If you ask how to start a drop shipping business, there are so many resources to guide you start. Instead, I think the best way to start a drop shipping business is "Know the enemy, know yourself,"
It means you must know the problems of before you start dropshipping so that you can do better to run successfully.
Therefore, in this post, I will show you the common FAQs or problems in onlline dropshipping business many people asked online.
Dropshipping is not the kind of retail business model that everyone is familiar with, even to veterans of the niche industry. However, it is very useful for both improving revenue and convenience. With benefits like these, anyone would be smart to jump on the bandwagon. However, with this kind unfamiliarity, it is almost impossible to avoid mistakes in your drop shipping business, and this results in the loss of vital revenue, or worse, will cost you the survival of your online retail store.
The only solution to the problem is knowing what the dropshipping problems are. It helps even more if you know how to solve each one, although, not every single problem has a solution because sometimes, the best solution is to avoid these drop shipping mistakes.
There is no question that the dropship model is legitimate. It is being used by retailers and wholesalers alike. However, what determines your shops legitimacy in the large niche market is your operation, and if your supplier does not handle its side of things well, then, you may cause yourself problems with your drop shipping operation.
The question now here is how can you determine the legitimacy of a dropship supplier?
You can do these three in stages:
1. Test the knowledge of their sales representatives
2. Ask for small test orders to determine their fulfillment speed and communication
3. Use existing customers as reference
If they can satisfactorily check all the boxes, then you should consider them as a partner in the future.
Related Reading: Drop Shipping Business Opportunities and Ideas in 2019
This is another factor that can help prove the legitimacy of your business because a business license can bring you almost anywhere.
Also, it helps you establish partnerships with legitimate dropship suppliers, which lowers the chances of drop shipping problems from happening because normally, legitimate suppliers will be asking for a Sales Tax ID Number, which comes with a business license. If they do not ask for it, you might have to question the legitimacy of their operation.
Let us face it – technology heavy ventures are daunting, and can sometimes pose a challenge, especially investments like e-commerce shops because of the many complex factors that needs to be set up so it can find its legs and gain some traction. Businessmen however wants to avoid dropshipping mistakes, and rightly so. Every mistake is costly and could cost you your business.
What do some tend to do?
They end up hiring people who are “experts” in the field and leave it to them to get the show running. As a result, you would not have any idea how your online store is run. That is a cut into your capital, which could have been used to invest in products, and other things such as marketing.
That is why, experts in the field believe that it is vital to ensure that you try to limit the cost of starting the enterprise at $1,000. That means you have to be more hands-on and learn how to do it yourself. That way, if any dropshipping problems happen in the future, you won’t have to pay someone else to solve your problems.
You may have also concluded this, but it will also cost you your time and patience – two vital components to the success of your business, other than the money you put into it.
In a drop shipping business model, you get paid through the difference of the amount that your customers pay you for the retail price of a product to the wholesale price that you pay your supplier. Anyone who has been in the industry for a while knows that to buy at a wholesale price means you get discounted prices.
One point that you have to address with the supplier though is the handling price. This is basically what you pay the supplier for shipping the products ordered by your customer. You can always negotiate a cheaper price to get more out of your business. However, this normally costs you $2 - $5 for each item bought. If a deal for a cheaper fee is not met, then, you can always up your prices a little bit to make up for it.
This revolves around a term known in the dropship community as nexus. It is basically where your shop has a physical presence. It could be either of the following:
● Where your headquarters is
● Employees working remotely for you
● Warehouse where your inventory is stocked
Sales tax can be charged as long as you have these3. However, it has to be in a location where the sale was made, otherwise, you will have legal problems with your dropshipping operation.
This however is how it is with a straightforward transaction where only 2 parties are involved. In dropshipping, there are three. To explain it simply, where both you and the supplier has nexus, a sales tax can be charged. If only the dropshipper company has nexus, then they can charge both you and your buyer. On the other hand, you can be exempted if you are able to present a resale certificate. This, however, comes at a cost because certificates not issued within the locality where the sale was made may not be accepted for that specific place.
If neither of the selling parties have nexus, the end customer is free of any sales tax, and if the seller insists on charging one, then, they will have dropshipping legal problems.
Again, dropshipping involves three parties – the buyer, the seller, and the supplier. In most cases, the seller partners with a drop ship company who is acknowledged on every purchase and delivery. However, not every customer is comfortable with this arrangement. Others are more confident if the seller has the stock on hand.
Also, this also risks losing a customer because they may cut the middle man and go straight to the company themselves.
This is where blind dropshipping comes in. It removes the drop shipping problems that the aforementioned hurdle makes by making the supplier’s identity unknown to the buyer. This way, you remove the risk of having your customers stolen from you, while projecting an image where you have your items on stock at all times.
One of the biggest failures of a dropshipper is letting your buyers purchase out of stock items. This is a big no in any retail venture.
If you failed to avoid this, call the customer personally and apologize. Do not write them an e-mail or send them a text message. It pays to show such a genuine act especially that money was involved. Although, you can always look for similar products from other suppliers just so you can fulfill the order. Then, as a contingency, do not partner yourself with one company. Have options available in case another mishap happens.
Also, before pairing yourself up with a supplier, it might be worth checking if they have any way of providing you live updates regarding their inventory so that you can also keep your shop up to date for the customer’s sake.
This is more of a subjective question because what is best depends on what your e-commerce shop requires. Although, AliExpress has been commonplace. They may have bad reviews in the past, but, they have turned themselves around and has been avoiding the dropshipping problems that plagued their operation in the past.
This is not to say that there are no companies better. To be honest, there are. It just so happens that AliExpress is more popular and well-established in the retail and wholesale industry simply from its association with Alibaba.
If you want to find more quality dropshipping suppliers. There is already a complete list : Top 10 Verified Wholesalers and Dropshippers.
Dropshipping suppliers can be found in 3 ways.
● Find at a directory
● Search for dropshipping website online
● Attend a trade show
World Wide Brands, for example, as a directory provides a list from which you can choose from. You just have to write an e-mail to these companies and pick the one that fulfills the need that you envision for your e-commerce shop. Just ensure that they can help you avoid dropshipping mistakes to ensure a faithful operation to your target audience. There are other directory like: Salehoo, esources, the wholesaler, HKtdc.
If you plan to find china wholesale suppliers, you can read on this:
Many international buyers go to China for wholesale and then resell to their countries. Say that you want to import electronics, clothing, toys or otheres. Well, there are12 picked reputable companies help you dropship now.
Normally, yes. These two have been proven to help avoid dropshipping mistakes in spite its massive suppliers may deceive customers, but they have improved upon recently.
Also, there is no difference between the two of them, just to erase any confusion. They are helmed by the same owner, so rest assured, both provide the same quality service that both are known for. There are also some websites like Alibaba in China, though they are not very famous overseas, they are middle sized and professional in wholesale and drop shipping business for years.
Find a product that gives you the most profit is one of the challenges with drop shipping. The internet lists some of them if you needed any help. However, there are industry experts who believes that accessories for electronic devices and clothing are the most profitable among all the products in the niche industry.
This is based on the reason that consumers do not think twice buying items that helps improve an experience.
For an industry whose transactions can be made on a personal level, having international drop shipping are failures waiting to happen. However, it is possible.
As mentioned, drop shipping poses challenges, and these could possibly be:
· Finding a reliable supplier
· Finding products that sell
· Customs of the Destination Country
· Order Fulfillment Risks
· Long Waiting Time
Order returns is one of the problems with drop shipping, and it occurs more often that you think. That is why, it is important that you know how to manage it as the seller. However, there is an unspoken agreement among those involved in the industry that if does happen, the seller should just take the loss. Give the customer their money back and let them keep the product if they do not want it replaced. This actually instill confidence and trust that is vital in retail.
If you do not want to absorb any losses, and the customer returned the product, you always have the option to re-sell it. Otherwise, you may return it to the supplier for a refund especially if it costs you more than $50.
Branding is somewhat helpful and helps remove one of the challenges in dropshipping which is to standout. You have to remember that there is never a shortage of competition in this industry. To brand means to stand out; to create an individual identity. It also helps customers remember who you are and the products that you specifically offer.
There are those who are always willing to teach aspiring online retailers knowing how daunting it is knowing that there are avoidable problems with drop shipping. You can always look up YouTube channels or blogs made by industry experts that could give you tips, make you aware of the challenges, and how to successfully manage them.
With an industry as big as dropshipping, problems normally abound. Sometimes, it is just a matter of knowing what they are and how to de-escalate them before they are beyond saving.
Read on this guide: 50 Resources For Ecommerce Dropshipping Business
Hopefully, this comprehensive list of dropshipping problems questions will help you deepen in this business before you start a drop shipping business.
Do you have any other ecommerce dropshipping problems?
Anyway, leave a comment let me know and I will also appreciate it if you can like my post or share this content :)
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