Dropshipping is an online retail method where a person sells third-party products on their website. When they receive an order from a customer, they will purchase the item from the manufacturer and send it directly to the buyer’s address.
The great thing about dropshipping is that you don’t need inventory or storage space. Dropshippers act as an intermediary, and their success will depend on the ability to attract visitors to the website. Furthermore, there is a low barrier of entry, and you don’t need lots of money to get things going.
Unfortunately, even if you have experience with online sales, you can still make various blunders. Before you start your dropshipping business, here are the five critical mistakes dropshippers make and how to prevent them.
1. Not researching international shipment opportunities
Most companies that do dropship get their merchandise from China. The manufacturers in this country can offer great prices and are able to send goods to the US and Europe within a week.
However, things don’t always go so smoothly. Due to the fact this is international trade, you need to consider customs, insurance, taxes, and various other things. Sometimes, the products can be stalled, causing customer dissatisfaction.
A good way to prevent this potential problem is by hiring freight forwarders as a middleman. Companies such as All Forward can help you identify the best possible forwarders for your specific needs.
2. Not creating a business plan
Dropshipping is the same as every other business. Planning is the key, and lack thereof can doom your enterprise from the start.
A lot of people have unrealistic expectations. The truth is, like a traditional business, more than 90 percent of dropshipping stores are closed within the first year. To circumvent the issue, you need to perform market research and create a feasible plan.
The basic premise of this model is making money based on the price difference. However, the costs tend to shoot up as you start working.
Perhaps the biggest expenditure is marketing. Creating a new website and promoting it to the point of profitability can take months and tens of thousands of dollars. When creating a business plan, you should be very conservative with your expectations and properly assess the profit potential.
3. Not being able to promote the website
Successfulness of a business is directly connected to your ability to attract customers. Having a nice-looking site or diverse assortment of products is great, but it won’t do you any good if no one comes to your product pages. A drop shipper has several options for advertising its website. You can use social media, Google, pay-per-click, and a few other methods.
Depending on the channel you are using, you might not even be able to penetrate the market. For example, if you are relying on SEO, you just can’t topple major players such as eBay, Amazon, and AliExpress. Or, if you are using PPC, the bidding cost can be too high. So, before starting the company, check if it is even possible to promote the items through your channel of choice.
4. Not going broad
The general idea of dropshipping is to choose a very specific product and stick to it. However, that doesn’t mean you should focus on one niche.
Often, entrepreneurs encounter hidden pitfalls when doing dropshipping. Some stubbornly continue with the same product even though it is not showing results. Alternatively, they might sell a product that was fashionable for a while, but it is no longer so.
No matter the case, you need to be more flexible. However, that necessarily doesn’t mean you should sell various unrelated products. It just means you should have several options at your disposal and change your assortment according to the current situation and trends.
5. Not having several suppliers
Like with products, you shouldn’t focus on just one supplier. Choosing the best provider with the lowest prices is crucial when starting a business. But, if they change their condition or pricing, you should definitely consider another option. Some of them will simply go out of business, leaving you without any merchandise to sell to buyers.
In some cases, the change of supplier will lead to the change of products you are selling. Luckily, drop shipping items are rarely brand names. They are often interchangeable, and you can get relatively similar stuff from another manufacturer.
Of course, if you decide to do so, you will likely have to change product descriptions on your website. But this will be well worth it if you can save a lot of money on the new product line or provide a better experience to your customers.
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I am Adeyemi Adetilewa, a media consultant, entrepreneur, husband, and father. Founder and Editor-In-Chief of Ideas Plus Business Magazine, online business resources for entrepreneurs. I help brands share unique and impactful stories through the use of public relations, advertising, and online marketing. My work has been featured on the Huffington Post, Thrive Global, Addicted2Success, Hackernoon, The Good Men Project, and other publications.