Dropshipping is a great way for new entrepreneurs to break into the e-commerce world. With dropshipping, you can keep costs to a bare minimum and scale much more efficiently. Simply upload pre-existing products onto your website, and when a customer orders, the product is shipped directly from the manufacturer to your customer.
This eliminates the need to hold inventory or spend money on minimum orders—especially if you’re just testing the market and aren’t sure what will sell.
However, not everything about dropshipping is easy. As a dropshipper, you relinquish a bulk of the control of your business, and this can be difficult for entrepreneurs who want to have their hands in every aspect of their business.
Here are five common challenges of running a dropshipping business that you should be aware of:
Choosing the Right Products
Choosing the best products for a dropshipping business is a difficult process. Even when you’re confident that you’ve settled into a niche that has solid profit potential, you can never be too sure about what your chosen products will physically look and feel like. Because of this, it’s important to start a lineup of just a handful of products.
As a dropshipper, it can be tempting to upload dozens or even hundreds of products into your e-commerce store. After all, with apps like Oberlo, you can important plenty within seconds. Once you’ve imported a few products, you can change the price, description, title, and more, while leaving other important information (like material, weight, etc) as it is.
However, because these are shipped directly to the consumer, you need to be sure that the product is up to par. By limiting yourself to a small store, you can purchase the product yourself to gauge its quality. Ordering each product that you put on your store also opens up a much bigger world of marketing potential. For example, you can take your own photographs instead of using the stock photos that are provided to you, which helps differentiate your business from other dropshippers selling the same product. As you grow, you can slowly start to expand the lineup.
In the dropshipping world, finding the right products also means finding the right supplier. Your supplier should have great reviews and be highly responsive. Reach out to a few to determine which you’re likely to have a better relationship with—especially when choosing between suppliers who offer the same product.
Customer retention should be a major part of your marketing strategy. As you may well already know, customer retention is significantly less expensive than customer acquisition. Yet, many businesses make the crucial mistake of focusing all their attention on acquiring new customers, rather than retaining their existing customers. If you have very few customers, this isn’t as difficult in the early stages.
For example, if you had just three separate purchases, you can reach out to each person individually and thank them for their purchase, as well as ask them how they enjoyed it and what you can do better (if applicable). A simple “thank you” goes a long way. Other ways you can help retain customers include starting a loyalty/rewards program, resolving issues quickly, and engage with them on social media.
Always think of your early adopters as brand ambassadors. With a small pool of early buyers, you can go the extra mile to make them happy.
Ranking in Search Engines
Ranking in search engines is a challenge for every business type, regardless of industry. Both on page and off page search engine optimization are key for performing well on search engines, and one of the best ways to spearhead your SEO efforts is to start a WordPress blog (or on whichever platform you’re using).
As previously mentioned, you do give up a portion of your control as a dropshipper, but your marketing and SEO efforts are where you can truly shine and stand out from the competition. If you aren’t SEO-proficient and don’t have the time or resources to learn, you should consider hiring an SEO freelancer or SEO agency.
One of the best ways to spearhead SEO for your e-commerce business is to start a blog. Your blog shouldn’t be overly promotional: in fact, most of the content should be geared towards providing value to readers. For instance, if you sell camping gear and gizmos, you’d create a useful camping blog that camping enthusiasts can turn to for advice. Feel free to discuss other brands and products that aren’t sold on your website—but use affiliate links where possible to bring in some extra income.
When you’re dealing with a third party, trade can get tricky quickly. After all, your customers don’t want to, nor they expect to, deal with your supplier. They purchased the product via your website, and hold your business accountable for returns. Many dropshippers circumvent this issue entirely by clearly stating of their website that all items are final sale.
However, many customers may shift away from your website without the option to return, particularly when dealing with clothing. Customers who can’t touch or try products like having the option to return something if they don’t like it, and might see a “no return policy” as a red flag. Before you dropship any product, be sure you understand the supplier’s return policy, and state it on the product page and include return instructions in packaging.
The Item Is Out of Stock
Because you’re not holding your own inventory, you never quite know when an item will be out of stock—or discontinued entirely. It isn’t until someone attempts to make a purchase that you’re alerted. Although this isn’t something that would happen often (most manufacturers keep product fulfillment informed), an out of stock item does sometimes slip through the cracks. In the event that this does happen, how you handle the situation is imperative.
Send out a personal email, letting them know the product is out of stock. Have solutions for accommodating them on hand. For example, you can let them know when the product will be available, offer alternatives for it if it isn’t, and/or provide discounts on other items in your store.