Updated: Jul 26, 2020
Dropshipping has become the new cool. But like every other industry, this industry is not free from its share of failures. In this article, we will discuss the ten mistakes people make that cause their dropshipping business to fail and how you can be smart enough to not do the same.
Mistake #1: Spreading Yourself Too Thin
Most dropshippers commit this classic mistake when starting a new business online. They don’t pick a niche and spread themselves too thin. You need to deliver value to people and not be just another pop-up store on the Internet that offers the same things as everybody else is offering.
Remember, that even as a dropshipper where you yourself don’t own the inventory, you are the one liable to the customer for bad service or any mismanagement, not your supplier. You are the owner of your store, and how you decide to position it in the market will ultimately determine your success.
Mistake #2: No Budget for Advertising
Running a successful business, whether it’s a dropshipping business or any other kind of business, requires some investment. Expecting to get a huge return on investment from just $100 when starting out is absolutely ludicrous. If you want to be successful, you need to have some money saved up for advertising.
If you don’t have a lot of money, advertising online on Facebook and Google will not just save you money but also give the maximum bang for your bucks. Because data-based online advertising allows you to track in real time which type of customers are interested in your products the most.
As with every advertising campaign, don’t wait for magic to happen immediately. Try different campaigns and different marketing strategies and see what works best for you. It’s all a game of trial and error initially.
Mistake #3: Poor Website Structure & Design
A good website UI/UX goes a long way in targeting your customers. Good branding leaves a good impression on the customer and generates trust, which ultimately leads to better sales.
One of the best platforms to build your own dropshipping store is Shopify. It has all the tools you need to get your online ecommerce business up and running, under one roof. You don’t need to know any coding or any technical stuff. You can just concentrate on your business and let Shopify handle the rest. It’s renowned for its excellent customer support too.
Again, don’t try to impress your customer with too many widgets and shenanigans on your ecommerce store. Keep it simple and slick.
Mistake #4 - Trying to sell a Trademark Product
If it was possible, then everyone would be selling their favorite branded stuff from Harry Potter/Marvel Comics/DC/ Lord of the Rings/Disney. But products from these companies are protected by the trademark laws of each country and the United States and the European Union are pretty strict about it.
Also, you would not be allowed to advertise these products on popular platforms. So if you can’t market them, how will you be able to sell them?
Mistake #5 - Not Registering Your Company
Every dropshipping business has legal liabilities and if you don’t want yourself to get buried under them, you have to register your business as a company. You will be the owner of your company, but you won’t be responsible for its business agreements and deals. Your company would be responsible for the legal liabilities undergone by the business.
Mistake #6: Not investing in Customer Service
When you are just starting out in the dropshipping industry, ‘word of mouth’ will be the single most important thing to help drive your business growth forward. Assumably, you won’t have hundreds of thousands of dollars to spend in advertising like the dropshipping giants. But what you can have is good customer service that makes your customers refer your store to their friends and family.
Your customers would need information and updates about product delivery on a regular basis. You need to set up a customer service team that’s available 24/7 to answer your customer queries. Popular platforms like Zendesk can help you manage customer service teams remotely.
Mistake #7: Trying to lower your prices to beat the competition
If lowering the prices of your products to beat the competition was ever a sustainable strategy for new dropshipping stores, then everyone would have been doing it. Remember, large stores can offer low prices because they have enough volume to make up for the price cut.
When you are a newbie in the industry and you lower your prices, not only do you risk your profitability but you also risk your business sustainability and may soon run out of money.
Instead, try to sell high-ticket items for a greater profit margin. This way you can have more money to invest in your customer support and marketing. Remember, it’s not about spending the most bucks. It’s all about how creatively can you set yourself apart from your competitors in your advertising campaigns.
Mistake #8: Not choosing the right suppliers
Suppliers can make or break your dropshipping business. After all, they are the ones that control the inventory and shipment of your customers’ orders. If a supplier regularly delays deliveries or sends faulty products, you cannot survive in this business.
Moreover, you need to have very strong communication with your suppliers. If they don’t regularly update you about their inventory or don’t answer your questions, signs are they are not even serious about their own business. It is extremely important to select a reliable supplier if you want your dropshipping to succeed.
Mistake #9: Lack of Inventory
Yes, you don’t own the inventory, but you own your store. If some products on your website keep showing as ‘out of stock’ and the supplier does not regularly replenish their inventory, it will hurt your brand image. Similarly, if some items on your webstore are showing as ‘in stock’ but when the customer orders the supplier informs that they are actually out of stock, it means that you are not proactive enough to regularly check your supplier’s inventory records.
Remember, a dropshipping store is a way to earn passive income. But that does not mean that you can just sit by the swimming pool, sipping your favorite margarita and do nothing. If you can’t manage your business yourself, then hire a manager to do so. A dropshipping business does not run automatically.
Mistake #10: Giving Up Too Early
Most marketing gurus are infamous for selling the magical life that a dropshipper can have simply by starting a store online. But while that is possible, it does not happen overnight and rarely does it happen within the first year even. And so, resilience is one of the most important qualities an entrepreneur can have.
If you have entered the dropshipping arena, know that there is plenty of competition already. You need to think long-term and not just look for short-term gains. Remember, million dollar dreams don’t come true with a thousand dollar mentality.