Dropshipping is a business model that fascinates because you can sell without directly managing an inventory, you can follow the sales from the desktop or a tablet and many imagine that you become rich in a short time, effortlessly.
Dropshipping can be used throughout the catalog, or only on part of the goods on sale, but it is not free from challenges, risks and dangers.
Problem #1: Low profit margin
If we talk about dropshipping to the consumer, a classic B2C, your merchandise supplier will have to ship every time you sell a single unit, while if you sell wholesale, collect the order, prepare it and send it is much easier. It is clear that your dropshipping merchandise can ask for higher prices depending on the higher costs that unit sales entails.
You can also request a fee to have you as a customer who partly covers the handling of goods, packaging and logistics. For owners of an online shop this is a cost and the average margin that remains is around 15-20 percent. Subtract the costs of running your business and look down on the little you have left.
Solution #1 – Offset with higher prices
The most obvious solution would be to increase prices and profit margins. If you think the lower price always wins, you’re wrong. And you’re wrong even if you do not care about selling prices. Prices must be modulated on products and it is important to increase the value perceived by the customer. Your ability to describe products also comes into play here. Do not keep the standard product description, but intervene and modify at least a part of the products on sale.
Solution #2 – Offset with sales volumes
For a few orders a month it may not be worthwhile to work in dropshipping. But if you transform quantities and points to volumes then it becomes a business. It’s a matter of mathematics: all sales are a matter of mathematics. Also talk to your supplier, knowing that even a small discount turns into a profit multiplier. Always do well and you’ll see that it is so.
Problem #2: It is very hard to do AdWords campaigns on dropshipping
Summary the scenario: strong competition, low profit margins, expensive keywords. But it is not an impossible challenge, it is a practicable challenge, even if sometimes mistakes are made. Here you have to think about the cost of acquisition of the customer that cannot exceed your margin.
Solution #1: Optimize ads
You must be willing to test, optimize, test, optimize, try and try again. You have to get to have super specific ads with specific keywords that address a few high-turnover products. It is not reasonable to expect to sell all items in your online store with AdWords. You have to find the top performer and spend your money on these products. Once again it is a math problem.
Solution #2: Find other sources of traffic
AdWords is not the only source of traffic. Try Facebook Ads (even Facebook is not your free traffic provider …), set the growth of your list of customers and contacts, develop a content strategy, drive traffic from other sources, and create satisfied customers. If you thought that selling in dropshpping was a wrong walk, you made the wrong strategy. Change strategy!
Continue Reading: Why consumers are increasingly buying online?
Problem #3: Too much competition
Drop shipping is easy, very easy, so easy that anyone, you, me, my cousin and your uncle can start an online store and sell immediately. We all sell the same product, same price, same photos, same description. Thousands at war to capture customers’ attention. In the meantime you forgot that Amazon sells the same thing yours and mine (if not the same, very similar).
Check out this blog Rockemeet.com
Solution #1: Be the best
The two of us have a store that sells covers with little money. But they could be different. It seems out of the time machine and you’re being different, so different that it does not even seem focused on the product. There are room for improvement for everyone. Do you know the competition? Can you fill in the holes left by the competitors? Can you put an effort into designing a business model and making your passion appear?
Solution #2: Go where no one is still there
90% of a store’s activity is marketing, intended as a way of being on the market. Marketing is NOT advertising.
Most people market themselves and their products all in the same place: organic search, price comparison, paid ads. And if it were possible to find customers elsewhere? There are examples of niche products that sell to a group of enthusiasts. Reread 1000 real fans once, twice. Focus on creating trust, do not spam.
Problem #4: Very few branding opportunities
I add further difficulties. You have no control over the goods, do not check the shipment, do not check the packaging, the labeling and what’s inside the boxes. Difficult to make custom branding. One way to make a good impression is to have a thank you note and agree on a memorable package.
Solution #1: Manage excellent customer service
Not having control over the product does not mean giving up control over the customer experience on your site, browsing, purchasing and any after-sales management activities. You have to spend time, because sales do not come with the tooth fairy, but they come from your job.
How to make a good impression to your customers
- Impressive product pages. Great images, powerful description. You have to make a product page so viscous that customers do not need to go somewhere else to look for similar products.
- Build an easy checkout.
- Make it easy to contact you. Make sure who you are, where you are, what your name is, your landline number.
- Customize the post sales mail that often seem written to cancel the sale.
- To the customers who spend a lot, send a personal thank you. Call them on the phone, send a special email. Customers are not all the same.
- If something goes wrong, intervene immediately.
Solution #2: To be very active on social media
A powerful and active presence on social media is a good way to build a brand. It is not so much for the products as to show that you too have a human face.
Problem #5: Logistics and availability problems
Apart from everything, the plug on the bigger side for a dropshipper is linked to the availability and shipping of the goods. You sell, you are responsible for the goods, and you have to keep promises. Your supplier is not responsible for the sale and if the product is not there or arrives late, you must fulfill a painful process: communicate the problem to your customer. Worst of all is when you find a provider who takes things easy, sends when he wants, two, three days later, without any communication. Put yourself in the customer’s shoes and understand how nervous he is.
Solution #1: Take the time and do not end up hanging with your own hands
The simplest solution is to give the information in advance to the customer and manage one or two days more on the packaging and shipping times .. If you know that the average time is longer for some items, it is better to offer free shipping. Always keep in touch with the customer.
Selling in dropshipping is a challenge and above all it’s a job. For leisure, there is something else.