5 Vital Points about Dropshipping You Must Know Before Trying Your Hands
Dropshipping is known as a kind of order fulfillment method under which a business doesn’t need to keep the items in stock. As an alternative, the products are sold through the store, which allows a third-party supplier to ship the order to the end customers after receiving the sales order from the store.
However, on the other hand, dropshipping is not a method to get richer quickly.
Well, it looks pretty well to earn money by selling goods of other people and take a cut for yourself – however, all the easiness will fade away when you meet up with a number of day-to-day management issues, obstacles and drawbacks.
But, it is also true that going with the right approach along with the implementation of the proven strategies will definitely help build a successful business using the dropshipping technique. Make sure to give it a right time to make it happen into your favor.
Hope You Entered the Business With this Mindset: It will not be easy for you to bring your business on the right track if you are based only on the dropshipping. However, if you already maintain a reputed online ecommerce store, it will be easier for you to try your hands in dropshipping to strengthen your existing services and keep your business move forward.
Let’s read out the information till the end to get aware of various problems related to dropshipping that are not discussed publicly everywhere else. Although dropshipping is full of flaws, it can prove to be an extremely impactful tool for an emerging brand if individuals use it in a proper way.
5 Real Facts about Dropshipping Very Few People Know
Make sure to check out the following points before investing all your hard earned money into a new dropshipping business. It will be pretty difficult for you to start this business alone without the help of an expert. Let’s go through all the information given below to learn why some experts consider it as a hard nut to crack:
1. Low Investments with Low Returns
The overhead is pretty low since you are not bounded to manage your own product inventory. However, this also results in witnessing the low returns.
The low investment of money also produces the low returns for you. So, you are always expected to put your best efforts to maintain your presence in the market and create some profits for yourself.
How could you ignore this point? The most of the money of your sale you make for a product directly goes to the supplier.
And, when you are a new to this business, it will not be easier for you to cover all your expenses you make on the advertising/marketing, managing the salaries of your employees, handing sales orders and maintaining your website.
2. Highly Competitive
Being optimistic is good, but take it in excessive amount can result in having a big loss in the end. There are only the overly optimistic businessmen who primarily concentrate on the low overhead part, while avoiding the other relevant things of the subject.
Yes, it is true that anyone can start a dropshipping business with a very nominal capital. That means that you will be surrounded by a number of individuals with the same interests in the market. So, you can expect to witness a very tough competition.
In general, a big company tries to reduce its markups to come with as lowest prices as possible. However, being a small business, you have to make a cut into your profits to maintain your presence in the market and compete with the big brands. And, very soon the time comes when it becomes quite impossible for them to survive in the market.
There are possibilities when you lack of an exclusive deal with your chosen suppliers. Well, this clears that you are expected to meet with countless competitors who deal in offering the exact same products. In addition to this, if you have just entered this niche, your competitors with some good years of experience are loaded with all the needful resources that will try to stop you from moving forward by not cutting your prices.
That means that when individuals have a chance to purchase the same product or service from someone else at cheaper prices – why would they consider you?
3. Supply-chain is Uncontrollable
When you are into the standard ecommerce, it is easy for you to address the problem on your own if your customers have any problem with the return policies, fulfillment speed or product quality.
In dropshipping, your supplier has the full control on all such things; however, talking to your customers directly will be in your hand.
Dropshippers are sometimes cheated since they think that hope that the supplier will take care of all the issues related to the product while at the same time they also reassure the customers about something that is not in their control.
4. Legal liability Problems
Although this doesn’t happen with every dropshipper, it is important to be aware of that. There are various suppliers who pretend to be a legitimate source, but, in actual, they are not. You are not aware of the source from where their merchandise actually comes from.
Even some suppliers don’t dare in using another brand’s intellectual property or a trademarked logo. If suppliers are involved in any illegal activities, its effects are also left on their vendor.
This means that it is always necessary to start a business with a transparent dropshipping agreement contract to rectify such problems. Make sure to keep this point in your mind while opting for the suppliers.
5. It Is Not Easy To Build A Brand
Like some other personalities like behind-the-scenes storywriters or song writers, dropshippers are the persons who have to deprive of taking the credit for their work on their own.
No matter what amazing product or service you are offering now, your customers will definitely want to know its brand without being focused on the shopping experience.
Branding matters a lot in ecommerce business since individuals love to visit their favorite online stores first to purchase even a small thing for themselves.
Being loyal to the customers will help you to attain a good traffic to your website especially if you are into the dropshipping one.