[UPDATED] 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.
- Dropshipping Success Rate
- Reasons for Dropshipping Failures
- What Dropshippers Have Said About Their Failures?
- Frequently Asked Questions (FAQs)
- Final Words!
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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.
Successful dropshippers estimates that the dropshipping business with highest success rate 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.
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.
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.
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.
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.
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.
Reasons of 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.
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.
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.
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.
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 – a successful dropshippers, who have been dropshipping for the last five years, shares these tips to increase the dropshipping success rate:
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:
Study Various Business Models for a Few Months
Nate Materson from Maple Holistics shares his two cents:
Pay Attention to Product Margins
Travis Nagle of Viesso says the following:
We have tried to explain everything about dropshipping failures in detail. But there are always more questions popping up in reader’s minds. So we decided to answer some quick asks below.
Q1. How to be a successful dropshipper in 2020?
The best thing you can do to get better at dropshipping is to focus on timely delivery. Experts suggest that 90 percent dropshippers will only leave your ecommerce store when they don’t get delivery on time. When they are buying from your store they think that they will get the product within a week at max. And, when they don’t get the product within a week they get frustrated and eventually leave your store.
So, just remember one thing: If you want to be a successful dropshipper in 2020, then focus on creating value for your users. This can be through quality, on-time delivery or going beyond expectations.
Q2. What is the success story of someone who started a dropship store?
We recently did a case study of a person who started a dropshipping store and earned more than $1Million in Under 24 Months. You can read more about the successful dropshipping story here. His method was to sell high ticket items and only focus on a single niche. Because of this, he was generating sales both through social media and search engines. In fact, the dropshipping store is growing by leaps and bounds and generating handsome profits.
Q3. Where can I find good dropshipping suppliers?
One thing that all dropshipping stores crave for are decent dropshipping suppliers. Most dropshippers are still using AliExpress and they sometimes don’t get the type of quality they need. Reliable dropshipping suppliers, on the other hand, offer them better quality of each product because the relationship is on a per order basis and benefits both. Here is a complete list of reliable dropshipping suppliers for your business.
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.
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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