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Why 90 Percent Dropshippers Fail in the Beginning? Here’s What Experts Say!

Updated on July 30, 2018

9 Min Read
dropshipping failures
Reading Time: 9 minutes

Do you know that almost 90 percent of dropshippers fail during their first month after getting frustrated that their business is not making enough money?!

In this post, I am going to discuss the 9 top reasons why most dropshipping failures occur and how to avoid them once and for all.

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Here’s how the journey of a beginner dropshipper goes!

Most dropshippers are emotional. They are inexperienced and don’t have the risk-taking ability. They get excited seeing that someone else is making money online so they should too. And then they start their own store without testing or even doing a feasibility study. When in the first few months, they don’t get profits, they realize the whole business idea isn’t for them. So, they drop it and move to something else complaining that dropshipping doesn’t work for anyone, generalizing their own assumptions.

Dropshipping Success Rate

Unfortunately, there are no official figures available that could determine the overall success rate of the dropshipping industry. Dropshipping is an ecommerce business model and is considered as a medium-risk business. Most of the money in this business model is spent on advertisements because dropshippers rely on paid marketing efforts to sell their products.

Image source: Pixabay

Many dropshipping experts have estimated that the success rate of dropshipping is around 10 percent during the first year of operations. This is because most of the dropshippers dive into the business without properly understanding the risk factors involved. Take the story of this dropshipper who didn’t keep in mind that refunds can also become a hurdle.

dropshipping expert opinion

The dropshipping failure story appeared on Reddit. According to the dropshipper, his business was prospering but he made one mistake and that’s how the whole profit-making empire crumbled to the floor.

Then I have another dropshipper who became disheartened because the paid marketing was consuming too much money, even more than what he was earning.

dropshipping expert opinion on Reddit

He has said that he started his store after seeing the hype of actually making money by selling products at a cheap rate. He thought that it was easy and when he started the business he realized that he had to spend a lot on advertisements. But due to a lack of budget, he couldn’t do it. So he closed his dropshipping store permanently.

Here’s Why Dropshipping is Still Profitable in 2019!

Mix of Opinions

However, most dropshippers don’t agree with the views described above. They say that the beginner dropshippers usually fail because they are inexperienced and follow the hype.

dropshipping expert opinion on Quora

One ecommerce consultant has said that in comparison with other businesses, a dropshipping business is a lot easier to start. But once it starts, you have to market it just like any other business.

dropshipping expert opinion on Quora

He says, after the store is established, the dropshipping store manager should focus on vertical integration and getting suppliers onboard. Only then he will be able to scale further. As a beginner dropshipper, one needs to understand the reasons behind most common dropshipping failures.

Below is a comprehensive list of these dropshipping failures. I have tried to be as detailed as possible and provide solutions to all the problems.

Reasons for Dropshipping Failures

Selecting the Wrong Niche

The first reason for the dropshipping failures is because of the wrong niche selection. A friend of mine wanted to target US traffic with one of his dropshipping stores. He chose a niche clothing line and started promoting the products in the USA. Too bad, he didn’t even receive a single order.

Niche vs General Store: Pick the Right Model for Your Dropshipping Store

He was depressed but not ready to quit. So, he started targeting the same product in Ukraine and received more than a 100 orders in a single day.

Point to note here: Targeting a wrong country with a particular niche can destroy your business. The best strategy to cope out of it is to test, test, and test.

Lack of Patience & Persistence

Most dropshippers just don’t have the patience to start a dropshipping store. So, if you aren’t patient enough then my advice is to start forex trading instead because that’s where you can earn instant money (or even lose it). Patience and persistence are not only required in dropshipping but for any business. And, if you are just starting out with dropshipping then it is a prerequisite.

Lack of Investment/Resources

Though dropshipping doesn’t require a lot of investment if you are just starting out for the first time then you need to keep a budget in mind. Let’s say you have just started your first store, so you need to keep at least $300-$400 for advertisements. If you lack even this amount of investment then it is better not to go into dropshipping until you have saved enough.

Selection of Wrong Platform

One reason most dropshippers fail is that they are using the wrong platform to market their dropshipping stores and products. Some of the most prominent channels to market your dropshipping products are Facebook Ads, Google Adwords, and Bing Ads. If dropshippers have found products that are already selling in high volumes on other shopping stores then you only have to market them. If you are still failing, then it can be because you are not using the right platform.

The best solution to this problem is to use multiple platforms to market the product and the one that provides the most ROI, use it further on.

High Prices of Dropshipping Products

Most of the visitors of a dropshipping store will search for the same product at another store just to compare the prices. This is because customers are now aware that most stores are selling the same products so they can easily get better deals elsewhere. If they think they can get the same product at a low price somewhere else, then they will leave the store.

So, it is better to keep a lower price of the product that you are selling on your dropshipping store while still staying profitable. You will have to learn to balance the both.

Bad Customer Support

Another reason why most dropshippers fail is that they are not good managers of the dropshipping stores. Dropshipping doesn’t end when the customer’s product is dispatched. You will still have to reply to their queries and stay connected with them until they are satisfied with their products.

In the example I described above, one dropshipper that was selling clothes from wholesalers and didn’t realize that clothes have the highest return rate. Since he wasn’t able to cope with that, he failed.

Delayed Shipping

In America, especially after Amazon started prime delivery, people now prefer ordering products from it because they can get theirs in just a single day. However, dropshipping is usually from China, so the minimum shipping time is at least 20 days. People can’t wait this long to get their products. Another reason most dropshippers fail is that they don’t order products through ePacket. This means the buyer won’t get a tracking number, decreasing his trust in the store.

Inconsistency in Managing Business

Most dropshippers are just wantrepreneurs. They are only interested in starting a business and not in keeping it alive. In short, they are inconsistent. Same happens with dropshipping. In fact, business magazine Forbes says that every 8/10 businesses fail in less than a year. And, one major reason for the failure is inconsistency or a lack of planning.

Unattractive Website Design

Here is an analogy to understand why dropshipping failures occur due to a bad UI. There are two stores: one is air-conditioned and has automated sliding doors for the visitors. Inside, a gorgeous looking hostess welcomes everyone, while escorting them to the products they want to buy.

Check Out 27 Best UI Designs for Ecommerce Stores

The second one doesn’t have an air conditioner and the visitors are not greeted at all. Moreover, they have to search for the products themselves and no supporting staff is available to answer customer queries, just a cashier at the cash counter.

Which store will you go to? Probably the first one.

Ecommerce stores are no different from a brick and mortar store. They need to feel good and look exceptional. Otherwise, visitors just won’t trust them. This makes it one more reason why most dropshippers fail. They have bad looking websites and no one wants to buy from them.

What Dropshippers Have Said About Their Failures?

Here’s a list of suggestions and bits of advices of dropshippers on how to cope with dropshipping failures and start a successful store.

Focus on Keywords with High Search Volume, Low Competition

Jason Coupon King of The Critter Depot, who have been dropshipping for the last five years, shares these tips to increase the dropshipping success rate:

1. Find a product with high search volume, but low competition. These are commonly known as niche products. But the reasoning here is that you want a product that has a lot of potential buyers. But you don’t want a product that is so popular that you’re competing against Walmart or Home Depot for first page rankings. Finding this mythical niche product is going to take a lot of time. It could take weeks or months until one is discovered. And that’s because there are so many experienced internet marketers that know this game all too well. But there are still plenty of these products to be discovered. Google’s Keyword Planner is a great, free resource to find low competition products. And there are many other sources available as well. So definitely take your time to discover one of these products. It will make your online marketing efforts much easier in the long run.
2. Find a Supplier for Your Product. This is important for obvious reasons. But knowing who your supplier is for your niche product will make the development and marketing efforts so much faster. You don’t want to go through the time or money to hire someone to design a nice logo for your store. Nor do you want to go through the trouble of having a store built, only to realize that you don’t have any suppliers for your product. Finding a supplier can be difficult, or it can be easy. Some companies list on their website that they will drop ship. While others will require a phone call or email to get to find out.
3. Regardless of how you find one, knowing that you have one available is critical before doing all this other legwork. Because if you pursue the other legwork (site building, social media pages, logo’s & artwork, etc) without a supplier, you could end up wasting a lot of time if you can’t find a supplier.

Add Value to Your Business

Max Robinson of Fish Tank Bank says:

The main reason that 90% of dropshipping businesses fail is that they don’t focus on adding as much value as possible for the customer. If all you’re doing is accepting orders from customers then forwarding the order onto a supplier for them to fulfill, then you’re not going to create any sort of loyalty with the customer.This was a mistake I made early on. Now I focus on adding value by providing excellent customer service – if the customer has an issue, I’ll email them back immediately, and I’ll even speak on the phone with them if they want. This is where I can add value, and how I’ve managed to succeed with dropshipping.

Study Various Business Models for a Few Months

Nate Materson from Maple Holistics shares his two cents:

Drop shipping takes a lot of work and there’s a huge learning curve. When I started drop shipping I found myself bleeding money because I wasn’t getting any customers and was putting out ads that weren’t paying off. Instead of giving up I did some research and slowly learned the business.The first few months that you’re in the business you aren’t going to make very much if anything, remember that it’s all part of the process and that once you learn the business you’ll be making money hand over fist.He further states that you should not overwhelm yourself to learn one aspect of the business at a time. It also may be a good idea not to jump into it so quickly take a couple of months to study the business first so that you aren’t overwhelmed when you first start. Find out what makes good ad copy, how to use Facebook ads, what kinds of products to add to your store, etc.

Pay Attention to Product Margins

Travis Nagle of Viesso says the following:

One early failure they faced was not paying enough attention to the product margins, especially after factoring in the costs of shipping. There can be some brands and products that sell on your site, but after discounts to match other retailers and expensive shipping because of the size, weight, or area it’s shipping from, just isn’t worth pushing. Dropshipping is great because it limits your overhead and is simpler in terms of cash flow, but you still need to make sure you’re running a viable model for profitability and not just top line revenue growth.

Final Words!

Beginner dropshippers need to understand that dropshipping is not just another ‘easy money making scheme’ it is a full-time business that requires dedication, consistency, hard work and a lot of patience. Only then they will be able to thrive in this business.

Read How This Dropshipper Made $12,650 in a Single Day!

Also, as Jack Ma says, “learn from your failures.” So, when they fail (and most will) they need to learn from that and start again if they are really serious about it.

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Sharjeel Ashraf

Sharjeel loves to write about startups and ecommerce. In his free time, he is on the road or working on some cool project in his den.

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