Why You Cannot Scale Your E-commerce Business - 6 Common Dropshipping Challenges and Solutions
Have you ever felt the struggle of putting a ton of effort into running your ecommerce store and witnessing no significant growth? You are not alone! Managing a business requires much commitment such as willingness to take risks and ability to work under high pressure. Even running a dropshipping business, which is among the easiest ones to start, still involves many complications. In this article, we will go in-depth into some common issues that experienced dropshippers face that might prevent them from scaling to 6 figures as well as recommend a simple solution that would help you handle them.
1. Little control over back-end matters
Dropshipping seems appealing to many entrepreneurs because it requires minimal set-up costs and upfront investment. However, it comes at the cost that you do not directly handle the goods that you are selling. This means that you do not have much control over shipping and logistics aspects of the operations, such as shipping speed or types of packaging, because they are mostly up to the suppliers’ discretion. If your suppliers execute them badly, it would affect your customer satisfaction. However, the suppliers usually deal with a large number of dropshippers, so they are usually not willing to make small changes to suit your needs unless you have a significantly large order quantity. As a result, it is hard for you to address your customers’ concerns and expand your ‘fan base’.
2. Separate shipments of items in the same order
Oftentimes, dropshippers work with multiple suppliers to source different products. Once a customer purchases an item, dropshippers will then place an order with their suppliers accordingly. However, if the end consumer buys more than one product at a time, there is a decent chance that those items are supplied by different parties. As a result, the items would arrive at the customer’ doorsteps separately. In many cases, there is no major issue when the parcels are delivered at approximately the same time. However, if the time difference between the arrival of multiple packages is large, your customers might think that their order is incomplete and write bad reviews about your store. Not only might this affect your brand reputation but it could also affect your PayPal account if you are using one.
3. Inconsistent product quality
Unless you order sample products from your suppliers, you will never get to see the actual goods. Even if you are satisfied with the quality of the sample, there is no guarantee that the items your customers receive are up to the same standards. This is one of the most concerning issues for dropshippers when they start working with new suppliers. The bad thing is that you would not know whether the products are bad until you receive excessive complaints and negative reviews from the end consumers.
4. Not enough inventory
This is something that many experienced store owners struggle with, especially those who are scaling their business. This could still happen even if you do your jobs (e.g. planning and forecasting) perfectly because it is often the supplier who is at fault. They may tell the dropshippers that they would have enough supplies on hand for scaling when in fact, they do not because they want to retain their clients. In the end, it would not only stop you from expanding your dropshipping empire and getting more sales but also hurt your brand reputation and lower customer satisfaction as shoppers do not get what they order or have to wait for an extended period of time to receive the items.
5. Lack of customisation and branding options
As mentioned previously, being a dropshipper means you have little chance to put your hands on the actual products or packaging. Hence, it is challenging for you to private label the products with your logo, customise the packaging, or insert personalised items such as thank-you notes as a token of appreciation for your buyers. If you are purchasing your goods from factories, they are usually not willing to help you brand the products or the packaging as they are not experts in branding but rather in manufacturing. Compared to businesses that are able to implement customisation, those who do not adopt this strategy usually earn a lower profit margin and have poorer brand recognition. Over a long period of time, you will lag behind other competitors in the sector.
6. Revelation of winning products
Every dropshipper understands the importance of winning products and how resource draining the process of product research could be. Thus, no one wants their winning products to be discovered by competitors. Even worse, they might do a better job of advertising and selling the products than you do, which takes up your market share and drives down your revenue. Nonetheless, some suppliers just do not care enough about their clients’ business as much as they do about their own. For instance, when a new client approaches them and asks for recommendations of some trending products, they straight up disclose the best-sellers of other clients. This is also the case if you order from some popular platforms such as AliExpress. If you purchase a large quantity of the same products from a single platform, the counts are pushed up, and the algorithms display the most-purchased products on the website.
The ultimate solution
If any of the above seems familiar to you, you are probably wondering what you can do to overcome them. The short answer is to work with a dropshipping agent because a reliable one would help you solve all the pain points above.
Third-party logistics: They tailor logistics arrangements according to your priorities and needs. For instance, they would use premium shipping methods if you would like the goods to be delivered faster to your customers. You can also ask for specific materials and styles of packaging to make it align with your brand messages and visions more.
Warehousing and fulfillment services: They help you stock up your inventory as well as gather all the items within your customers’ orders and ship everything out in one package.
Quality inspection and product certification: Firstly, they could make factory visits for some preliminary checks of the suppliers as well as their products. Afterwards, upon purchasing and receiving the inventory at their warehouses, they would also perform quality control to ensure that the products shipped to your customers meet your requirements and expectations. Furthermore, they can also help you obtain product certifications to provide your shoppers additional guarantee on the quality of your goods.
Long-term relationships with a large pool of manufacturers: This gives dropshipping agents flexibility and negotiating power in terms of the quantity and quality of products provided by the suppliers. For instance, if one factory runs out of stock, they can contact others in their network and obtain the products for you. Moreover, many agents provide free storage for a decent amount of time (typically 3 months), which allows dropshippers to stock up enough items for scaling.
Customisation services: When partnering with an agent, you are given plenty of options for customisation, from branded external packaging and internal content (e.g. gifts and cards) to customised product hardware.
Commitment to safeguard client’s business: A trustworthy agent should try their best to protect their clients’ business. At the very least, they would refrain from revealing their clients’ identity and their trade secrets such as winning products. Some agents are even willing to sign a non-disclosure agreement (NDA) to earn your trust.
At Xianchao Logistics, we practice what we preach to help you grow your business to its full potential. We provide many types of services for your store, from sourcing to inventory management, or order fulfillment to branding. Do you have a dropshipping business to grow? Discuss with us and let’s get started ASAP!
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