Why dropshipping fails
Dropshipping has in the last decade taken the world by storm. With a dropshipping related query, post or forum to be found on every annal of the internet, it is no surprise that a new entrepreneur adapts the mantle of dropshipper every second, flooding the market with new ideas, and trendy products. Yet for every successful store out there, stands the ghost of nine failed ones behind him. And in the spirit of success, we delve into some of the reasons behind this, so you are spared the impecunious fate that often afflicts so many newcomers to the industry.
Getting to the root of the problem
Headlines and openings such as the ones featured in the text so far may perhaps hold the negative laurels of tainting the prospective outlook of the dropshipping industry as a whole, but what you are soon to discover is that eCommerce, dropshipping in particular is far from a plateau, in fact, it is in its nascent phase with a lot more room for growth, and even more room for new stores. With a year-on-year growth of 7 percent, to the colossal figure of $4 billion made collectively in the industry so far this year, dropshipping is as a business model still as successful as ever, with no sight of a plateau in the figures on the horizon for the foreseeable future.
Despite the high profit-making potential in the business model, coupled with the relative ease of setting up, and starting a store of your own, it is then perhaps surprising that according to industry experts 20 percent of new businesses are doomed to fail within the first two years of operation. With an even greater rate of failure for those operating in their first year of business, 90 percent to be exact.
With this in mind one is easily lead to the conclusion that the means for error lies not in the business model, or the industry itself, but an easily amended set of variables, that when put into play whilst in the process of operating a store can act as a brick wall blocking your path to profitability. Using our years of service to dropshippers in the industry we identify the mistakes that are common to all stories of failure in dropshipping, so you can be sure to be cautious of them, and not fall into the same traps yourself.
Nothing worthwhile is ever constructed on a whim! And if ever there was an aspect of life that required a lot of planning beforehand, it’s a business. Dropshipping may be one of the few business models that permit easy entry, closing in on the gap between entrepreneurship, and wanting to start a business, but being constrained from doing so by a lack of capital and a lot of bureaucracy around most conventional business models. This is why dropshipping is often the talk of the table whenever anything eCommerce comes up, but this is in no way an excuse to negate on adequate preparation when venturing into the world of dropshipping.
The barriers to entry might be low, but maintaining your presence, and growing your store to profit margins isn’t. This is why planning is crucial to keeping your store afloat after its launch. Stores that lack preparation are evident in the messy, unorganized layout of their sites, and an inventory ripped straight from competitor sites, with little variation to separate such stores as a unique entry into the dropshipping world. An unorganized site is a cause for concern in and of itself but coupled that with clone products, and you stand to lose customers out of a fear of bad customer service, and distrust in the brand you’re trying to create.
Two pitfalls that are virtually impossible to recover from once in effect. Virtually stunting your growth as an entrepreneur permanently, effectively banning you from ever participating in a dropshipping venture again unless you up for a change of identity. Situations easily prevented by properly planning your store as opposed to simply opening it on the fly.
Patience, or a lack thereof
Patience is a virtue akin to gold on the internet, and it is especially useful to mastering your journey to success as an entrepreneur in the field of dropshipping. In fact, most of the pointers in this article can be turned into success stories through the simple act of patience. Chances are you’re not going to get your ad campaigns right on your first try, and to discover which social media platforms bring your store the most conversions, and traffic you’re going to have to try your hand at each one, and weigh your options once you’ve had a go at each one too.
Stores and products also require a lot of testing to determine which ones sell the best and ensure every aspect of your store’s customer experience is working as advertised and to do all of this right you need to acquire the skill of patience, and persistence. A lack of patience is where the majority of dropshippers fail, yet it is still one of the more easily rectified hurdles to one’s success, and skill easily acquired should long-term success, and profits await you in the foreseeable future.
A lack of resources
Led astray by the promise of easy money, and virtually no amount of capital to acquire it, a lack of investment is another reason that most dropshippers fail. One must understand that it takes both time and resources to land your first sale on your store. This aspect of your business is especially pertinent considering that in the nascent phase of most store’s careers, paid advertisements act as their main source of traffic.
Your first ad spends budget is likely to be spent as a test in which you gather data to help you launch a successful ad campaign that brings in traffic, and sales by extension the second time around. Dropshipping in general is all about traversing a path most conducive to your success as a brand, and store. To do this, and eventually reach your desired destination, it’ll take a lot of practice, and to actually acquire some kind of knowledge in your practice run, you’ll need money, and a fairly decent amount of it too, to learn what best to do in your next ad campaign so it’s a profitable venture the second time around.
A central component to any dropshipping store is the niche you choose to service, most dropshippers err in this part of the selection phase for their store, and pay dearly for it by extension. There is a general consensus gathered up from years of experience in the industry as to why niches act as one of the reasons dropshipping stores fail, and there are always two mistakes that pop up all the time. First is selecting a niche in a highly oversaturated and competitive market, and although this isn’t an automatic disqualification from your daily operations, it can make being competitive in the industry that much harder. To avoid your store from going stagnant due to the competitive nature of the niche your servicing, always list only the trendiest products in that category in your inventory. Do this by using the best product research tools such as those offered on Product Mafia, with each of their curated items.
This can help you overcome the fate of being a stagnant sales pool in a highly competitive niche. And the second reason for failure in the niche sector of your store is choosing to operate in the wrong niche for your intended target audience. The popularity of certain products offered in a store varies by factors that include geography, age, and gender of the intended audience you service. Marketing female fashion items, or beauty products to a predominantly male audience is a surefire way to fail. Or marketing a tech niche store to a region known for the purchase of articles of clothing is also a means to see your store fail within its first year of operation. This brings us to the next entry on the list.
Not knowing your target audience
You need to be specific when approaching an audience with your ad campaigns. You don’t want to find yourself in the precarious position of spending tons of money on your ad campaigns in the endeavor to bring more traffic to your store, only to have that traffic not result in any sales, which is the whole point of ad campaigns in the first place. This is why knowing your audience, and selecting a niche appropriate to them is so important. Neglecting on developing a general idea of the audience you want to service to, can cost you in terms of ad spend, and since marketing to the wrong audience is ad spend you’re unlikely to get back, you’ll be forced to close shop due to a lack of funds, and capital to reinvest in the business.
Reliance on bestsellers as a sole means of income
This one is something that one encounters all the time when reasons for failing in the dropshipping industry come up. You’ve reached the stage in your business endeavor where you’re starting to become profitable, and products are being sold. The only problem is that only a few select products appeal to your customers, and in the spirit of capitalism you give your undivided attention, and resources into said products, or the products bring in so much money for your store that you see little reason to devout any more effort into the product side of your store and put your efforts into the other aspects of your store that could do with some more TLC.
But a couple of months down the line, and it turns out that product was in a manner of speaking a product of a seasonal trend, a trend that has since lost its appeal. Now you have a ton of new visitors to your site who are rather disappointed in the limited inventory of products that your shop keeps, now more than ever since you don’t even have products that interest anyone in your audience no more. This is a story that so many dropshippers can relate to, one that you can easily avoid yourself simply by expanding your horizons as far as products are concerned and always remember that product trends come and go in the industry, and you’d do wise to always have a contingency in place for whenever the popularity of a product reaches its sell-by date.
Something easily achieved by constantly testing and adding new products to your store, as to reduce your reliance on bestsellers, and have alternatives in place for when they lose their appeal, and trust me when I say that they all do at some point.
Prolonged shipping times
Customer service is everything as far as eCommerce stores are concerned, and a central part of a positive customer experience in your store is the shipping. Take to long on your shipping times, or fail to communicate the specifics thereof in clear print with your clientele, and you risk becoming idle as far as profits are concerned on the behest of customers demanding refunds on the products they order, or a fate worse than death in the industry- a loss of trust and faith in your brand. Such faults could lie with the store owner himself, or the supplier he chooses to list his products from.
Due to the limited say you have in a products shipping, delivery time, and packaging it helps to always vet your chosen suppliers religiously, and leverage services like ePacket when coming to a conclusion on which suppliers to use for your brand.
Having touched on some of the most prominent reasons behind the failure of dropshipping stores to be found in those shops which have encountered hurdles along the way. It is important to note that most of these problems aren’t permanent dispositions from the world of dropshipping, in fact, if you’re patient and persistent enough to learn from the mistakes you make whilst running your store, and improving on them you’ll still find a pot of gold at the end of the rainbow. The problems listed are simply speedbumps along the path in your journey.