7 Reasons Why Drop Shipping Businesses Fail
E-commerce brings in endless opportunities for those who are eager to start or expand their own business. The drop shipping industry provides such a platform for entrepreneurs, and many people have jumped the bandwagon to explore this aspect of earning money online.
While it may seem appealing to join a startup with minimal investment and a seemingly simple concept, it is important to understand the associated risks and chances of failure too. As with any other venture, the essential thing to do first and foremost is to take inspiration from other companies who have succeeded in their businesses, and learn from those that have failed.
If you are looking to learn the reasons behind failure of drop shipping businesses, this is the perfect blog to get more comprehension on the subject. The list below describes many of the common failures and how to avoid them.
1. Ineffective marketing
One of the basic mistakes made by any newbie in drop shipping is not knowing what to sell in the first place. This idea can be further subdivided into two main categories:
- choosing the wrong niche
- targeting the wrong place or audience
Everyone involved in business should make a calculated decision of what they want to sell. The product niche should be based on something they would enjoy themselves, rather than what might bring maximum profits and sell fast.
This ensures that they are able to give thorough and honest product reviews by having sufficient knowledge about the products.
Moreover, choosing the right audience is crucial in e-commerce. The likelihood of buying a certain product varies from place to place. It is better to follow trends to know which niche to select, and who to target. To do so, they must experiment often to find the most suitable option.
2. Lack of Persistence
There are three key qualities that every entrepreneur should aspire to have when it comes to drop shipping; patience, persistence and consistency. Without any of these, their business is heading towards eminent doom.
Getting into this business, one should acknowledge that effort is required for everything. Similarly, drop shipping is not a way to earn fast or easy money overnight. It requires patience and full effort if you want this to be a success.
As it is a slow and steady process, the profit margin for items on sale should be kept low initially. People should be attracted to the store through promos and discounts, rather than discouraged from buying anything that is overpriced. With this in mind, your store would definitely get attention and good reviews, thus bringing in more customers.
3. Lack of Resources
As drop shipping promises minimal investments and low risk factor, people are usually misled by this and believe that they would not be spending any money on their business at all. However, in order to promote your store it is vital to pay for advertisements.
This would bring in more viewers and increase interest in the products too. So if you have absolutely no savings beforehand, drop shipping may not be the right choice.
4. Poor management
While it is good advice to experiment with new ideas, if someone lacks the very basic knowledge of business management and e-commerce, their store would likely fail. According to Forbes, about 90% startups fail and a major cause is bad planning, which encompasses the following:
- No frequent updates of store to keep people interested
- Customer service issues such as delayed shipping
- Help and support is unresponsive or delayed
- After product is sold, no further inquiry made into customer complaints or reviews
Such negligence should be avoided in any business to provide the best experience to customers.
5. Counterfeit or damaged products
The products shown online should be of good quality, and true to reality otherwise the store may be faulted for online spam. For those who do not test or research their products early on and simply want to make a sale, this can be a big problem.
Also, most of the products sold on AliExpress from China are damaged or counterfeit, which ultimately affects your store as that is the main provider for buyers. Such issues must be addressed instantly to avoid trouble.
6. Putting minimal effort into the store
While you may think that placing products is enough to make a good sale, the store would not get any customers if it is not eye-catching or unique. Design is important so that stores garner attention and make the page easy for users to navigate through.
Another point to consider is the growing popularity of drop shipping. For beginners, this means that there is a lot of competition to deal with. Without putting effort into their store, people would overlook it and search for better options. Thus it is necessary to make your store stand out and contain multiple features that appeal to users.
7. Attempting too many things at once
On the other hand, trying everything all at once is not helpful either. People try to make their store too unique or display too many items for sale. For starters, it is best to create a clear and bold design, make a cohesive webpage, and sell a handful of products instead.
This would help them handle orders and write a sufficient product description, which ultimately leads to business growth and success.