Dropshipping is a newer form of e-commerce that excites many hopeful entrepreneurs. Selling products online without holding inventory? The ability to work from anywhere, anytime, even in your pajamas? It sounds easy, and specific aspects of dropshipping are. You can have a website up and running in minutes with platforms like Shopify.
However, dropshipping is not without its caveats. While it may seem like less work than traditional e-commerce and brick-and-mortar stores, there are still challenges that online sellers face. Here are some frequently encountered difficulties and how to address them:
Finding the right suppliers
Finding drop ship suppliers is the most critical step when establishing a drop shipping business, besides setting up your website. If you want to sell products online, you need, well, products. Dropshipping saves you the trouble of making them yourself or purchasing them beforehand, but you must conduct thorough research into which companies you want to partner with.
Entering a relationship with a supplier may sound easy, don’t you just pick up the phone and order? But the process is much more rigorous. Some dropship suppliers out there are fraudulent. Some will try to take advantage of you. Others might be a hassle to work with. These companies are necessary to avoid, so if you want to be a dropshipper, save yourself a significant amount of trouble and do not neglect your homework.
How do you find legitimate suppliers? Platforms like Oberlo and AliExpress simplify the task. However, you still need to ensure that your partners are in strategic locations, communicative (international suppliers may not speak English), and reliable. Consider asking drop shippers who have used particular manufacturers in the past about their experiences with them.
You must also pay attention to how compliant and transparent your suppliers are. Are they following all the regulations they need to? Be sure to enact strong service level agreements (SLAs) that detail your expectations of one another and potential consequences in case of violations (there is technology available to provide insight into how your suppliers are performing regarding your SLA guidelines).
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Dealing with shipping issues
One of the most significant risks associated with dropshipping is that when something goes wrong, your customers will turn to you to fix it, even if it’s not your fault. Did the incorrect quantity ship? Was an item damaged? Was there a delay? Is an item out of stock? Did a shipment go to the wrong address? Whatever it was, you need to be ready to pick up the phone and call your suppliers to resolve the matter.
Ecommerce Insiders recommends that you retain some proof of whatever shipping address you provided your supplier so that you know whose fault it is. It’s time to discuss remedy costs. Remember to review every invoice your suppliers send you carefully. Sometimes, you might be able to catch an error on an invoice before the items leave the warehouse, so your customer never has a problem with their order. If something happens, it is your brand’s reputation on the line, not your suppliers’, so be alert and don’t ally with partners prone to mistakes.
Branding and marketing
The entire reason why consumers purchase from you and not someone else when dropshipping is branding. You need to be more trustworthy and communicative than your competitors (of course, affordable prices always help). The dropshipping business model frees up a great deal of your time to focus on outreach, so be sure you establish a brand that people are willing to tell their friends about.
There is also the issue of packaging. Other e-commerce stores can print their logo on their packages or include a few stickers, but you do not always have such a guarantee. Thankfully, some suppliers are willing to include branded marketing material with your orders to be more competitive and emphasize that you are the seller, not them. According to a study from Dotcom Distribution, 40 percent of surveyed consumers said that they would be either somewhat or much more likely to return to an online seller if their order arrived in a “gift-like or premium package.”
Such suppliers are ideal partners, but if you cannot find them, you must compensate for this with further online outreach. Something that never hurts is sending a thank you note whenever people order from you, whether it’s an automated email or a personal social media message.
Dropshipping is a convenient business model for many entrepreneurs, but its flexibility does not mean it’s easy. If you plan to become a drop shipper, what challenges are you preparing for?