Getting started with a dropshipping business can be quite challenging. The learning curve can be quite steep with a number of important things to learn. Inevitably, you will encounter some drop shipping problems that you will need to solve. Here are some common drop shipping problems and how to get around them:
1. Selling Items You Have Never Seen Before
One of the quirks about running a dropship business is that you will sometimes be dealing in products that you have never seen in person! This can obviously be a challenge because it’s never easy selling something that you have no clue about. Luckily for you, there are a number of ways in which you can get around this problem:
- Sell Well-Established Products: Selling products by well-established manufacturers gives you some assurance that your customers will get good quality products. Top manufactures usually have high quality websites with loads of product information including product descriptions, their pictures, and their uses. You can usually learn a lot about new products that you have never seen before by gleaning information from your manufacturer’s website.
- Order Popular Products for Yourself: If you have several new products that are popular with your customers and you therefore have to ship them frequently, it’s usually a good idea to order for samples of these products from your suppliers for yourself so that you can get an opportunity to see them and learn more about them firsthand. If they are expensive or valuable items, you can later resell the items as ‘slightly used’ or ‘refurbished’ products on sites such as eBay or Amazon and recoup a good chunk of your investment.
- Talk with Your Customers: You can learn a great deal about the products you are selling by talking to your customers. Just call some of your customers, preferably the regular ones, and ask them about their experiences about using your products. This way, you also get to learn more about your customers as well.
2. Drop Shipping Fraud
One of the common problems encountered with dropshipping businesses and other online businesses is credit card fraud. Whereas the mention of credit card fraud often conjures up images of some sophisticated cyber criminals outwitting your credit card providers’ security systems, the truth is that the vast majority of credit card fraud is opportunistic and occurs when you fail to observe some simple security measures.
If you use your eCommerce website as your payment gateway, make sure that you request your customers to enter their CVV numbers – these are the last 3 digits on the back of all credit cards. Entering the CVV number is a good way to ensure that the one making the purchase actually possesses the physical card. Make sure that the gateway service that you use for processing your card is AVS-enabled. AVS, or Address Verification Service, is a security feature that ensures the billing address provided by the customer matches their zip code that is on file with their bank. If the two fail to match, the transaction is blocked.
It’s always a good idea to keep an eye on large orders if they happen to have a different billing and shipping address because most online shopping cases occur here. If you happen to ship any order to a customer’s billing address, make sure that the shipment address matches the customer’s bank information.
Shipping orders to addresses that are different from the official billing addresses exposes you to higher risk because if the order turns out to be a fraudulent one, you will be responsible for refunding the genuine card holder for any losses incurred. That’s why it’s important to be double careful with such orders. Always be on the lookout for large orders, email addresses that fail to match the customer’s name and orders that come with requests for expedited shipping. In most cases, a quick phone call is usually enough to determine whether an order is legitimate or fraudulent.
3. Dealing With High Competition and Awful Margins
The unfortunate fact about a drop shipping business is that many products that can be easily drop shipped often spawn a lot of competition. This kind of competition usually leads to cutthroat pricing and thin margins, which make it difficult to build a viable business.
To be successful in such kinds of situations, avoid trying to compete on price alone but instead focus on offering added value to your customers through great product education, selection and service. It’s also important to learn about how to spot a profitable niche that is likely to make you more profits.
Also it makes good sense to become a member of a good reliable Drop Ship Supplier Directory that offers metrics that show you potential profits that can be made using historical data.
4. Difficulty in Syncing Inventory
One common problem encountered by many dropshipping businesses is syncing inventory with suppliers. The best way to get around this problem is to have multiple suppliers for each of your items. It is a good idea to have the right shopping cart website buit right from the start when youre looking at starting a drop ship reliant business. Quality ecommerce websites are easy to update quickly and because they are built on industry standard platforms, there is plenty of ducumentation on-line on how to update products your self.
In the event that your customer places an order only for you to discover that it’s out of stock, you can offer them an upgraded product at the same cost as their original order. This is usually better than cancelling the order and helps to build goodwill with your customers leading to a loyal customer base.
5. Dealing with Supplier Mistakes
Depending on the quality of supplier you have, the frequency of mistakes in delivered products can be anywhere from quite frequently to very rarely. One sign of a mediocre supplier is one who repeatedly gaffs in fulfillment errors and logistical problems. A good rule of thumb is to always be ready to accept responsibility for your suppliers’ mistakes. Trying to pin any delivery problems on your suppliers to your customers comes off as amateurish and in bad taste. Just accept the cost of remedying any logistical problems as part of the business. If a supplier consistently makes such mistakes, make a point of looking for a higher quality one.
The Final Word
A lot of the problems encountered by the average dropshipping business have to do with the supply side of the business. That is why you have to really do your homework when searching for a supplier. Once you have found a good and reliable supplier, make sure you work on your eCommerce website since this is often the first point of contact between your customers and your business. If you manage your dropshipping business correctly, it can form a good foundation for a successful online store.