Drop-Shipping : The Perfect Zero Risk Enterprise
Much as I hate telling you this, though I am not a negative person, I’d like to think that it is important to tell you what I know and give you some warning about certain issues on dropshipping as part of your business plan.
I don’t want to discourage you but I have the urge to help you so that you can avoid certain issues and predicament most often encountered especially by people who are first time users of dropshipping.
Based on my studies, you often read all the good sides associated with dropshipping. Almost all are guaranteed success type of websites. They often sell dropshipping directories and related services but the problem is they do not show the real score behind the other kind of the coin.
I will be nasty here, not because I am really like that but because I want to help you so that you will open your eyes wider from an illusion.
Here are the basic downsides of dropshipping that you must consider.
YOU ARE NOT IN CONTROL
- Since you are not the manufacturer or the original supplier of the products, you must admit that you are at their mercy or the mercy of fate. What will happen to you if you are dealing with a business that started to be unreliable, untrustworthy or the business got busted? What will happen if their export regulation or import regulations changes?
- Where will that leave you?
- Remember that your business is dependent on the supply of goods. Once they disappear, your business will have the same fate.
MOST COMMON DIFFICULTY: OUT OF STOCK!
- This is inevitable. No matter how reliable your supplier is, sometimes in their business life, they go out of stock on certain goods or they must have changed their product range. If you are not aware of what is happening with your supplier and you have pending orders with your customers, you will be facing some dissatisfied customers. They have all the reasons to act that way. They have paid for the product and the delay is no longer bearable.
“OH NO – I DIDN’T WANT A FULL TIME BUSINESS”
- Your purpose is to jump into big profit as soon as you get in the business therefore; you might be tempted to get as many products as possible. This is because on the first time you came into the business you hit it off right away. You might have found yourself expanding your business this soon. You never imagined it will happen and just thought that you will apply a very simple business dropship model.
Are you under control?
Overnight, your dropship selling business is successful. Everything is overwhelming for you. Running the business now seems complicated. You thought you were going to avoid these issues but you have to face them.
- Customer service
- Technical support of the products
- Product return policy
- Legal issues
- Growing overheads (You need to add more manpower)
- Accounting and record keeping
- Marketing budgets
- Time management and stress related to work
- It seems that dropship suppliers do not offer exclusive contracts to anyone in particular. This only means that anyone equipped with know how and knowledge, any dropshipping business can copy your business acumen and then compete with you and who knows will take down your business completely if you are not careful.
- Since most dropship sellers will be running the business through the internet, they are exposed to the risks involved with running the business online. These includes copying of the content of your website without your authorization, eventual increase in your advertising cost, increase competition from businesses that are larger than your business and unpredictable customer traffic if you are relying on search engines.
If your business is online, you will have a hard time in succeeding if you are a beginner in the web.
- It is but normal for import business to import large stock of items to cover the cost of insurance and storage of the products. What if, the goods won’t even sell, or the prices of the goods had gone down overtime. This will make the whole stock very risky for the business. However, in dropshipping that is more unlikely to happen. The risk here is what if the money gets lost? It could be because the dropshipper disappear or it was lost during the shipment. Things like these are the risk involve when you are dealing with dropshipping. Likewise, if you wish to offer money back guarantee or a customer cheated on you, again you have financial risk involve here. One or two cases of frauds or refunds on your part will greatly affect your profit. If this happens too often, you might loose your business.
LOW CUSTOMER LOYALTY
- As a dropshipper naturally your prices as higher that your supplier. If your customers would know where to go, they can easily stop doing business with you and buy the same price from your supplier. Once your buyer is planning to order the same product again and in much higher quantity, it is more likely that they will order directly from the source. With the technology nowadays, there is a great chance that they will do their research and locate your supplier. This will cut you out from the scene.
- Even this happens to you, you should build loyalty with your customers. Instead of buying from you only once, with the good attitude you are showing to your customers, they will still find time to buy from you. As a dropshippers, you have no hold on the product. The product has no physical presence for your customers therefore; you have to work hard to build the identity of your product and repeat-customer business.