Dropshipping is an interesting category of trade that gained traction years back and has seen a succession of both good and bad experiences in different industry types.
The concept behind dropshipping is simple where the seller of the product purchases the item from a third-party and has it shipped directly to the customer by simply acting as a medium. The seller doesn’t handle the product directly and doesn’t even keep the products it sells in stock.
It runs on a different methodology when compared to the standard retail model where the selling merchant doesn’t even own an inventory. As per the need for order fulfillment the seller purchases it from the manufacturer or the wholesaler, working in association.
“33% of online stores use Dropshipping as a fulfillment method.
The popularity of dropshipping has thrown an array of advantages to the suppliers and merchants. Let’s take a look at some factual statements that prove this statement.
-Manufacturers who practiced in dropshipping were 18.33% more profitable than the ones who applied the conventional ways.
-eCommerce retailers gained 50% more profits who used dropshipping when compared to others who weren’t involved in the concept
-34% of Amazon sales were successfully accomplished via dropshipping in 2011 which led to its increase ever since then
Considering all the above mentions here are a few crucial statements to gaze that contradict the success achieved by dropshipping.
–Mostly 90% of the newbies suffer failures in the first of Business months being annoyed with the unexpected sales.
-And on top of it, 84% of the eCommerce retailers state that finding and securing a reliable supplier is the biggest challenge they face in the initial stage of business development.
-Successful dropshippers say that the highest success rate of dropshipping business hardly goes above 10% during the first year of operations.
Now this calls for us to detail the top reasons that account for the failure of dropshipping in the majority of the cases which will help entrepreneurs and budding marketers to pay close heed to the areas of improvement.
[Prefer Reading: “15 Ways to Improve your Online Sales during COVID-19.”]
Top Reasons to Why Majority of Dropshipping Stores Shut Down
#Blind Business Decisions
This is where a person can witness a great setback if he/she would just go with a hit and trial method.
Dropshipping doesn’t work with this approach. You need to do the ground up regarding selecting the area/locale to target, making the right decision to work on a particular niche, checking the feasibility of the niche with the marked locale, possibilities of shipping products, workforce availability as per place, and more.
Say if you step up in the market with a niche relating to apparel and clothes and try to market the US audience by promoting your brand, you’ll surely end up with no expected results. (as attracting US traffic is not a cakewalk, the area is widespread where you have a big pool of competitors to drive through)
Nevertheless, if the fortune is tried targeting small locales like Ukraine, Latvia, etc. your efforts will be paid off.
All the practical use cases must be noted and taken into consideration before putting yourself into the real game of running any business.
#Failed at Product Promotion
Getting well acquainted with the concepts of dropshipping isn’t enough. When you are into the business world, you must know the value of marketing.
There are many who might be good dealing with dropshipping while choosing the wrong platforms to market your products and stores could let their knowledge and efforts go in vain.
Prefer to choose some prominent branding channels like Google Adwords, Facebook Ads which aid great opportunities to make your brand and products visible globally.
Remember, the competition is huge and ever-expanding and you might find similar products (as that of yours) that are progressively being sold on various shopping stores then it’s time for you to buckle up and make sure that it’s only you who have to market them.
Make use of multiple platforms to sell your items but choose the best and right platform that delivers fruitful outcomes in the form of accelerated revenues and high business gains.
#High Product Prices
High product prices can get you high business risks if you try to make exceptional or unrealistic profits.
Visitors and customers, today, have a habit to search N number of products, compare their features, cost, and quality, and then make a final say. Thus, the maximum of your store visitors will surely search for the same product in other stores and compare it with that of yours.
And if they get better deals with reduced prices anywhere else, you would tend to disappoint your visitors and let them transit their way towards your competitors. So it’s better to keep fair low prices of your sale items while staying profitable and wise.
You must know how to maintain the balance between the price lists.
#Substandard Customer Support
Dropshippers may succeed in handling their inventory and store however they fail in the management part when they underestimate the importance of customers after finishing the product delivery.
Dispatching customer’s product isn’t the end role played in the dropshipping process, one has to be there for customers after final delivery to answer their queries, solve their grievances and stay in touch with them unless they are fully contented with their purchase.
Delivering the best and satisfactory customer experience has become the top priority of almost every business today as customers stay loyal and connected with the companies with whom they have had a worth remembering and a great experience.
[Prefer Reading: “37 Powerful Customer Experience Statistics 2020.”]
#Retarded Product Shipping
You might relate with yourself that while ordering a product item online, the secondary crucial aspect, after finalizing the product, that influences our buying decision is the time frame of the product delivery.
Haven’t we all been impressed and moved by Amazon since it started its Prime Delivery? The brand has seen a huge acceleration in orders as they get purchases and deliveries executed in a single day.
But dropshipping doesn’t see the same angle and as usually, it is from China, the minimum shipping time of 20 days is a long time for which people can’t wait and won’t consider it even as an option.
This is why dropshipping fails majorly. Moreover, most of the dropshippers use the traditional ways to complete shipping which are accountable for late deliveries, failure of tracking orders, delayed speed, etc.
And this further adds to the reason why dropshippers fail to build customers’ trust.
As said dropshipping is a business trade where many have witnessed success and many have seen losses. At minute levels, there might be many other distinguishable reasons why dropshippers failed to acquire the expected results.
#Lack of Patience & Persistence
If you are impatient and cannot wait for long to get the expected results, setting up a dropshipping store would not be of any benefit.
A retail fulfillment type method involves much effort and trouble, especially in the beginning, which needs a high level of patience. You must be able to use your perseverance to illustrate the technique of single-mindedness that will deliver fruitful results, gradually, with the ongoing endeavors.
These two virtues are necessary for running any type of business; but if you are into dropshipping, you can’t proceed without imbibing these values.
[Check out what Raghavendra said about his failure in dropshipping and what were the pain points he unveiled which became the significant reasons for closing his e-store.]
How to Cope with Dropshipping Failures? Experts Advice
#Study Different Business Models before Proceeding
There is a huge learning curve before venturing into any business type and dropshipping as well needs a deep search, research, and ground up.
One must not jump into the business aspect so quickly and must take a good time to study the business networks, its flow, the investments, the returns, the time to retrieve the success rates, and more. (find out about Facebook Ads, how to make interesting ad copy, products to include/exclude from stores, etc.)
(Nate Materson, Maple Holistics)
#Focus on High Volume Keywords
Go for targeting niche products that have low competition but range high in keyword search volume. There are many experienced marketers and online marketing companies who know the tactics and have played this game very well.
(Jason Coupon, The Critter Depot)
#Find a Reliable Supplier
Finding a supplier is itself a tough task and above that getting a reliable supplier for your niche product is a hard nut to crack; however, go through the time to find one as sometimes it becomes easy when companies offer on their websites that they will drop ship.
(Jason Coupon, The Critter Depot)
#Add Value to Your Business
Never neglect your audience of action, i.e. your customers. Just playing the part of an intermediator, accepting the customer’s order, and forwarding it to the vendor/supplier/manufacturer won’t fulfill the purpose and derive success.
You need to create customer loyalty at your end by enhancing the efforts made on customer service. This is where you add the real value to the business and can succeed in dropshipping as I did.
(Max Robinson, Fish Tank Bank)
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