In another article, I wrote about Why Dropshipping is Still an Attractive Business Model in 2021. This maybe considered by some to be quite a controversial or simply stupid article to write in this day and age, where it is generally considered by those established in the eCommerce world to be an all out terrible business model.
I stand by what I wrote in that article, but must point out that nearly every point I made comes with the caveat of requiring the use of professional, high quality services, like dropshipping suppliers actually based in the country you service.
The insanely cheap prices of Chinese suppliers' products on AliExpress, that you can mark up like mad, are not worth the customer dissatisfaction of a two month delivery time and horrific return procedures!
I would also like to point out that I said it was attractive, not good. I still refuse to give a definitive opinion on that.
You don’t have to invest a load up front for stock, true, but at the end of the day you will end up paying considerably more in product costs for any product you do sell.
Think about it like this, if you sold 2,000 widgets for $15 using the dropshipping model then you would be paying a much higher per product price like $10 because you are only ordering one item at a time.
Had you gone to the supplier and ordered 2,000 of the product upfront and had them all delivered in one simple order, not 2,000 separate orders that may have required follow up support from them, then they would have definitely been happy to give you a massive discount and you might have paid only $4 per item.
Massive savings in product costs means huge increases in profit per item and ROI. More money to spend on Lamborghinis and books!
A problem so bad that it got mentioned in the opening of the article.
Again, this can be negated using a decent, local supplier. This of course reduces the products available to you though as you can’t expect a dropshipping supplier to have such an extensive catalog of craziness and diamonds in the rough as AliExpress.
Slow delivery times is probably the number one reason people hate dropshipping, especially customers who don’t expect it, and is touted as one of the main reasons for it’s reputation being so bad that Facebook is cracking down on dropshipping, so make this the number one thing to try to avoid if you are getting into the dropshipping game.
“I don’t have to buy stock?! All I have to do is upload the provided videos and photos to my store and advertise them and the supplier does all the hard work?! That’s amazing!”
Yea... nah. Let’s not even bring up the troubles caused by dealing with suppliers far east of your customers for now and assume you found a good local supplier which reduces issues. Well, it’s your logo on the invoice emails, it’s your email address on the contact form, it’s you who sold them the product. Do you know the return rates of your items? They can be pretty high with clothing items averaging 30-40% and the average return rate of ecommerce being estimated at 20%.
All of this eats into your time and money. And though they could be considered standard business problems, most who are sold on the dropshipping dream aren’t told about this bit. Combine this single consideration with the myriad of other dropshipping specific reasons customers might become unhappy and require support and you could find yourself engulfed in an overwhelming storm of complaints.
Unless you spend the time and money to actually order every product you want to test on your store, you won’t know whether the package on their porch contains a product that matches what was presented to them by you and your brand until it is too late.
This means that any new product could seem like an awesome money maker while the completed order notifications are blowing up your phone, before becoming an absolute nightmare once dispatched items hit the doors of disappointed customers.
The above point provides a perfect opportunity for reputation control to become essential, but it generally is from day one. Happy customers go about their lives, while unhappy customers seek retribution. And they will come for your Facebook and Instagram posts, ready to rally their retaliation for retail miscarriage. You need to be on the ball with this to stop them losing you customers, or even a Facebook presence. Again, Facebook is cracking down on dropshipping and agitated users having easy access to a report button on all your posts isn’t good in the slightest!
And it’s not just upset customers. If you are getting your posts in front of a huge amount of people, which is generally the idea, then you will have all the miserable trolls ready to rain on your parade. Calling out your product as tacky, fake, useless or redundant, outing you as a dropshipper (which is not something you don’t want people knowing in 2021) or just generally being a dick.
Moderating your social media presence itself can become a full time job with all the hiding and deleting of comments, banning of visitors and maintaining a comment keyword blacklist!
I never said that!
But it definitely has lots of pitfalls. I must reinforce though, that these pitfalls can be avoided by partnering with reliable suppliers that offer a good service, having strong systems and, if required, a good team in place.
The downside of doing it well is that you will pay more in business expecnts, which negates the ‘huge margins!‘ part of the dropshipping pitch that is often sold. Though, when done well, dropshipping can be done in a way which is good for the majority of customers while still profitable for the business.
Of course, I’ll let you be the judge of whether dropshipping is worth pursuing yourself. And if you haven’t already, check out the article written about the opposing side of the coin - Why Dropshipping is Still an Attractive Business Model in 2021
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