About 90% of dropshipping businesses fail. Shocking, isn’t it? If you’re wondering why it’s this way, you’re not alone. With so many dropshipping brands going out of business, most entrepreneurs are wondering if it’s still worth the effort.
Well, it is. But it’s also crucial to understand why these brands fail, as it will help you avoid their mistakes
It’s often a good idea to set high prices for products, but that only works if they are worth it, i.e., if the price is justifiable.
If customers don’t have a reason to pay extra, they’ll lose interest in your store and go elsewhere. Also, consumers love to compare prices. They will know if your prices are unnecessarily high and get better deals from your competitors. You need a carefully laid out pricing strategy.
Choosing the wrong niche
Focusing on the wrong product categories keeps dropshipping businesses from making meaningful profit. Many people now know there’s money to be made online, which means all related industries are crowded and highly competitive.
Besides, they also compete against major players like Walmart and Amazon, who have the infrastructure to provide same-day deliveries and all sorts of benefits. So, it’s vital to choose a niche that works.
Before you dive into selling, make a thorough study of your target product categories. Evaluate current and anticipated demand trends. Your niche should have high search volume but low competition. Admittedly, it can take weeks or even months to find one that fits this description, but it will be totally worth it. You will make several sales early on, and it will be easier to market your products in the long term.
A product is not the same as a product category or niche. And, dropshipping stores based on products are not “niche” sites. It doesn’t work to get a range of laptops (for example), add them to your website, and call it a niche site. Yes, it might get you a few hundred dollars in profit, but it won’t be sustainable because once those products become obsolete, your customers will move on.
It’s better to consider buyer pain points while choosing a niche. That way, you’ll always target the right products.
Poor website design/optimization
Dropshipping stores are more or less the same as eCommerce stores. So, they need compelling designs and an outstanding user experience. However, many drop shippers do not give these factors much thought.
Some stores aren’t optimized for mobile. They have frustratingly inconvenient navigation bars, which makes for a terrible user experience. If you have a messy store and users can’t find products, they will not trust you.
Furthermore, dropshipping store owners rarely invest time into optimizing their stores for search engines. This means they’re missing out on several opportunities. Since a dropshipping store will likely have several products, it’s hard to rank for a specific keyword. If you optimize your site the right way, your product pages can appear first in the search results.
You’ll want to do SEO even before launching your store. Find the most relevant search phrase opportunities and incorporate them into your website’s content. You may also optimize your product descriptions and H1 headings. It might not seem like much, but this approach will yield significant returns in the future.
Suppliers with terrible service
Dropshippers have limited control over the order fulfillment process, which frustrates their customers.
Since your supplier offers the products, picks, packs, and ships them, you have limited oversight. The process can go wrong at any of these stages, causing problems like faulty tracking codes, shipping delays, and defective items.
Although this problem is common with low-quality suppliers, it may arise even with the best suppliers. For example, you may see that a product is in stock, only to find that it’s sold out before you can place your order. This sort of problem is almost impossible to predict or control. It will force you to place items on backorder or issue refunds, which will hurt your reputation and bottom line.
Finding suppliers who are genuinely willing to help you succeed can be challenging but is not impossible. Automated dropshipping solutions like wholesale2b will help you find reputable partners. But, you still need to connect with your suppliers via Skype, email, or even meet their representatives in person. You need to understand their policies and terms. This information will help you fix problems quickly and efficiently.
Bad customer service
Bad customer service kills dropshipping stores really fast, and sometimes, it’s not (entirely) their fault.
Some suppliers won’t provide tracking info, so you can know when customers will receive their packages. Furthermore, if a customer orders several items from your store, they probably won’t receive them in 1 package. It is more likely that they will receive them separately at different times.
If you have a large store featuring products from different suppliers, they won’t ship at the same time, in the same package. You will need an order fulfillment service to avoid this sort of problem. It may cost more money, but it’s the way to go if you want your customer’s items to reach them at the same time.
Since dropshipping has few barriers to entry, entrepreneurs like to think they can get by with little to no investment, but this isn’t true. You’ll need money to advertise, set up your website, and process returns. For example, your customers may ask to return an item, so you will need money to repackage it and return it to the manufacturer.
So let’s assume you’ve created a dropshipping store and then populated it with products from suppliers you found on AliExpress. Most of these suppliers are in China, so they will have to ship the products over to you. This may seem okay on paper, but the real-world consequences are not that pretty.
It takes at least 20 days to ship a product from China. Consumers, especially those in the United States and Canada, will not wait that long. Giving your customers assurances and a sense of respect will go a long way in helping you resolve this problem.
- Be responsive
- Provide instant responses whenever your customers ask about shipping.
- Send proactive emails and text messages informing your customers about shipping delays.
We’ve looked at the most common reasons why dropshipping businesses fail. If you’re thinking of starting a dropshipping business, you can use this knowledge to avoid the mistakes most people make and enhance your strategy.