This article will cover some of the most difficult aspects of dropshipping. Keep reading to learn everything you need before you start your online business.
There are many opportunities to do business with the advent of the internet. The dropshipping is one of the most popular. A large number of eCommerce entrepreneurs have adapted this business strategy, which has a net worth of $162.44 trillions (2019 statistics). Dropshipping is often linked to the increasing number of online shoppers, which is why dropshipping has seen an incredible rise in sales. However, not every business is easy.
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Drop-shipping is a great option for online sellers and retailers. The market is growing at 25% per year.
eCommerce platforms must invest significant amounts in warehouse space management to keep their inventory stock current. Dropshipping, on the other hand, will not incur any additional overhead costs for inventory management or storage.
Dropshipping is a great way to save money. You don’t have to purchase your products before you sell them. What are the down sides to this model of business?
Dropshipping can be a win-win situation for retailers. Dropshipping allows eCommerce companies to fulfill their inventory needs without having to manage endless inventory warehouses. This reduces storage costs and inventory carrying cost. It also eliminates the possibility of stock that might not sell.
Dropshipping allows for faster delivery as inventory can be sourced from many locations. Some of these locations will be closer to customers than the company’s warehouse. Dropshipping can lead to higher customer satisfaction as shoppers are more likely find the items they need in stock (due the increased inventory) or to receive them faster (due the greater geographic diversity of the sources).
Dropshipping Challenges
Dropshipping is just like any other business model. There are many challenges that you must overcome and some mistakes you need to avoid.
We have compiled a list of the most common problems dropshippers will face in the next paragraphs.
You can build your own brand while selling third-party products
Dropshippers can open one-product or limited-time stores and they will happily close them down once the trend has ended. Social Media advertising has become more costly. This is why dropshippers can’t afford to lose customers and have to start over every time. The key to building a dropshipping business is investing into the creation of your own label.
How can you build your brand if you don’t even come in contact with the products that you sell?
Dropshipping is a challenge because of this. It is expensive and time-consuming to create custom products, especially if you are dealing with Chinese suppliers or have limited funds to invest. At least at the beginning of your dropshipping career you can customize your products packaging.
Private labelling is affordable and possible with very low MOQs. Once you’re ready, you can even consider applying your logo to your products. This is the first step in overcoming dropshipping’s next challenge.
Find a reliable supplier
Drop-shipping is not without its challenges. Finding reliable suppliers is another challenge. You could compare finding the right supplier to drop-shipping with searching for a needle among a maze.
AliExpress is the preferred platform for beginner dropshippers when searching for products. AliExpress isn’t a good long-term option as it is a B2C platform that has many resellers, who don’t often offer after-sales assistance or fast shipping.
Dropshipping is gaining popularity due to its lucrative business results and increasing awareness. We have also seen an increase in private dropshipping suppliers. However, not all dropshipping suppliers will meet your standards or be able to afford you the same quality.
Only three entities are required to complete the entire process: customers, suppliers and stores.
Dropshippers are responsible for the delivery of the product to customers. What if the collaboration you have with your supplier is inadequate?
Your business will suffer. It is enough to find the supplier that will comply.
Yakkyofy is the supplier that can source high-quality products for you at competitive B2B prices, and offers fast shipping.
Yakkyofy has access to over 12,000,000 products worldwide and can fast ship these products to many countries. The software this supplier offers can automate the entire order fulfillment procedure, so your orders are fulfilled immediately after you receive them.
Yakkyofy also offers a variety of other services such as:
- Shopify, WooCommerce, and eBay integration
- Multi-store management dashboard free of charge
- Private labelling of products, packaging and services
- Customer service specialists available.
- No cost Warehouse space
- Bulk Shipping to Custom Locations or Amazon FBA.
Many people view the selection of a supplier as secondary. However, don’t let this fool you. It is crucial that you choose the right partner for your business. This is especially important as your order volume increases as you scale your market.
Customers will trust high-quality products to build customer loyalty
You may have heard the expression, “Sell the right thing at the right time to the right people.”
This one should not be difficult if you have already conquered the dropshipping challenge. You can be sure that your clients will be satisfied if you offer high-quality products. They’ll most likely return to your store for more!
Bonus tip: Display your product and ads in an engaging way. Make sure to add high-quality images and videos that showcase your goodies in the best light!
Shipping and Processing Time
If you haven’t shipped your products in bulk Amazon FBA you won’t likely be able get them delivered next day. This is the most difficult part of dropshipping.
Shipping and processing time management is a breeze!
It is important to be truthful with customers. Don’t lie about shipping times. Make sure you include in the shipping section actual times for your parcels. Your clients will appreciate you being honest and will keep your returns and complaints to a minimum.
Bonus tip: Provide excellent customer service and keep your customers updated on the shipment status. This will build trust and confidence in your company.
Handling Customer Returns
It can be a bit more complicated when a third party is involved.
Dropshipping policies are heavily dependent on the suppliers. Most of them don’t offer returns services. AliExpress resellers are particularly affected by this, as many disappear after they close a sale. Second, shipping back parcels to China can be very expensive.
To understand how the service operates, make sure to get in touch.
You should also include a return policy for your dropshipping shop. This will help you keep customer complaints to a minimum. If you receive too many complaints, bad reviews, or have to ban your account, it could result in payments being frozen.
Facebook, Shopify and PayPal bans: How to cope
Facebook, Shopify, and PayPal will be your best friends if you launch your dropshipping business. These tools are used by a lot of dropshipping entrepreneurs.
Unfortunately, if you don’t follow their regulations or don’t keep your clients satisfied, your account could be banned.
What can you do if your ban is imposed? To be fair, prevention is always better than treatment.
- Follow the guidelines carefully. This will reduce the chance of your order being blocked.
- Give your customers real information about your products, and don’t mislead them.
- Don’t promote your products too much. Sometimes, it could lead to a ban.
Stock Out
Dropshipping can be challenging during busy times of the year, particularly Christmas and Chinese New Year. There are often times when you sell most. That’s why it’s important to plan ahead and stock up on your top-selling items. Although you don’t need to purchase thousands, you should have enough to ensure that your orders are fulfilled on time.
However, not all suppliers offer this service. Some may charge a handling fee to store your products in their warehouse.
Supplier Transparency & Compliance
You are the customer’s representative and responsible for ensuring that your supplier complies with certain regulations. The Better Business Bureau can be a great source of information. You can also check with state regulators. These checks do not provide any information about the supplier’s past performance. You may have a different experience.
Strong service level agreements (SLAs), which you have with suppliers, should clearly outline your expectations for transparency and compliance. Also, the consequences of breaking the SLA. You should also ensure that you have the technology available to monitor the performance of each supplier and determine if they are adhering to SLA guidelines.
Managing Numbers
Dropshipping increases the availability of your inventory, but it makes managing the inventory more difficult. While supplier A might run out of inventory, supplier B could have more. If product isn’t moving quickly enough, you should be able price the entire supply chain. You must also be able to access tracking and order processing information at a moment’s notice.
These details are too complex to be handled manually. If you don’t have the technology to automate order processing and exception handling, as well as shipping and inventory between dropship suppliers and retailers, your business’ growth will be limited.
Rely on third-party suppliers
Dropshipping is a service that allows retailers to rely on their suppliers. The retailer is responsible for any order that is not fulfilled by a supplier. The retailer will also be affected if the supplier goes out of business suddenly.
If a retailer had physical inventory, it would make these types of problems less severe. This would allow operations to continue while they search for a supplier. A working contingency plan is essential for any new brand.
Dropshipping gives third parties control over quality control and product availability. Dropshipping denies retailers the ability to inspect products before shipping to customers. It also makes it difficult for them to offer value-added services such as pre-installing software or customizing jewelry messages.
Competitorship at a high level
Dropshipping is a simple way for retailers to make money. This means that you will likely face significant competition. Unless you have an exclusive arrangement with a supplier for dropshipping certain products, your business is open to selling the same products as others.
Dropshipping will make it harder for retailers to stand out among the crowd as they won’t have unique products and services. Other ways retailers can compete with dropshippers include providing a memorable customer experience and a user-friendly ecommerce environment.
Profit margins are tight
Dropshipping is a way to reduce your revenue by outsourcing a part of the order fulfillment process. To make the same profit as traditional retailers, you’ll need to increase your sales volume.
Difficult customer support
Retailers who don’t have inventory control may find it more difficult to provide customer support if something goes wrong. The retailer might need to deal with the third-party seller if the customer has questions about the product or claims that it is defective. This adds to the administrative overhead and creates more work than if there were no suppliers involved in order fulfillment.
