quick’ mentoring schemes because the odds are that they’re fake and ineffective. Building a business takes time and patience, as I’ve already mentioned.
Of course, there is the very rare instance where somebody has managed to create a successful business quickly, but the chances are so slim that you’d be a fool to put all your hopes onto this. You’ll find that even people with good knowledge of the drop shipping industry and unintentionally give bad advice. It doesn’t mean that you’re being lied to, it can simply mean that the advice doesn’t apply to your business or specific niche. It’s always a good idea to get some experience in retail sales before jumping into drop shipping to give yourself an understanding of retail psychology and customer behaviours/expectations. But if in doubt, follow your gut; you may be surprised how much you can know by intuition.
One other very important character trait you’ll need is thick skin. You are guaranteed to get shipping issues, chargebacks, customer complaints, fraud alerts etc… At first, you’ll have a steep learning curve. Often when a business fails it can easily relate to customer issues. It will become easier as you gain success but during your start-up period it will be stressful. Getting through it will be difficult but, once you’re on the other side, you’ll be glad you stuck with it.
As much as you need to ensure that you’ve prepared yourself, you’ll also have a lot of outside issues. One of these may be unreliable suppliers. You may have the determination you need to succeed but, if you have unreliable suppliers, your business will be in big trouble. Your supplier not only offers you the products at wholesale rates, they also complete the tasks of picking, packing and delivering the order to the customer, so they’re extremely important. But if/when the process goes wrong, you’ll be the one that has to explain the situation to a potentially irate customer. Even if your supplier is trying their best, issues may still arise but there are a few things you can do to keep things running smoothly.
It’s a wise choice to work with multiple suppliers to avoid running out of stock and to ensure that you can fulfil as many orders as possible without delay. Even with multiple options, you should still try and pick reputable suppliers as they will make sure your items are well packed and shipping quickly. Some may even include your marketing material, giving your business validity and further exposure. It may cost a little more, but it will be worth it. This being said, it’s still a good idea to ask your supplier(s) to regularly send you an inventory report or, if possible, track their inventory in real time. This will ensure that you can adjust your store to reflect availability and will also minimise your unfulfilled orders.
Although legal liability issues aren’t a common problem for drop shippers, I did feel it was worth mentioning. Some suppliers aren’t as legitimate as they claim, and you don’t always know where the product(s) come from. Sometimes suppliers may even illegally use a trademarked logo or another company’s intellectual property to give an appeared validity and trust to their business. This potential problem can be avoided with a strong Drop shipping Agreement Contract, which is something you’ll want to keep in mind when choosing your suppliers.
Two of the most off-putting realities of the drop shipping industry is the low profit margins and the high rate of competition. Seeing as you don’t have to manage or store your inventory, your overheads are low… but so are the returns. Less money in means less money out. You’ll have to do a lot of business to stay afloat, let alone make a profit. Most of the money made from each sale will go to the supplier, what you earn is skimmed from the top, which is hardly enough to cover expenses such as; marketing, maintaining your site and covering office hours. You’ll notice that your profit is largely determined by your traffic so, if you decide to build an ecommerce brand from scratch, you’ll be struggling for quite a while as your build your client base. It’s much easier to approach drop shipping if you already have a regular traffic source.
There will always be the overly optimistic entrepreneurs that focus solely on the ‘low overhead’ aspect, ignoring the above information. But because very little capital is required to start your shop, the low barrier of entry means a lot of competition. The most popular markets will suffer the most, but the struggle is visible across the board. The bigger the company, the more they can reduce their mark-ups to offer the lowest price. To make things worse, the chances are you won’t have an exclusive deal with your supplier(s). A number of your competitors may actually be selling the exact same products as you and, if you’re just starting out, your rivals may have the experience and resources to undercut your prices.
Everything I’ve discussed so far is very important, however the most important thing to get right is your relationship with the customer. You can have the best business model in the world but if your customers don’t like you, you won’t make any ales. Your role doesn’t end as soon as the product is dispatched, you’ll want to stay connected with them until they’re satisfied with their product(s).
Delayed shipping is a big issue for customers, especially since Amazon began their Prime delivery, allowing customers to get their products in a single day. However, drop shipping products are often delivered from China, so you’re looking at a minimum of about 20 days shipping time and people just aren’t willing to wait that long. ePackets are a good way to get a slightly shorter delivery time and they’re trackable too! Not all products can be posted this way, so the customer won’t always be able to track the product(s) and may potentially lose trust in your store. Because of this, you’ll need to ensure that not only the product, but the entire shopping experience with your store is worth the wait.
Another BIG reason drop shippers fail is because a lot of people believe customers are willing to wait 24 hours for a response after leaving an initial message. It’s way more likely that the customer will potentially purchase elsewhere, even if the price is a little higher. Customers are often pressed for time, and time is money, so it’s sometimes worth paying a little more for an item if they can get immediate answers / resolutions to their queries. By responding as soon as possible, you have the potential to steal plenty of business from your competition.
In standard ecommerce, when a customer has a complaint about the product or service, you can address the problems yourself. In drop shipping, you’re held responsible, but you also have no control. You want to cover yourself in as many ways as possible as bad reviews early on can end your business before it starts.
It’s not just about responding to customers. You’ve got to reach out to people too, whether it’s to suppliers, customers, marketers… you will need to make calls to initially build your business. Being online doesn’t mean that you can avoid actual contact. You may think you can get around it with emails, but that just doesn’t work. There’s only so much you can do by email and you can get issues resolved so much quicker just by picking up the phone. Emails are impersonal, not matter how much you try to make it seem personalised, and people love to hear a real voice. If you’re not prepared to make and take plenty of phone calls, this probably isn’t the business for you.
There are a lot of places for your drop shipping business to fail. It can be quick and unexpected and hard to accept but, with a good plan and lots of research, you should be able to avoid and/or overcome these issues successfully. Don’t get hung up on keeping your business the same, you’ll always have to be open to adapting and growing in ways you didn’t expect. At the end of the day, if you do enough research and have plenty of patience, determination and faith, you should eventually see your profits grow.