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eCommerce has taken a big swing, and online shopping has become second nature to most customers. As such, this gives us a unique opportunity to take advantage of the growing eCommerce market. Now, with the rise in eCommerce shopping, dropshipping is a profitable and appealing business venture to take part in. However, just like when running any business, it comes with its dropshipping challenges.
In fact, these are challenges that we need to learn to overcome to succeed. But, instead of taking them as obstacles, we can turn them into opportunities.
So, in this article, we will learn what the major challenges of dropshipping are and how to overcome them. More importantly, we will learn how to turn our challenges into opportunities.Â
To truly take advantage of the dropshipping model, we need to understand what dropshipping is and how it works. To elaborate, dropshipping is a low-investment and low-risk eCommerce business model. Uniquely, the dropshipper doesn’t hold the inventory but instead works with suppliers. Notably, we only purchase the inventory from our suppliers after making sales. With all things considered, dropshipping is a retail fulfillment method.
Furthermore, any sale we make to a customer gets shipped to them from a third-party supplier. Interestingly, in the process, we never actually touch any inventory while making a profit. To demonstrate, let’s look at an example.
Let’s say we are selling a pair of women’s shoes for $100. On the other hand, our supplier has priced them at $60. In this transaction, with our solid profit margin, we are earning a hefty profit of $40. Thus, we act more like a middleman in the transaction.
However, there are a few challenges to this model that we need to learn to overcome. So, let’s dive into them.
As with any business, there are numerous challenges that come along the way. However, the key to success is not only overcoming them but also turning them into opportunities. For dropshipping, the 10 most prominent dropshipping challenges are:
With all that being said, let’s dive into each of these and see how we can overcome them.Â
Undeniably, one of the biggest challenges, when we dropship, is building a brand around our store. Because we’re often sourcing mass-manufactured products it can be difficult to build brand awareness and attain higher brand recognition.
To note, it can be hard to stand out from the competition since most dropshippers offer the same products in their stores. Actually, it can be difficult to differentiate ourselves when our product catalog is similar. So, we need to find ways to make ourselves distinctive and more attractive than our competitors.
On that note, there are a few ways to overcome this challenge:
First and foremost, we can build a customizable website. What this means is that we can brand our store. To clarify, we can customize our store using our brand design and colors and include our logo wherever necessary. With this, we can become recognizable when people shop from our store.
Plus, we can also market our dropshipping store. In fact, marketing will help us boost our brand awareness and recognition. Notably, we can take advantage of email marketing, influencer marketing, and pay-per-click advertising (PPC).
Moreover, by offering exceptional customer service we will provide an enjoyable shopping experience to our customers. As a result, we can remain at top of mind for our customers and build loyalty.
Also, we can take advantage of private label dropshipping. This enables us to ship our products from our suppliers repackaged with our branded packaging. Consequently, with private labels, we can also brand products.
Lastly, we can also leverage white label customization options. With white label customization, we can personalize things like packaging. As a result, our customers get the sense that they are purchasing from our brand rather than our supplier’s. With all that in mind, we can start working on these solutions to solve our brand awareness challenges.
Next, a challenge we can face as dropshippers is finding reliable and trustworthy suppliers. Actually, finding suppliers that we can rely on is key because then we can ensure that our store is credible.
Furthermore, we also need to consider what makes a supplier reliable. To elaborate, a reliable supplier has solid and fair business policies. And, a reliable supplier offers good quality items, ensuring the customer is satisfied with their purchase.
With that in mind, there are a few ways to find trustworthy suppliers:Â
Notably, we can work with AutoDS-supported global suppliers. This is a great way to ensure we are sourcing from dependable suppliers. Notably, this collection of suppliers are the best to work with because they pass all the necessary requirements. Plus, when working with them, we can automate our business.
Next, we need to make sure we go through our supplier’s reviews. Undeniably, reading through social proof gives us insight into how the supplier operates from a customer perspective.
What’s more, we need to check out their product range. If a supplier offers a good variety and range of items, it also enables us to offer diversity in our store.
Furthermore, we need to ensure that our suppliers have international warehouses so we can reach a larger market. Plus, this will allow us to offer shorter shipping times internationally.
And, most importantly, we always need to thoroughly read through the supplier’s business policies. Undoubtedly, a supplier’s business policies give us the rundown into how this supplier works and what we should expect if we collaborate. Besides that, these are also the policies we extend to our customers in order to have transparency in the fulfillment process.
Finally, we want to make sure that our suppliers provide excellent customer service. In fact, a supplier with good customer service will allow us to enhance the shopping experience for our customers.
To continue, another challenge dropshippers face is long shipping times and delays. Since shipping is handled by our supplier and not us, we don’t have much control over it. Interestingly, different suppliers have different processing, billing, and shipping policies, so shipping times vary. This can be a challenge when we are sourcing from Chinese or overseas suppliers.
To elaborate, when sourcing from such suppliers, shipping times tend to be much longer. Additionally, this can result in delays, which results in a poor customer experience.
However, there are ways to handle this obstacle and make sure our customers get their items on time. Actually, the most important thing we need to do is have clear and honest communication with both our supplier and our customer. Thus, we need to set clear guidelines with our customers about the shipping times. And, we need to set solid ground rules with our suppliers regarding the shipping.
Additionally, we must find suppliers with domestic warehouses in the markets we dropship in. Consequently, this allows us to cut down on shipping times as well as on delays.
Moreover, a challenge that we need to learn to manage is running out of stock. Uniquely, because we don’t handle our own inventory, we don’t have much control over stock availability. As a result, offering a product that is out of stock may turn away potential customers.
To demonstrate, let’s say we have a store of over 1,000 products. As such, the product catalog is too big for us to be able to manually check the stock availability of each individual product. Thus, we may end up offering a product that is out of stock and risk appearing unreliable to our customers.
However, there is a way to overcome and handle this dropshipping challenge. Utilizing an automated stock monitoring tool will help us avoid losing sales. For example, if our supplier is out of stock of an item, the AutoDS tool automatically won’t let us import the product into our store.
Plus, this is why we should work with multiple suppliers. By working with multiple suppliers, if an item goes out of stock from one supplier, we can find that item from another supplier. Thus, we can ensure we’re always putting our customers first and providing the best service possible, even if we are out of stock.
Furthermore, similar to stock shortages, we also don’t have control over product price changes. Specifically, for our profit margins, we need to consider the lack of control over supplier price changes.
What this means is that suppliers can increase or decrease prices which conflict with our own profit margins. And, we risk losing a portion of our profits due to price fluctuation because we also want to remain competitive.
However, we will never lose any profits when using an automated price monitoring tool. To elaborate, this tool monitors prices around the clock and if there is a price change detected, it automatically updates our pricing. This helps us adjust our pricing in order to keep a solid profit margin while remaining competitive.
Interestingly, with suppliers like Amazon we run the risk of having our buyer accounts locked. To clarify, if we’re fulfilling hundreds of orders per day, Amazon can lock our account. This is because we are constantly making hundreds of purchases from our personal buyer accounts.
However, we can avoid this dropshipping challenge by using Fulfilled By AutoDS. Fulfilled By AutoDS has multiple buyer accounts, so we don’t have to worry about any accounts being locked. Thus, by using these various buyer accounts we can avoid account locks and fulfill orders with ease.
Notably, when making our purchases with this tool, we are not using our bank accounts. In fact, we load a balance on our Fulfilled By AutoDS accounts and use that. This allows for further flexibility and scalability.
Next, another dropshipping challenge we may face is product quality. Since we don’t hold our inventory, the products we sell never actually go through our hands. Because of that, we can’t be sure about their quality.
Undeniably, sourcing high-quality products is a dropshipping challenge because a poor-quality item can fall into our customer’s hands. In that case, we lose credibility as well as risk getting a bad review and by extension, lose customers.
With that being said, there are ways to ensure we source high-quality products:
First and foremost, the easiest way to ensure we are sourcing a good quality product is to go through the product reviews. To clarify, we can go on our supplier’s product listing and read through the product reviews. As a result, this helps us understand if a product has good quality directly from our own peers.
In some cases, we can utilize product inspection services. The inspection services ensure that the product is of good quality. For example, with the AutoDS Product Sourcing service, items you source through AutoDS pass through its warehouse and get inspected before shipping. This way, we ensure items meet our quality standards, reducing the chances of defects and customer dissatisfaction. Furthermore, items shipping from the AutoDS Warehouse have better shipping and delivery times.
Lastly, we can also test our products. Now, the way we would do this is to order and test the product ourselves. However, in the long run, that might not be sustainable if we are building a product catalog of 1,000+ items. So, we can rely on the previously mentioned tactics to ensure proper product quality.
Another dropshipping challenge we can face is customer product returns. Actually, it can be difficult to navigate product returns. To elaborate, because we don’t hold or ship the products, the returns must go through our supplier. As such, it can get tricky to handle returns.
This is why we need to offer exceptional customer service. Notably, with great customer service, we can put our customers at ease when dealing with returns. As a result, this clear line of communication allows for a smooth product return process.
Additionally, we need to have clear business policies. On our dropshipping store website, we need to clearly state both the shipping and the returns policies. Consequently, this allows us to inform the customer of their options and protect ourselves.Â
To continue, finding winning products to dropship is a dropshipping challenge that every dropshipper can face. With intense competition, having best-sellers in our product catalog enables us to attract customers.
But, product research is a very time-consuming and laborious task. Actually, it can take hours of our day continuously in order for us to stay on trend with the hottest products.
With that in mind, there are various ways to do proper product research without losing hours of your day:
First, we can start by checking out the best sellers lists on our supplier website. This helps us understand which products are selling well. For example, we can utilize Amazon’s best sellers list.
In addition, the AutoDS Winning Products Hub is a great tool for finding winning products without investing hours. As a matter of fact, this tool helps us discover, source, and research trending dropshipping products in no time. Plus, after we find profitable products, we can utilize this tool for product imports and easy one-click returns.
Finally, with AutoDS’ blog and YouTube best-sellers playlist, we can easily learn which products are best-sellers. From this content, we can get access to exclusive product suggestions, enabling us to offer the hottest products out there.
Lastly, the final dropshipping challenge we can face is manually importing products to our store. Now, manual dropshipping is not only laborious and tedious, but it’s also very time-consuming. Importing a large number of products manually to our dropshipping store can take forever. This is because we have to import each product individually.
Essentially, by manually importing our products, we have to individually copy/paste each product’s information from the supplier’s website. Then, we have to transfer the details one by one to our selling channel, which takes up much of our time.
However, in contrast to doing this manually, we can automate our product importing process. Notably, we can easily import products to our store with just a click of a button with the AutoDS product importer. It allows us to import single items, a bulk of items, or even schedule a product import for a future date.
Uniquely, we can import products one by one by sourcing their product IDs or URLs. Or, we can even source entire product pages in bulk with an item grabber extension, the AutoDS Helper. To clarify, the AutoDs Helper helps us import tens to thousands of products by extracting their product IDs.
By using this tool, we not only extract the product but everything that comes with it: images, descriptions, variations, etc. As such, this helps us build a more extensive product catalog and saves us a ton of time and effort.
Of course, dropshipping is still worth it! As with any other business, we will also face challenges as dropshippers. Although there are some dropshipping challenges, there are many benefits as well. On top of that, we now know how to overcome and use these common dropshipping challenges to our advantage.
But, the fact still remains that dropshipping is a lucrative business model for us to venture into. What’s more, the dropshipping market size has been growing exponentially over the years. Actually, it’s projected to reach $476 billion in the next four years.Â
In addition, we can generate profits with minimal risk because of the low-risk, low-investment business model. All in all, dropshipping has advantages that far outweigh the challenges. And it enables us to make a solid profit while avoiding any major risks. So, we won’t be losing money; instead, we’ll be able to earn even more. Â
Dropshipping can be time-consuming and a lot of work when done manually. However, it becomes significantly easier if we automate the dropshipping process and let the software do the work for us.Â
Most often, the biggest dropshipping challenge is finding reliable suppliers that represent your brand’s values and quality. However, by using AutoDS’ list of reliable suppliers that have passed all the necessary requirements, we can easily find solid suppliers for our store.
Nope! It is never too late to start dropshipping. Once you find your winning products and suppliers, you can start building your store anytime. Regardless of the high competition, we can scale our profits by optimizing marketing, and customer service and utilizing dropshipping automation tools.
Dropshippers usually make a 20% – 30% profit from each sale. In fact, dropshippers can make $1000 – $5000 per month; however, this fluctuates, and it all depends on how well your store is doing.Â
Finally, we’ve run down the 10 most common dropshipping challenges and learned how to overcome them. On top of that, we can use these challenges to our advantage to further grow and scale our dropshipping business.
As a matter of fact, with the right information and tools, there is no challenge we can’t overcome. Actually, with dropshipping automation, we can not only overcome the dropshipping challenges, but we can optimize our business as well.
With that being said, check out these articles to take your business to the next level:Â
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