10 Reasons Why Your Dropshipping Business Will Fail
For aspiring entrepreneurs in the e-commerce space, dropshipping is an enticing venture. The promise of low operating costs and minimal to zero inventory management has drawn countless individuals into the business model.
But what exactly is dropshipping? You might ask.
Dropshipping is a business model where businesses list and sell products without keeping them in stock. When a customer places an order, the business purchases the product from a third-party supplier, who then ships it directly to the customer. This makes the business a middleman between the customer and the supplier.
However, like every other business model, success isn't guaranteed in dropshipping. You'll have to put in the work, approach it strategically, keep tabs on market insights, and know pitfalls to avoid so it can be a successful venture for you.
This article highlights some reasons that can cause your dropshipping business to fail. Understanding these reasons will equip you to navigate this business model successfully. Whether you're a seasoned dropshipper or just setting out on this journey, the insights shared here will be a valuable guide.
1. Inadequate market research
One of the most common causes of dropshipping business failure is the lack of proper research. Many people fall into the trap of thinking that a popular product will automatically get a ready market.
To be a successful dropshipper, you must be a student of markets. That is to say, you have to sell what people want to buy. To do this, you must:
Understand your target audience:
- Determine who your potential customers are, their demography, purchasing power, location, and gender.
- Uncover their needs, desires, and problems through surveys, social listening, and tools like Google Trends.
Source products that align with their needs and desires.
- Study the competition and analyse their strategies, including product selection, pricing, and marketing.
- Identify gaps and look for areas you can use to differentiate yourself.
Proper market research lays the foundation for starting a dropshipping business, as it allows you to align yourself with what the market needs instead of operating on what you want.
2. Starting as a generalist
As a beginner dropshippper, one of the pitfalls you should avoid is starting with too many products on your radar. While it may offer the advantage of having a wide range of products to cater to a broad audience, it has disadvantages.
Spreading your efforts too thin can result in a lack of expertise in any particular niche. And for a world where customers value helpful content, it can hinder your ability to provide the content they need.
Also, managing a wide range of inventory from different suppliers can get tiring. This could cause logistics issues that can lead to delays and mixups of orders.
Being a generalist can also water down your marketing efforts as you have to promote a wide range of products. Imagine running Facebook ads for ten different products. Aside from the money you'll have to spend, creating targeted and compelling campaigns for each of these products can become challenging.
Instead of being a generalist, you can own a niche and upsell. For example, if you focus on fashion instead of selling clothes only, you can be the go-to person for other fashion accessories that complement clothes.
3. Lack of niche research and selection
Selecting a niche without proper research or demand means flying a plane without fuel, which can cause your dropshipping business to fail. Without understanding market demand, consumer preferences, and the competitive landscape, you might be putting money into a niche that may not be profitable.
To avoid this, it is essential to employ effective marketing strategies. Analyse trends to gain insights into what people are looking for and niche down based on the results.
Another issue with niche selection is picking a niche you are not interested in. Even if it’s profitable, you might be unable to keep up when the challenges come, as they might be a little complex for you to handle. Look on the side of your passions and pick something that you can utilise.
Furthermore, pay attention to understanding seasonal products within your chosen niche. Some items may have peak periods and high periods impacting your sales. By conducting in-depth research, you can uncover these patterns and adjust your marketing and inventory accordingly.
4. Poor supplier selection
A mistake that can cost you your dropshipping business is poor supplier selection. The basis of this business model is on the third-party supplier, and if this supplier is unreliable, it can shake the very foundations of your business.
One of the most detrimental results of choosing the wrong supplier is denting your reputation. Imagine customers placing orders only to be met by delays, substandard products, and incorrect items. These scenarios are frustrating for customers and can tarnish the image you’ve worked to build.
To avoid this, you must have reliable suppliers and research their credibility. Look for reviews, feedback, and overall ratings. Scrutinise product quality to make sure it meets the standards you’ve set for your business.
Furthermore, you also have to consider their communication. It must be clear and prompt, as this is vital to resolving issues that arise. Consider return and refund policies as well as the supplier's ethics.
5. Insufficient marketing and promotion
It is often said that "best known beats best." This means you can be the best, but if you're not known, the least best person who's known will be picked over you.
Marketing is a lifeline for your dropshipping business as competition is fierce, and not tackling it proactively might cause your business to be hidden and overshadowed by the business with a robust marketing strategy.
To tackle this, it's crucial to employ a concrete marketing strategy to improve brand awareness and convert leads into paying customers. Also, pay attention to your copywriting, product description and website functionality.
This could include exploring digital channels like social media advertising, Google ads, SEO, pay-per-click advertising, email marketing, and even influencer marketing.
It is also essential to track your marketing efforts to see what's working and what's not. This will impact the decisions you make moving forward.
6. Bad customer experience
You could have a profitable niche, a fantastic supplier, and an excellent marketing strategy. But if you have a bad customer experience, you’d struggle to have loyal customers who will be brand evangelists.
With a bad customer experience, you may experience:
- Damaged reputation: Dissatisfied customers are quick to call out businesses online, potentially damaging your brand's reputation and throwing you into a frenzy of crisis management.
- Leads that don’t convert: slow response time to enquiries can lead customers to seek out the competition who'll treat their queries promptly.
- Loss in revenue: A bad customer experience can lead to a drop in sales, which ultimately means revenue loss.
To resolve this, you should prioritise responsive customer support. Make it easy for customers to find specific information on your business page or website, and respond promptly to calls, messages and emails to create a positive and lasting impression on your customers.
7. Overlooking customer feedback
Have you tried downloading an app from the Google Play Store but saw negative reviews, which made you go, “Nooo, I shouldn’t waste time downloading this app.” This is the same thing that happens when you overlook customer feedback. Potential customers may feel it will waste time and resources patronising you as the feedback from those who already did shows displeasure with your products.
Overlooking customer feedback can lead to the following:
- Loss of trust and credibility for your brand.
- Decreased customer satisfaction.
- Missed opportunities for improvement and innovation.
- Loss of valuable insights that can shape your marketing strategy and help you stay ahead of the competition.
To keep your business running, pay attention to customer feedback, work on them and improve your offerings.
8. Lack of adaptability and flexibility:
“Evolve or die. This evolutionary cycle is not just for people but for countries, companies, economies—for everything.”
The business landscape is continually changing, and for you to remain competitive and relevant through these changes, you must keep evolving with the changing times.
Embracing this change becomes necessary as it helps you:
- Continually delight customers with relevant products.
- Improve your supply chain.
- Set yourself aside from competitors.
- Scale your business for growth.
9. Delayed shipping
A critical aspect of any dropshipping business is timely shipping, customers getting their orders when they should and in good condition. But when delayed shipping becomes a thing, it is a stumbling block to your business success.
To minimise shipping delays and reduce customer dissatisfaction, you should:
- Communicate your shipping policies to manage customer expectations.
- Work with credible suppliers.
- Monitor stock levels to avoid collecting payment orders for out-of-stock products.
- Track shipments and provide real-time updates to customers.
- In cases where circumstances out of your control delay shipping, clearly communicate to the customer to avoid messy situations.
Your shipping buddy: Heroshe
To avoid delays, you should ship your products with Heroshe. We provide affordable and reliable services to get your shipments from the U.S.A. and the U.K. to Nigeria and Ghana.
Timely deliveries: We are always on time, helping you build a trusted brand and keep your customers happy.
Real-time updates: Get real-time updates on your shipment location and progress.
Intact packages: Missing packages? Not a thing over here. At Heroshe, we ensure all your packages arrive in one piece.
Competitive prices: We provide timely and reliable deliveries like the carrier trinity - U.P.S., DHL, and FedEx - but this comes at a fraction of their cost. See our pricing page for more information.
10. Lack of persistence and patience
Dropshipping, like every other business, requires time and effort. It's not a get-rich-quick scheme, and if you're going into it because you heard you could make a quick profit, you might get burnt out.
Approach your dropshipping business like you would approach taking care of a child. Set realistic expectations, as success does not materialise overnight.
As you patiently work towards building a dropshipping empire, continually adapt to market trends and fine-tune your marketing strategy to get more qualified leads who will contribute to your business's success.
Dropshipping success comes as a result of a perfect blend of everything that has been outlined in this article. It goes beyond the products you will be selling, spreads over your audience's desires and needs, and your ability to spot and adopt new trends.
Dropshipping business demands a commitment to exceptional customer experiences and learning from feedback. Shipping plays a vital role in this journey, and it's better if you go the Heroshe way, where shipping is done with love and swift delivery.
And let's not forget patience and persistence are the unsung heroes of the dropshipping journey. It's a marathon, not a sprint.