Problem Number 1: Out of Stock Items
The number one problem when dropshipping is running out of popular items. This poses a risk to the customer experience and directly affects re-visits, sales, and the overall company image, which determines traffic and popularity.
When a customer orders and finds out the item they have been looking for becomes unavailable, that impacts business and creates a negative impression of your dropshipping venture. Even though you don’t have control over the supply-demand besides pre-ordering items and dealing with vendors, customers will place the blame on your website as the seller as you are the only one they see.
The most realistic way to deal with running out of stock is to partner with multiple suppliers and allow overlap for popular items. So, when supplier X runs out of certain items, you can rely on supplier Y for the availability of the goods.
In this way, the chances of items that sell more running out of stock reduces. An alternative would be to arrange for a substitute product once the original runs out.
In situations where products cannot be delivered the best way to handle clients is to personally inform them, preferably via calls, about the bad news regarding their orders. Try sourcing the products from another supplier at a later date or offer a substitute that can be made available. Suggest alternatives or direct to another place where they can find said item. Remember to be polite and understanding at all times.
Problem Number 2: Delays with Order Processing and Customer Dissatisfaction
Order mishandlings, delivery delays, dissatisfied customers, and damage to products are common issues when it comes to any e-commerce website. When dropshipping, you are bound to face this challenge sooner rather than later.
Imagine this. You receive an order on your website. The next thing you do is place the order with the supplier and wait for it to be processed and confirm the order to the customer and inform them of the shipping and tracking. But, the order confirmation never arrives.
Or the order confirmation arrives, and it’s out for delivery but the delivery company makes a delay in shipping. Another scenario would be the product receiving some defects in transportation.
The best way to handle not receiving order confirmation and shipping delays are by contacting the supplier after not receiving a response 24 hours after placing the order. In the case of a courier company, question about the hold-up.
Enquire when the earliest possible date of shipping can be. Being efficient in dropshipping is important as the customer could contact you for more information. It is imperative to keep clear and direct communication to build trust and loyal customers.
If the product is defective, offer exchanges or money backs if the customers demand it. It is important to maintain cordial relations even with a dissatisfied customer. As a business owner, you should apologize for the inconvenience caused to the customer. Asking for feedback is also recommended to improve your business operations.
Problem Number 3: Low-Profit Margin
Unlike physical stores and wholesalers that sell their products in bulk, the drop-ship supplier sells single units whenever an order is placed. Comparatively, the number of orders and so the amount of products actually sold is less. This ultimately means lower sales and lesser profits.
To top that, the operational costs and time and effort required per order is more for a single unit when compared to bulk orders is significantly higher. This ultimately means that drop shippers have to ask for a higher selling price to justify all the costs. Additional fees for labor, packing, transporting, and logistics are not uncommon.
The profit margins for online dropshipping stores become quite bleak, barely 15-20% of the total operational costs. A few ways to bargain that low-profit margin is by demanding a higher price on products, compensating with volume, and talking to the suppliers.
When increasing the selling price it is key to calculate how much more you can charge. While ‘the lowest prices win’ motto isn’t always the right course asking for too much won’t make sales either.
The alternative is to compensate for the lower margins by selling a higher volume of goods. Lastly, negotiating a better deal with your suppliers to get a deeper discount on goods can appreciably boost profits.
Problem Number 4: Little Branding Opportunity
Perhaps the biggest disadvantage an online drop-ship supplier faces is the lack of branding opportunity. With a drop-ship store, you do not control the merchandise. The packaging, labeling, boxing, etc are dealt with by the sellers. This makes personalization and branding difficult for drop shippers.
The purpose of branding is to get customers to recognize the company and brand name. To make up for the loss in opportunity, provide excellent service to your customers that is hard to forget.
You may not have control over the product or its branding but you do control the customer’s shopping experience and service. From finding your website, navigating it, ordering a purchase, and taking feedback and follow-ups.
This can be done by providing great product pages, powerful descriptions, videos, infographics, even writing informational blog posts so the customer doesn’t need to go anywhere else for research. Make checkout and buying simple and easy.
Personalize confirmation emails, and messages that don’t seem like automated messages, perhaps sending thank you emails as follow-ups.
Another solution is by creating a strong social media presence. Social media marketing is a powerful tool, but primarily it is a means of communication. Businesses can use these interactive platforms to directly reach out to their customers and gain a larger audience to cater to.
Problem Number 5: The Right Supplier
Finding the right supplier is tough especially when it comes to the dropshipping business. Suppliers need to be reputable, fulfill your site’s orders, provide quality products and are trustworthy.
It is not uncommon to find fraudulent suppliers that ship cheap products in hopes of earning a quick buck. A good supplier is a tall order to fill in which is what poses the dilemma.
Start your search by making a list of local suppliers you may already know. You could also use dropshipping supplier directories. Supplier directories list various companies to choose from. Some options include Worldwidebrands.com and Salehoo.com. Be sure to conduct a thorough check before signing a contract. It doesn’t hurt to ask for a trial period before committing for a longer time.
Or, you can automate the complete process by trusting a reliable dropshipping platform that can help you with finding trending products, trustworthy suppliers, and automated order fulfillment. Sell The Trend is an AI-Powered dropshipping platform that can save you a lot of time and money. You’ve got more important things to do than worrying about your suppliers, order fulfillment, and shipments, don’t you?
Moreover, Sell The Trend can also help you spy on your competitors, build targeted Facebook Audience, create ad copies, and video ads for a higher conversion rate.
Dropshipping is a growing business that largely depends on the capability of the business owner. Some issues can come up but overcoming these problems is what differentiates a successful business from a failed venture.