Although dropshipping is among one of the easiest ways to start a business, it does not mean that anyone can succeed without any struggles. If you have been in the industry for some time, you must have encountered one, if not all, of these issues. In this article, we will discuss the most common problems faced by experienced dropshippers and how they can find a resolution to those.
1. Long shipping times
The rapid technological advancement in the logistics industry has made shipping faster than ever. As a result, consumer expectations about shipping speed have also evolved accordingly. In many cases, customers prefer sellers with shorter delivery time, especially when they need certain products for upcoming occasions, which makes dropshipping become a speed game in terms of processing and shipping. However, international shipping, which is common in the industry, is a complicated process involving many complications and formalities such as custom and border restrictions. As a result, it typically takes several weeks for parcels to arrive at the customers’ doorstep, which might discourage them from purchasing from you.
What you can do
First and foremost, you should be upfront with your customers about shipping times and responsive whenever they have any inquiries or concerns. Moreover, to overcome this challenge while maintaining your profit level, you could offer multiple shipping options. For instance, for those who do not mind waiting weeks for the items, they might opt for the free shipping alternative. On the other hand, if they need to get their hands on the products as soon as possible, say a dress for an upcoming special occasion, it is likely that they would pay for premium shipping methods.
2. Long processing times
In general, online shoppers expect their orders to be processed within one or two business days. However, as a dropshipper, you do not have much control over the processing time since the orders are handed over to your suppliers to agents.
What you can do
However, this does not mean that there is nothing you could do to keep your customers happy. Firstly, let us discuss what you should do before actually working with suppliers, which is to have a conversation where you establish certain expectations and agreements, including an average acceptable processing time. Additionally, you also should clearly state that any major issues should be communicated to you immediately, and it would be better if you have specific circumstances in mind. Secondly, in the event that delays in processing occur, get in touch with suppliers/agents (if they have not done so) to find out the actual situations and sort things out. If they provide reasonable explanations, you should convey them to customers. Most of the time, they will understand this. Furthermore, you can also offer them some incentives such as discounts for their future orders.
3. Poor inventory management
When working with suppliers who manage their stocks and warehouses poorly, the two most common issues that you would encounter are:
Your end customers receive low quality and/or damaged goods
Suppliers do not have enough stock for the items you are selling. This is often called backorders.
Happening frequently, these would upset your customers, who might also leave bad feedback for your store. Subsequently, you would lose existing customers, fail to attract new ones, and earn less revenue. Besides, without proper inventory planning, you can also end up with excess inventory, which leads to a lower profit margin and higher costs (e.g. storage fees).
What you can do
- Backorders
If the suppliers take too long to reply or refuse to resolve the situation, you should first try to source it from another supplier and fulfill the orders as soon as possible to appease your customers.
To avoid this bottleneck situation in the first place, you should work with multiple suppliers rather than relying on one. However, if you are not willing to dedicate a large amount of resources into this, you may work with a reliable dropshipping agent instead. They would help you better handle the situation thanks to their specialists who are well-versed in dropshipping matters and negotiation and dedicate themselves to establishing long-term relationships and mutual agreements with many factories.
- Damaged goods/packages
Firstly, your store should have a clear refund/exchange policy and/or warranty terms and conditions. This will assure customers that they will not lose their money, and as long as they can provide sufficient proof, they will be eligible for an exchange or full refund (depending on your priorities and business models). On the top of that, you can also offer them discounts and small gifts to restore their trust and retain them for future purchases.
To minimize your losses, you should contact the in-charge parties and request reimbursements. For instance, if it is the shipping company who is at fault for handing the parcels poorly, they should pay your incurred costs (e.g. costs of new items sent to customers and shipping).
- Excess inventory
A good planning system is necessary because it would give you a good idea of your current inventory and help you decide what to and not to stock up. Many prefer Excel sheets because they are easy to use and effective. You should monitor the inflow and outflow of goods closely and update the system accordingly. This process would be more seamless if you work with a responsible dropshipping agent since they are mostly in charge of fulfilling your orders and holding inventory.
Other things that you should do include conducting market research and analyzing past data to find an optimal quantity of goods and planning ahead your seasonal sales or promotional campaigns.
4. Lack of branding and customisation
As online shipping becomes more and more popular among consumers over the past few years, the competition among dropshippers is increasingly competitive. As a result, those who fail to differentiate their brand name from other players in the market are likely to be driven out of business. Branding helps you to better represent your value and generate greater trust and recognition in the marketplace, which in turn retains your existing customers and brings you a more consistent inflow of new ones.
What you can do
Many dropshippers think that branded dropshipping is expensive when it, in fact, is affordable if you do it wisely. You might consider partnering with an agent who provides you with industry insights and personalized advice so that you can maximise your potential. In the beginning, you can start small with customising your packaging, which delivers a pleasing and unique unboxing experience for your customers. You can also request your suppliers/agents to use affordable options for ink and dunnage materials. Over time, if you want to target more sophisticated market segments, you could use more high-end alternatives.
With over 30 years of logistics experience, Xianchao Logistics began to branch out to serve the dropshipping industry in 2015. With our experience in logistics fulfilment and close relationships with suppliers, our company has risen to help different dropshippers grow their businesses over these years. We believe that our company’s success and growth will only come with helping our clients grow. Do you have a dropshipping business to grow? Discuss with us and let’s get started ASAP!
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