Drop shippers are a profitable and efficient way for most businesses looking to expand. And in recent years, China has grown to become a major player in the drop ship business. However, with the recent spread of Coronavirus, many drop ship suppliers from China are experiencing problems.

The virus has led to multiple issues that is putting businesses at risk of foreclosure and customers not getting their products on time, or at all. But fortunately Wholesale2b is adapting during this time of crisis and delivering to their consumer base.

This article will first highlight the issues that coronavirus has caused drop shipping in general, and then discuss ways to combat and avoid these challenges.

The Effects  Of Coronavirus On Drop Shipping

According to multiple sources as well as CNN, drop shipping suppliers that take products from China are halting their transfers to mitigate the spread of the virus. This has affected companies worldwide as China is home to some of the biggest companies of the world.

The following are some of the major effects the coronavirus has had and continues to have on drop ship businesses.

Shipping Delays

One of the major problems most drop shippers are experiencing is the delay in shipment. Because the Chinese government as well as other nations’ main concern is the public health and safety of its people, products will not be delivered on time.

This is because further control and disease prevention methods have been put in place that not all companies, especially small-scale drop ship businesses can afford currently. Ultimately, this introduces financial dangers as various ports and pathways for transportation remain closed.

And finally, there is no way to predict when these restrictions and blockages will be removed. As a result, drop shippers are left in a state of uncertainty that gives rise to another problem caused by the virus.

Risk of Bankruptcy

Many small scale drop shippers are at risk of going bankrupt due to the lack of certainty on the time at which business will resume as usual. Such companies sustain themselves on being able to meet the requirements of their customers in timely fashion, so this issue may put them out of business.

Added to this, are the additional costs that drop shipping suppliers will have to incur if they look for alternative ways to ship their product to their customers. These include paying premium costs that some suppliers may not be able to pay, increasing the risk of bankruptcy.

Media Frenzy

In the age of social media, it is extremely easy to spread misinformation and create fake news that will grab the public’s attention. Given that coronavirus has received a lot of attention in the media, many have taken to social media to hype up the issue, affecting many drop ship businesses negatively.

This can and perhaps already has caused customers to stop buying or importing products from China, despite the requirements of health and safety being met. Even the centers for disease control and regulation are not trusted who may approve of a shipment as being safe to travel.

Ultimately, this is bad news for products made in China, and thus for the Chinese economy. Sales for products from China are likely to continue decreasing until the threat subsides. But until then, some businesses will most likely go under.

Possible Solutions By Wholesale2b

So how does wholesale2b avoid all these issues?

It is quite simple; we at wholesale2b integrate suppliers mostly from the United States, which enables us to continue to run our business smoothly.  We understand the importance of providing our customers with a safe and trusted experience, which is why we take pride in how we get you your products.

But if there are some of you looking to start your own drop shipping business or are already in the business and struggling, do not fear! We at wholesale2b recognize the importance of developing an action plan to deal with the situation at hand, so here it is:

The first thing you should do is to contact your drop shipping suppliers. Speak to them about the situation on the ground, as this will give you an idea of how serious is the issue that you are dealing with.

If there is significant risk, you may want to put a temporary stop on your ad campaigns to reduce money being wasted during this period. Instead, use this time to respond to and deal with the orders you have already received and stay in contact with your customers.

Ideally, you should be honest with them about the delays, as this will make them feel they are being heard and will not abandon ship so to speak in your time of need. Or if you wish to not induce panic, you can simply not state the reason for the delay.

However, this does not mean that you can be irresponsible with your products and their safety for your customers. Ensure that if and when they do arrive they are completely safe to use.

Lastly, you should consider looking for drop ship suppliers in other nations such as the States and Europe. This is perhaps the best solution in the given situation as it completely removes the fear that may keep your customers from buying from you.

You can tweak the action plan above to suit your business’ needs, but having a way to tactfully and timely address the concerns of your consumer base is essential in the establishment and survival of a business venture.

We hope these suggestions come in use for you.

Drop shipping isn’t all fun and games. There are a fair few issues that could possibly arise. Here are some problems and their solutions that will help you in your business.

Customer service

The backbone of a successful business is good customer service. Responding to client queries on time is key in building a positive brand image. Unfortunately, the nature of drop shipping doesn’t allow this. You will be answerable to your customers without having first hand knowledge yourself. You won’t know when exactly the order will ship, when the order will arrive, why is there a delay, etc. You’ll have to forward the queries to your suppliers, wait for a response, and then answer your client. To handle this, all you can do is make sure you choose a trustworthy supplier. Other than that, there isn’t much control you have here.

Not so wholesale

Drop shipping businesses run on the concept of buying at wholesale rates and selling at regular prices. This is how drop shipping businesses earn profits. However, if you look from the suppliers’ point of view, this method is rather unprofitable for them. You’re not technically buying products in bulk. Instead, the supplier is sending out one or two items at a time. Finding suppliers who are okay with this model and still agree to sell on wholesale prices is hard. The solution here is to research hard. There certainly are wholesale suppliers who work happily with the drop shipping model. Wholesale2b is a good option to consider. You won’t have to face this challenge as such if you choose them.

Product returns

Online shopping has earned the trust of people due to one basic feature; guarantee of return. If people don’t like the quality of what they chose unseen, they can return the product to get their money back. Similarly, this process also covers the cases in which the product is faulty or damaged. In drop shipping, the client will demand the refund from you. However, you’ll have to make sure you get your money back from the supplier too. The chain of communication is longer and the process is slower. Once again, your solution is to opt for a supplier who’ll deal with such situations professionally.

Competition

The suppliers you bag won’t be providing the items just for your online store. There will be tens, sometimes even hundreds, of other stores selling the exact same product as you. This high competition may force you to narrow your profit percentage. Sometimes, you may even find competitors who will be selling the product at a price that would bring a loss to you. To tackle this challenge, you need to do two things. First of all, decide a store niche that is relatively unique. You won’t have to worry about the excessive competition and people will be attracted to the different items on your store. Secondly, don’t compromise on the supplier. Choose the best of the best, and the best isn’t always the cheapest.

Dive into drop shipping businesses with these challenges in mind. Better cautious than sorry!

Drop shipping businesses can be a huge success if you partner with the right company. We’ve made things easy for you by compiling a list of the best companies out there that you can choose to work with if you start a drop shipping business.

1.    Sunrise Wholesale

This is a wholesale drop shipping company that has been awarded an A+ by the Better Business Bureau. Sunrise Wholesale work in partnership with another importer. Overall, you get the benefits of both along with a 600,000 square feet warehouse and distribution center. You’ll have 15,000 branded products to choose from. If you sign up with them, you get special tools that make eBay and Amazon marketing much easier for you. There is a limitation of 7 suppliers only but if they’re trustworthy, you don’t have to worry about the small number.

2.    Oberlo

Oberlo is a rather famous name in the drop shipping industry. It is loved for its user-friendly interface along with the technical facilities. You can create a free account on Oberlo to test things out. The direct link with AliExpress and Shopify makes things very convenient. However, the restriction is that this will only work with Shopify accounts. Other than that, the only suppliers they have for now are those on AliExpress. There is still a wide variety of options for you to choose from.

3.    SaleHoo

SaleHoo is a platform where suppliers meet website owners. People like you, who are starting a drop shipping business, get to connect with more than 8,000 companies. In total, these companies supply around 1.6 million products. The best part is that every single one of the suppliers on SaleHoo is verified. There is no risk of fraud or lack of quality. Other than that, this platform also offers market research tools that you can use to figure out which products will work out best for your business. If you want to try SaleHoo, you can’t do it for free. Although there is no free trial, you do get a 60-day money back guarantee so you can dive in without a worry.

4.    Megagood

Unlike previous options, Megagood isn’t a platform for wholesale companies. Instead, Megagood itself is a supplier. You get 45 categories of products. The variety is great but the product count is still very low. But, then this service is one of the cheaper ones too. There are pros and cons but it’s up to you to decide if it will work fine for your business.

5.    Wholesale2b

Wholesale2b is a platform that provides 1000s of product options. With trustworthy suppliers, you don’t have much to stress about. You’ll get the cheapest rates here in terms of platform subscription as well as product prices. Another convenience offered by wholesale2b is that they allow you to access product information so that you have a guarantee of quality.

You can further look into the subscription details of each of these wholesale platforms. Choose the one that fits your budget, scale of business, and niche.

Drop shipping businesses are expanding all over the world. They are super easy to set up. In the excitement and hurry to start your own drop shipping business, don’t forget that there are a few legal requirements you must fulfil. Fulfil these requirements to keep yourself from any trouble in the future.

Licenses

Any business that sells tangible products requires a number of licenses. Even if you’ll be operating the business from a single website from within your home, you’ll need a registered office location. You will have to decide a business name and get that registered. Then, you’ll have to go to your local county. This will be the county that is connected to the office address that you registered. After getting the country license, you’ll have to get the city license. Unless your registered address is in an area that comes under no city, this license is a must have to operate a legal business. Lastly, you will need a reseller’s license. This will allow you to sell products via drop shipping which is basically reselling in the simplest terms. These licenses can be obtained rather easily. Make sure you keep getting them renewed whenever they expire to steer clear of legal trouble.

Tax ID Number

A tax ID number (TIN) or Employer Identification Number (EIN) is a must have document for any business that is going to hire employees. You might not need it if you plan on running the business on your own. However, we would recommend you to still get one for future safety. This number will be needed for business bank accounts too. You can get your TIN from IRS.

Business account and credit card

A lot of people tend to forget this basic requirement. You’ll need specifically a business account for all your transactions. Opt for a bank that offers online banking for your convenience. Moreover, keep preparing your account to meet the requirements of a business credit card.

IP alteration

Opening a bank account will be troublesome if you’re not a US resident. They usually approve the opening of the account but later on, under Patriot Act, FBAR, FATCA, BSA, and hundreds of other laws, they might close your account. There is nothing illegal about your accounts yet, you may have to suffer loss. You can use VPNs while logging into your accounts from abroad to prevent this issue.

Deposits

After every sale, the ecommerce company you partnered with will deposit money in your account. By default, this money is deposited in your name even though it is not all yours. Overtime, such huge amounts of transactions will become red flags for the authorities. To keep yourself from legal trouble and baseless suspicions, make it clear with the ecommerce platform to deposit money in the name of the company.

Originality

Lastly, make sure in the process of building your own business, you don’t intentionally or unintentionally replicate someone else’s website. From branding to design to aesthetics, keep everything original no matter how hard you have to work.

Selling products used to be a simple process. The business owner bought the products in bulk from the manufacturer. Due to the massive purchase, the business owner got a bargain deal. He then sold the products individually at the average price. This led to a successful business with huge profit margins. Then what exactly happened that evolved this basic purchase and sell model to drop shopping?

Product catalogs

In the 1950s, some business owners started facing issues of storage. They had to pay rents for warehouses to store products that weren’t to be sold in the near future. Eventually, the storage cost exceeded their profits. They figured out that they won’t manufacture and store their products. Instead, they sent out catalogs that had pictures and details of every single item. These catalogs were mailed to potential clients. Interested people could place an order. Once the company received confirm orders, they began the process of manufacturing. This way, they only had to pay the expenses of raw material, storage, processing, etc. of the final products that had already been sold. It was a win-win situation which is why the trend extended further.

JIT

JIT manufacturing is just in time manufacturing. This was the next step in the business world. After the method with the catalogs was successful, business minded people took it a step further. Now, a third party was involved. Instead of the company sending out direct catalogs, independent people started doing the job. They would promote products to people and get orders. These orders were then forwarded to the manufacturer. The product was manufactured ‘just in time’ for the delivery. This method was the most advance drop shipping method for that time. The JIT manufacturing was also a pretty fast service so there was no inconvenience as such. The manufacturer would produce the item within 3 to 4 days.

The market was very limited with these methods. With the introduction of the internet services, the exposure increased to a whole new level. The idea of these previous methods was improvised with the latest advancements.

Ecommerce

The drop shipping model that is implemented today is at such a huge scale all because of ecommerce. The idea of online businesses encouraged retailers and manufacturers to connect with each other as well as with a wider consumer community. This has increased the market by huge percentages. At the same time, this model of drop shipping has expanded the options too.

Till a few years ago, drop shipping wasn’t very widely known. But, as shipping facilities have improved, so has this business model. Moreover, exposure to this new business model has encouraged better software options as well. All in all, every aspect has been polished and improved one at a time. The drop shipping business model we know today actually started as a simple idea decades ago. Gradually but successfully, it adapted to the needs and technologies of time to result in such a successful business model!

Adapting businesses to the latest trends is what keeps them going. If you stick to traditional methods, your business will sink in no time even if those particular strategies boosted your business previously. Drop shipping is a model that has been around for some time now. Some would say it is the best thing for their business while the others would totally disagree. The reason being the difference of nature of businesses along with the varying approaches. Here are a few factors that will help you determine if drop shipping is for you or not.

High competition scale

One thing that makes drop shipping very attractive is the fact that such a business requires almost no investment. This opens the gates of the drop shipping business world to everyone who wants to start a business. Since things have been made easy, you’ll find hundreds of thousands of people in pretty much the same business category as you. There is high competition and the truth is, some of these people will be better than you. They’ll be selling the same products in cheaper prices just because they have direct links with the supplier. If you can cope with such a high scale of competitors, you’ll definitely be successful.

Risk of frauds

There is practically nothing in the world that won’t have loopholes. These loopholes are taken advantage of by frauds to scam people who have little knowledge. A lot of suppliers will do the same. Small startups will usually be attracted by cheaper rates without considering the risks. If you’re not so amateur, drop shipping is successful for you.

Low input, low output

As previously mentioned, people love the fact that drop shipping businesses require zero investment. However, they don’t realise that minimal input will not bring them huge profits either. There is a very tight profit margin in drop shipping businesses. The suppliers generally offer a 20% discount. That is your ultimate profit. But, there’s a chance you’ll have to lower your cut and offer minimal prices to attract customers. This is specially important in case of high competition niches. If you’re okay with that, drop shipping will be a success for you.

Branding issues

You’ll always be just the platform where another brand’s products are being sold. Since you’re not the manufacturer, you can’t really develop a specific brand identity. The only thing you can do is build an image for your service. If you’re successful in that, drop shipping will be a win for you.

Dependence

Your business isn’t only run by your clock. Yes, you deal with the clients but the ultimate product shipment and handling is done by the supplier. This makes you highly dependent on the supplier in case of return policies, shipment timing, etc. The process of communication also elongates. Hence, you can’t offer instant response to the queries of your clients.

Like anything else in the world, this business model has challenges too. If you find strategies to cope with them, drop shipping will definitely be successful for you.