Are you just starting your journey to learn how to start a dropshipping business? There's a lot to learn including how to find dropshipping vendors, choose the right dropshipping niches, and invest in the best dropshipping products.
To get the most out of this education, you'll also want to avoid the mistakes that many other dropshippers come across.
Keep reading to learn about the most common dropshipping mistakes, why they occur, and how to avoid them.
Common Dropshipping Mistakes
Dropshipping businesses offer a lot of upside for entrepreneurs. They're easy to scale, cheap to start, and have low overhead expenses. However, that doesn't mean they're fool-proof. Many dropshipping businesses have failed due to poor management, bad decision-making, or a missing drop shipping business plan.
Here are the ten most common dropshipping mistakes:
Dropshipping businesses don't need as much management as other types of eCommerce businesses, but that doesn't mean you can go fully hands-off. You need to invest time and money into the venture if it's ever going to succeed. You have to come up with some dropshipping business ideas, seek out vendors, learn how to create a dropshipping website, and more. If you truly want to sit back and let the business run itself, you'll need to invest in dropshipping automation. This involves using a set of tools to automatically find the products to sell, upload them to your site, and start marketing them. You'll still need to make decisions yourself and handle the customers, but this takes out a lot of potential risk of human error and can help you maximize your chance of making a profit.
One issue that many dropshipping businesses run into is an inability to establish their brand. Since you neither create products nor handle them yourself, you need to work much harder to garner attention for your business. Using eCommerce marketing tools is key, and you can use eCommerce email marketing, eCommerce content marketing, and more to set yourself apart. If people don't know who you are, they aren't likely going to trust you enough to buy from you.
You should also work with your suppliers to get your brand added to as many aspects of the eCommerce packaging as possible. Your suppliers may be able to arrange for private label dropshipping, so your branded packaging and labels are added to all products. When researching this option, make sure you understand the difference between white label vs private label so you don’t sign a contract for the wrong thing. Even if that's not an option, you'll want your brand added to a packing slip and RMA form that's inserted into every order. This will help your customers remember your brand and also let them know the process and who to reach out to for any returns or questions they have.
Over-Reliance on Vendors
All dropshipping businesses turn over a lot of the decision-making and work to their vendors. But, this doesn't mean you can just expect your vendors to take care of everything for you. If you don't have a good relationship with open communication, you can quickly run into issues with your suppliers. This may be increasing lead time, backordered products, manufacturing problems, and more. By staying on top of these issues and working with your supplier, you'll know about the issues sooner and be able to react and help serve your customers better.
Product Quality Issues
One issue that can quickly destroy a dropshipping business is selling low-quality products. The dropshipping model is known for buying low-cost goods and selling them at a high margin. However, this doesn't mean you can purchase inferior products and expect to make a fortune from them. Customers still expect products that function and don't break in a very short period of time. In the late 2010s, a number of dropshipping businesses flooded the market with inferior-quality goods and lackluster customer service. This caused many businesses to fail and customers became disenchanted with the model. Many people were even asking "is dropshipping dead?" and "is dropshipping legal"? Stick with products that are worth their cost and always work with your customers to ensure you don't damage your reputation and lose sales.
Investing In The Wrong Software
The eCommerce software you choose has a direct impact on your ability to make eCommerce sales. You need to properly research the tools available to you before making any purchasing decisions. Product research, vendor management, order tracking, and more all have associated software that makes them easier to understand and evaluate. You can set eCommerce KPIs, track their success and reevaluate your decisions based on the data. This is an area where upfront investments can be higher, but the return on investment makes it well worth it. Pick the right tools for B2B eCommerce like one of the best B2B eCommerce platform and you’ll be on your way. You don't want to waste your time and energy on ventures that aren't going to succeed because you don't have the right tools for the job.
Confusing Website Layout
As an eCommerce business, your website is the most important tool in your arsenal. It needs to be easy to navigate, have a simple structure, and allow you ample opportunity for cross selling. One option on the market is a headless eCommerce platform. These platforms give you total control over every aspect of your site. Unfortunately, it also means you need to manually create every page and handle any technical issues that arise. This can be a daunting task and many dropshippers have had to abandon their original platforms to move to an easier-to-use option.
To avoid the headache of coding your own pages, you can instead use an online marketplace. These sites feature multiple businesses and have a preexisting customer base, making it easier to sell your products. For dropshippers, the best marketplace is BlueCart eCommerce. We take care of store design, eCommerce payment processing, and more, so you can focus on selling. You can even use it for a subscription website or any other kind of eCommerce website. Even better, all BlueCart customers also get listed in our wholesale marketplace where their products can reach 92,000+ buyers in the U.S.
Lack of Research
One of the biggest mistakes that any entrepreneur can make is not researching their chosen market. You can't assume you know what your customers want, you need to put in the effort to understand them. Look at the social media channels they use, the businesses they already shop at, the products they like or purchase online, and more. The more you understand your prospective customers, the more likely you are to be successful. Research is vital in establishing your business as the go-to destination for your market. Remember, research isn't a one-time thing. You need to continue to look at data about your market, so you can adjust to shifting trends and stay on top of your sales and tailor your dropshipping ads to the audience.
For more tips on how to dropship and avoid pitfalls, check out our free drop shipping for dummies guide, read some of our favorite dropshipping books, eCommerce books, or sign up for some dropshipping courses.
Not Performing Demand Planning
Demand planning is the act of researching customer demand trends and planning out for product offerings to optimize sales. In a traditional business, you'd need to purchase all the products in advance to ensure you could meet customer demand, but dropshipping businesses have more flexibility. Unfortunately, this means it's easy to wait too long and miss out on sales. Make sure you take the time to regularly look at how products are performing and what customers are currently interested in. You can use Google Trends to look at search trends and discover new products you should procure to make the most revenue. Just make sure to factor in seasonal demand trends and avoid jumping on the bandwagon too late, or you'll waste time and energy putting products on your site that have dwindling demand. The only exception to this is if you perform drop surfing and regularly switch between product types in an effort to get the most dropshipping profit margin out of each sale. Even the best dropshipping websites are only as good as their ability to serve customers what they want.
Dropshipping businesses need to keep pricing competitive while ensuring product markups are high enough to drive a profit. This relies on you understanding the difference between markup vs margin and keeping an eye on competitors' prices. You can neither price your products too high nor too low if you want to succeed. Keep an eye on your competitors' sites and try to keep your prices similar, but undercut them if possible. The only exception here is if your business is focused on reverse dropshipping. In this model, you procure higher-cost items and sell them overseas at a high margin. Since you're operating as a kind of luxury brand, higher prices won't push customers away.
Not Focusing on the Customers
Ensuring customer satisfaction is the key to how to make money dropshipping. Even more than other business types, your reputation can make or break you. Your online presence will drive sales and negative reviews or social media posts can cause customers to lose their faith in your business. Make sure to always handle customer issues in a timely and respectful manner to avoid causing trouble. If you don't have the time for this, you can seek out a customer service for dropshipping rep online through a website or board listing dropshipping jobs. It's important to put your customers and their experience first if you want to succeed. You can also work with reputable influencers to post reviews and content that highlights your customer service and product offerings to help make prospective customers trust your business. Instead of having to choose between affiliate marketing vs dropshipping, you can use both to showcase your focus on customers and increase sales.
Oops, I Dropshipped Again
The dropshipping model offers many benefits and can allow you to grow a successful business with little upfront cost. By avoiding the pitfalls listed above, you can key the revenue flowing in and scale your business more quickly.
You could also look into cross docking if you have a little bit of storage space and want more quality control.