The Leader Media | Shopify Agency

5 Things You Must Know Before Starting a Dropshipping Business

As entrepreneurs, we discover that sometimes it takes mistakes to produce breakthroughs. As the ancient Chinese proverb about learning from our mistakes goes, “Failure is the mother of success.”

In fact, there is no substitute for practical experience when it comes to real-world problems while running our own businesses. Some missteps may be unavoidable, but you can save yourself from costly mistakes and years of wasted time by learning from these lessons learned the hard way.

1. Product quality

If I could go back to the time when I first started dropshipping, I would have told my younger self to put product quality above everything else.

I wish I knew I shouldn’t trust product quality without seeing the product itself.

Many dropshippers source their products from AliExpress. However, don’t do what I did, which was to choose the provider with the cheapest prices.

This is the big mistake, because the suppliers would compromise on product quality to offer the most competitive prices. We didn’t check the samples. As a result, we received many customer complaints that the products did not match the ones used in the advertisements.

We began to look back and reflect on what went wrong. We found that the suppliers we chose were those who offered the lowest prices but who offered poor quality products.

Put the lesson into action:

Don’t always look for suppliers that offer the cheapest prices without first checking the quality of their products. Doing so could hurt your results in the long run. Always place a trial order with your chosen vendors so you can check product quality and see exactly what your customers will receive.

Doing your due diligence early on will save you from making costly mistakes down the road.

2. Do not rely on just one supplier

In the past, we relied on a single vendor for all orders for a top-selling viral product, and we were overwhelmed by the number of orders coming in for this product. We quickly ran out of stock.

Because we had a very good relationship with this supplier, we shipped all orders to him. He couldn’t keep up with that amount of growth, but he kept quiet about it. Simply put, we had a backlog of orders that we couldn’t fulfill on time and we received a lot of chargebacks from angry customers due to the long delay.

When you receive many chargebacks, you run the risk of your merchant account being closed.

Following this setback, we are now looking for three to five suppliers for each product we sell. And while we know that Supplier A could fulfill all of our orders, we now divide our orders among other suppliers to serve as backup.

We use this formula:

60 percent goes to provider A

30 percent goes to provider B

10 percent goes to provider C

In this way, we are also building relationships with other providers that we can turn to in the future if things go wrong with Provider A.

Put the lesson into action:

When starting a dropshipping business, look for three to five suppliers. Evaluate each of these so that you can identify the supplier that should receive the most of your orders.

In this way, you will diversify your risk and could potentially minimize your downtime.

Be aware that even the best suppliers can run out of stock. This is a common situation in drop shipping, especially when selling popular products. Your supplier should keep you informed when there is a manufacturing or supply chain problem. However, it is your responsibility to ensure that your customers can receive your products and to ensure that your customers are informed about delays in shipping times.

Dropshipping is based on the relationship that exists between a seller and a supplier. Taking the time to forge strong relationships with different vendors will definitely pay off in the long run.

3. Provide great customer service

At the beginning of our dropshipping journey, we were pretty good at marketing, so we were able to get a massive influx of orders.

Unfortunately, we did not have enough time to expand our infrastructure and secure a support team to address customer concerns. As a result, we received many complaints from customers requesting updates on their shipments.

That was one of our biggest problems, so we decided to invest significantly in customer service. Now we pride ourselves on providing excellent customer service and fast response times.

Put the lesson into action:

Please note that the provider is not accessible to the consumer. Dealing with customer inquiries and concerns is your job, so it is important to address inquiries and complaints as soon as possible.

Neglecting this will deal a severe blow to customer satisfaction ratings and could result in lost opportunities.

4. Diversify your traffic sources

Relying on a single source of online traffic could cost you a lot of time and money in the long run. 99% of dropshippers only target one source of traffic: Facebook.

As advertising on Facebook becomes more expensive, it will affect your profit margins. As a result, you could see less and less profit as a dropshipper. And when you have all your eggs in one basket and run into problems (like getting your ad account banned), you could see significant profit losses overnight.

We didn’t bother to branch out, and that’s something I would have done differently from the start.

Put the lesson into action:

Make sure your website traffic comes from multiple sources. Backup plans are essential when running your business because they give you flexibility and options when there is a crisis.

Focus on alternative traffic sources like Snapchat Ads, Pinterest Ads, Google Shopping, Google AdWords, and SEO.

You must be proactive in diversifying your traffic sources so that you don’t suffer drastic losses when there are algorithmic updates on Facebook or Google.

5. Global market should be the aim

Although many dropshippers focus on English-speaking countries, such as the United States and Australia, Europe is also a large market. We have had great success in European countries.

Selling internationally via dropshipping has never been easier, and frankly, I wish I had thought about global expansion from the beginning.

Put the lesson into action:

The beauty of dropshipping is being able to sell globally when you already have systems installed. There are many opportunities in foreign markets where you will often find less competition for your products.

To prepare for this, check if your payment gateway supports the different currencies used in other countries or if there are additional fees that you will incur.

As an ecommerce expert with over 14 years of experience in the dropshipping industry, these are the things I wish I knew when I started so I could have gotten it right the first time. Hindsight is an important asset, and looking back at our past trials and errors can provide us with the lessons that will show us the way forward.

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