Making money online can be one of the most uncertain ventures out there. If you don’t do your homework, you could spend way more than you make and dig a hole for yourself.
Dropshipping can be one of these ventures. And when people don’t do dropshipping right, they fail and bail.
This is one of the reasons the internet is full of dropshipping horror stories. But those people were likely the “get rich quick” types who expected to make money for little effort.
Dropshipping can be easier than a traditional business, but it still takes effort. And it’s still a viable way to make money online through eCommerce.
But will it really make you money? Scroll onward to find out.
1. The Problem With Dropshipping
The economy of logistics has changed entirely in the last ten years. Amazon now uses an algorithm to predict what you’re going to buy and when. They ship the item to the closest fulfillment center just in case they’re right.
This allows them to ship you the item in record time for record cost. And if you’re a Prime Member, you get this record shipping speed for free.
Before the advent of logarithmic and predictive logistics, two-day shipping cost nearly $20 or more depending on the item. Who wanted to pay that kind of money for shipping? Nobody is who.
Back then, people were willing to wait a couple weeks to save on shipping. If you wanted a Mac computer game and you didn’t have a Mac retailer nearby, you were glad to wait for your item.
Dropshipping fit right in. If you had to wait an extra week to get your item, who cared? Shipping was cheap, the item was cheap.
2. People Are Impatient Now
Today, people have been conditioned. They can have Christmas early now…like ten days early.
No longer does last-minute shopping mean wandering the halls of your local mall. It means flipping through your phone only a few days before your mother’s birthday.
Dropshipping doesn’t compete well with this new culture of microwave shipping. If you’re ordering cheaply from across the world, you can’t have the item at a nearby fulfillment center ready to deliver in two days.
If you’re being honest about how long dropshipping takes, you’ll lose a few people to Amazon and now even Walmart (if you buy more than $30 worth of stuff).
3. Dishonesty Within Dropshipping
Some dropshippers, in order to compete with the big boys, decided to hide the fact their shipping takes FOREVER. Nowhere on their site did it say shipping takes a whole month!
But people who are so used to automatically getting two-day shipping service will sometimes just click buy without questioning the lack of a shipping date. These people stand on their doorstep two to three days later and wait until sunset. They then scream bloody murder when their package doesn’t arrive.
These dropshippers are giving the industry a bad name. They’re driving away customers for the rest of us.
This is why it’s imperative you remain honest with your customers. If you’re not going to maintain your own inventory from home or through Amazon fulfilment, you need to tell people.
More on ways to make it seem less bothersome to wait for a package later.
4. Costs Can’t Compete
In only the past few years have we seen prices drop significantly in the manufacturing world. Why?
It’s not the reintroduction of slave labor. In fact, labor conditions have improved across the globe.
It’s the improved manufacturing processes.
3D printing is so ubiquitous that even public libraries are installing printers. And the ability to cheaply print parts on demand has drastically dropped manufacturing costs.
3D printer prices dropped 30% in 2017. This, in turn, dropped manufacturing cost.
The cost gap between cheaply made stuff from across the sea and higher quality products is closing. This makes it harder for dropshipped items to stand out against competing sellers.
On top of smaller price gaps, the trade war with China is increasing costs if you’re shipping from China. This is especially true in the tech market.
5. How to Salvage Your Dropshipping Business
Just like any business, how well you do is tied to your marketing. (What? You thought you’d get away without me mentioning marketing? Think again!)
If you’re not seeing any traction with your dropshipping store, the first place you need to look is your marketing. Ask yourself these questions:
- How are you promoting yourself on social media?
- Are you using the Instagram Influencer model?
- Are you researching your PPC keywords or just casting an impossibly wide net?
- Are you using email marketing?
Your Store Probably Sucks
One of the weak points in most failing dropshipping stores is the storefront itself. It’s too easy to set up an online storefront now. And people think that if you build it (in a few hours with little investment) they will come.
This is far from true. Instead of going the DIY route with a default storefront, hire someone to set up your storefront for you.
6. Dropshipping Might Not Be Dead But…
Dropshipping used to be the easy alternative to running your own store. The pros were easy to see: No need for inventory; only be a go-between.
But with how much it takes to maintain a profitable dropshipping business, you might as well just run your own business.
With small-time logistics companies on the rise, it’s easy to start selling and shipping. Just pick your preferred LTL freight shipping company, gather your inventory, set up your store, and you’re golden.
Amazon fulfillment is almost another form of dropshipping without the insane shipping times. Instead of needing a garage to keep your inventory, you can have Amazon store and ship your inventory for you.
They give you great tools for keeping track and setting up a storefront. Less hassle and you can take advantage of Prime Shipping if you want.