In order to run a successful dropship business, you are going to have to be in the right mindset. There are some things that you need to keep in mind before you start trying to dropship products online. Since dropshipping doesn’t require a whole lot of startup costs, I can definitely see the appeal in this business model.
When you run an online store that only offers dropshipped products, you don’t have to worry about inventory and you don’t have to worry about product fulfillment.
All you have to do is sell the product, take orders and make a decent profit. Easy right? But there is more to it in running a successfully dropshipping business.
Unfortunately, it’s not that simple and with anything that sounds too good to be true, there are always some gotchas.
In theory, dropshipping sounds like a great idea because it’s inherently scalable without you having to do a lot of work up front. But when you dig down a bit further, it becomes obvious why dropshipping may not be ideal for many people.
Most people try to open up a dropship website expecting it to be easy, but in reality it’s much harder to operate a dropship website than a traditional online store and I will explain the reasons why below.
You Will Need To Charge Higher Shipping Costs
Often times, you will require the use of several dropship distributors to fully flesh out the product selection for your store when trying to successfully run a dropshipping business.
Using 2 or more different dropshippers means that 2 or more companies will be making separate shipments to your customers, which means that 2 or more companies will be charging you their own separate shipping costs.
If I’m a customer and I buy products from your store across 3 different distributors, you will have to charge me a much higher shipping cost just so you can break even.
This is why you should always choose expensive items to sell. This can help cushion the shipping costs and offer you greater profit margins.
The only way around this is to only use one dropship distributor or wholesaler which may not carry the breadth of products that you need. The result is that you will have to pass these extra costs onto the consumer which reduces your price competitiveness.
Having To Ensure Product Availability
Thousands of people are making money through dropshipping on eBay because it eliminates the need to keep an inventory, but this can lead to some setbacks. One of the biggest mistakes dropshippers can make is not ensuring that the items they list on eBay are still available.
This mistake becomes frustrating for online buyers, driving away potential repeat customers and creating financial hardships for you.
Avoid the pitfalls of selling discontinued or out-of-stock items by checking your suppliers’ inventories frequently to see what’s in stock and what will be leaving their stores soon because of low quantities.
Collecting daily reports from your suppliers will help you maintain a reputation of quick and reliable fulfillment with your customers.
Remember, your business needs its reputation to stand out from the competition, and dissatisfied customers can quickly put your shop or website at risk of being permanently shut down by eBay if you are having difficulty fulfilling orders.
Having To Ensure Product Fulfillment
You have made sure that your listed items are available. Now it’s time to keep your customers happy by fulfilling all orders quickly and efficiently. Reputation is everything on eBay.
There are hundreds of online sellers that are competing for sales every day, so be sure to stay on track with product fulfillment. This is the main key to successfully running a dropshipping business.
The biggest challenge with fulfillment is that ultimately, it’s out of your hands. You can send your customers’ orders to your supplier, but it’s up to them to follow through. If your supplier is unreliable, it’s time to move on and find another product source.
A reliable supplier will not only stay on top of shipping the items quickly, they will also keep you up to date on the status of your orders, letting you know of potential delays or issues so you can relay the information to your customers.
Issues will inevitably arise now and then, but keeping in contact with both your suppliers and your customers will keep any potential negative feedback to a minimum.
You Have To Watch Out for Unreliable Suppliers
There are countless suppliers to be found online, but many dropshippers fail to properly screen or evaluate the ones they choose before attempting to make sales on eBay.
This mistake can quickly backfire in the form of late deliveries and poor-quality drop shipped items.
Remember, the customer isn’t going to your supplier for what they want.
They are looking to you to provide them with the items they paid for in a timely manner and in the quality they expect.
Even if the supplier is at fault with an order, the customer only sees you and will react accordingly with negative reviews or complaints to eBay. Services such as online directories can save you time by offering lists of suppliers that are pre-screened for quality and reliability.
Dropshipping Can Be A Logistical Nightmare
You might think that since the dropship distributor is doing all the work that you can just sit back and relax. Unfortunately, you have to deal with your customer base. You have to be the one that answers all of the questions. You have to be the one to apologize when an order doesn’t arrive on time.
The main problem is that when you use several different dropship distributors, getting the entire order to the end customer can be a logistical nightmare. All distributors will have different shipping times and will be shipping from completely different locations.
If a customer orders products across 3 different distributors, they will end up receiving 3 different packages at varying times. If an order is particularly time sensitive and needs to be rushed, you will have to make sure that all of your distributors can deliver the product on time.
In effect, you are staking the reputation of your online store and linking yourself to all of your dropship distributors in a single chain.
If even a single distributor is unreliable, then it will reflect negatively on your online store. These are some of the things to keep in mind on how to successfully run a dropshipping business.