The dropshipping model of e-commerce has numerous benefits.
Its startup costs are low, it offers access to millions of buyers, and has the potential to be wildly successful. So much so that, it is estimated that the dropshipping industry will be worth over 500 billion by 2025.
It is, therefore, no surprise that you would want a piece of the lucrative dropshipping pie. However, whether you are a beginner or a veteran, it would be wise to proceed with a clear understanding of dropshipping mistakes to avoid.
Such knowledge could save you from making losses or sinking your business altogether. So, to help you avoid dropshipping doom, here are key dropshipping no-nos to steer clear of.
One of the first things you will have to do as a dropshipper is to choose a niche for your business. This should ideally be based on proper market and product research data.
A common mistake that most dropshippers make is venturing into a niche that is very narrow and leaves no room for growth.
Take nail polish, for instance. If you choose that as a niche you may make sales but it is a very limited concept. In contrast, if you ventured into nail care products in general, you could offer more variety, attract a wider pool of clients, and subsequently make more sales.
The goal here is not to choose broad undefined niches. Rather, to go for product categories that offer some flexibility.
Dropshipping does not necessarily have to be a 9 to 5 job but it is not an autopilot business either. Whether you have automated systems or not, you will have to put in some effort into attending to various aspects of the business.
Key areas that will require your direct input include:
- Ensuring customer orders have been shared with your suppliers for fulfillment
- Responding to customer inquiries, complaints, and feedback
- Marketing your dropshipping store
- Ensuring that any automation systems you might have are working as required
Consider setting apart two or so hours of your day to handle such matters. If you are caught up handling other activities or need a break, you could also hire a virtual assistant to help you.
At a glance, it is easy to imagine that certain products are popular and would thus sell out quickly.
At the end of the day, your opinions and preferences are not a bad thing. However, if you would like to avoid epic failures, it is best to work with analytic data.
Analytic data, like that provided by Facebook Insights, helps you understand your customers' shopping habits better. It gives you insight into what your target audience likes and needs so that you can curate your product listings accordingly.
Picture going to a supermarket only to find no aisle guides and an unfathomable order with no natural flow. How long would it take you to shop? More importantly, would you shop or try to find a more organized supermarket?
This example is exactly what it is like to shop in an online dropshipping store that is poorly organized. If customers have a hard time finding what they need or keep having to re-enter their details, about 30% of them might abandon their carts.
Online dropshipping store platforms such as Shopify are quite user-friendly. When you sign up there are numerous templates that you can customize and apply to your e-commerce store. Alternatively, if DIY online store setup is not your specialty, hire a pro.
- Logical and instinctive flow of site pages
- Proper categorization of products and services. (Try and tag products too as this can make customers' product searches much easier)
- Well-displayed tabs to access all the categories
- A legible font
Marketing via video or poster ads helps to draw customers to your dropshipping store. Other methods such as newsletters and email notifications for special offers also help maintain existing customer bases.
Nonetheless, video ads and posters can not be sent individually. You will need to find a platform to run them on. To get this right, keep your target audience in mind as you compare social media platforms.
For instance, if you are targeting a more general audience of all ages, Facebook would be ideal. It has a more inclusive user demographic. TikTok, on the other hand, is more of a preserve of a much younger audience.
Choosing the right platform is also important in ensuring you get true value from your advertising budget. It defeats the purpose if you pay to run ads and hardly get any conversion in terms of sales.
As a dropshipper, you do not handle any stock. It is, however, crucial that your customers can see how many units of a product are available in your online store. This is where inventory management comes in.
It can be quite tasking to keep tabs on different suppliers to find out what they have in stock. You would then have to update the inventory levels on your e-commerce store.
This is time-consuming and exhausting. Yet, it is very important if you are to avoid buyers ordering products that are out of stock.
Fortunately, you can automate inventory management. Inventory apps automatically update such stock information between supplier sites and your dropshipping store. They make your work easier and also diminish the odds of posting erroneous information.
Most suppliers require you to fill out order details on their platforms so that they can fulfill them. This usually entails filling in your store as the 'billing address' and your customer's address as the 'delivery address'.
If you make any errors when filling in these details, the orders will likely be shipped to the wrong destinations. Therefore, it is advisable to always confirm such details before you move to the payment step.
Customer care is a fundamental part of becoming a successful dropshipper. If you are polite and helpful, customers will likely give you a chance to rectify any errors or complaints.
Prompt responses and proactive service are equally recommended as they make customers feel valued.
Poor customer care is the fastest way to end your dropshipping store. Endeavor to always maintain cordial interactions with your customers. Remember to also remain calm even when faced with harsh criticism.
While customer service may not be your strong suit, be wary of outsourcing this service.
Granted, you can probably find a good freelance assistant. The problem is, they may not represent your dropshipping store in the right way. Involving a third party can also compromise your customers' confidential information.
Dropshipping requires investing lots of trust in your suppliers because you never get to see what they send out. It is thus easy to find yourself offering low-quality products that end up disappointing customers.
This could result in returns and negative reviews about your store.
Where possible, it is advisable to buy some samples from your supplier before you engage their services. This will allow you to evaluate the quality of products that your customers will be receiving. You could also use other methods to monitor product quality such as:
- Using a dropshipping company that only lists vetted suppliers
- Reading through supplier reviews and ratings; multiple low ratings are always a bad sign
- Evaluating product prices; if the deal is too good and it is not even sale season, be wary of the quality
The good news is that you will have a wide array of options when it comes to e-commerce platforms. The not-so-great news is that it can be tricky to find the right one for your needs.
Before you sign up for Shopify, Woocommerce, or any other platform, try and make a list of your needs first. This will give you a clear idea of what you require in a dropshipping store platform. Here are some highlight issues worth considering:
- Is the platform available to users in your country?
- What type of payment options would be ideal and convenient for you?
- Ease of use
- Availability of add-ons and integrations
- Availability of customer support services
- The costs involved and whether they are commensurate with the value you will get from the platform
Choosing the wrong e-commerce platform could affect your profits, customers' experience, and the overall performance of your business. It is not the kind of decision you want to make on a whim.
Understandably, accounting is not for everyone. Especially when you have a dozen other business responsibilities to tend to.
The problem is, if you keep running your dropshipping store without managing your money, you might soon find yourself in a financial hole.
Accounts give you an idea of whether your business is growing or whether you need to make changes. They also help you manage your business costs and expenditures to avoid making losses. To sum it up, accounts are a pulse point you should not ignore.
Try to commit to regular book-keeping. It is much easier to handle than an accumulated sum of accounts that you can hardly make head or tail of.
Consider automating your accounting systems too. It may come at a cost but it would certainly lighten your workload.
Suppliers are to dropshipping what anchors are to ships. Of course, no one intentionally chooses an unreliable supplier or one who offers poor services. It is simply a dropshipping business hazard.
Try to do as much due diligence as you can to find the right supplier. If your suppliers are within reach, make an effort to even go and visit their premises. Leave nothing to chance because the success of your business highly depends on this.
In some cases, it may also be worth it to have backup suppliers. They may not handle the bulk of your orders but you can have them on call, just in case another supplier fails you or is running low on certain products.
Lately, there seems to be an app for everything. From plugins to indispensable dropshipping tools like DSers that allow you to place multiple orders in seconds, automation is a breeze.
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Still, it is best to pace yourself and evaluate which of these apps or plugins is necessary. More so because most of them involve monthly subscriptions which are an added expense to your dropshipping business.
Further, remember to always end subscriptions that you no longer use or those whose trial period has ended and you will not be opting into. These costs may seem negligible but they can easily bleed your profits dry.
A good entrepreneur is keen on making profits. A great entrepreneur aims for growth because with growth comes even greater profits.
The truth, however, is that scaling your dropshipping business, or any other for that matter, is not easy. How do you really know that you are ready for the next big step? If you do indeed scale, how big is too big?
Being complacent will stifle your growth and leaping too high will make your operations inefficient. So the trick is to take baby steps. Slowly introduce new products and cautiously test new markets to see how you fare in them. Expand your venture gradually.
This approach protects your business from getting overwhelmed by an influx of orders. It also mitigates your financial exposure in case the scaling does not work out.
Finally, as you scale, always ensure that your suppliers are able to meet the new levels of your fulfillment demands.
Now that you know what to look out for, you can make adjustments to your dropshipping business and avoid such unnecessary losses.
If you have made any of the above dropshipping mistakes, don't be too hard on yourself. If you're just starting out, don't be afraid to make mistakes. From mistakes you’ll learn new things and get a chance to improve.
Stanley is the founder of NicheDropshipping, a dropshipping platform providing sourcing, warehousing, white & private labeling, and order fulfillment services. With over ten years of experience in e-commerce, Stanley has helped thousands of small businesses to build and grow their brands.