Why Dropshipping is a Bad Idea
03/02/2021 | Share:
Some ecommerce business owners boast that dropshipping is the way to get rich fast. They claim to make thousands, if not hundreds of thousands, in profit each year. However, this is not the case for the majority of dropshippers and normally it’s the customer who suffers. In this article, we’re going to explain why dropshipping is a bad idea and how it’s not the easy get-rich-quick scheme that other dropshippers often try to teach you about (for a fee of course!).
What is dropshipping?
Dropshipping is a fulfilment method. First, a customer makes a purchase on an ecommerce website. The ecommerce business takes the money and then places an order with their supplier, which is often situated in another country (for example, China, where products are cheaper to make). The supplier sends the finished product from their warehouse directly to the customer. The ecommerce company never handles the stock.
At a first glance, it seems like a great idea. You don’t have the tasks of manufacturing, warehousing, storage or delivery to deal with and you get money from your customers. You might start to think the road to riches just got easier with this low-risk method of doing ecommerce. However, when you think about it even further, you may realise the following points:
It’s someone else’s product
At the end of the day, a dropshipper is selling someone else’s product. They’re just the middle man trying to make a cut for themselves. A lot of dropshippers acquire their products from websites such as AliExpress, which is open for anyone to make a purchase.
There’s no real opportunity in dropshipping to make the product your own and therefore less opportunity to build a brand around your product. Unless you buy and photograph every product in your store from the supplier, you’ll have to use imagery and branding elements from your supplier for your website and social media promotion. This might not always tie in with the vision for your brand and will affect its consistency.
Branding isn’t just crucial for the website or your social media. It has to be consistent across the board and that includes your products and packaging too. A great example of this would be Apple’s range of electronics. Whether you’re buying an iPhone, iPod, AirPods or other accessories, it doesn’t take much effort to recognise the branding across the packaging. With dropshipping, you have no control over this.
Higher prices and low profits
As a dropshipper, your prices are normally higher. Firstly, you’ve got to pay the asking price from the supplier which covers their costs and profit margins. Then, you’ve got to factor in your own costs, such as website and social media ad costs. Only once you’ve factored this in can you establish your profit margin. By then, the product could be too expensive for a customer, especially since it will take several weeks for it to arrive. Customers may be willing to pay slightly more to obtain the product from a trusted source and receive it within a few days.
Longer lead times
As mentioned above, dropshipping usually involves supplying products from foreign countries where they are cheaper to produce. The problem is that this can lead to very long lead times, where customers can be waiting 3 weeks or more. In the age of next day deliveries and Amazon Prime, where expectations are only getting higher, it is going to become difficult to compete. The only way is to ensure what you’re offering is unique and worth the wait.
Less control
Once the supplier ships the product, it’s fingers crossed until it reaches the customer safely. You have very little control over the order fulfilment process, but once you’ve sold the product, it is your responsibility to ensure the customer is happy. If there’s a problem with an order, it’s going to be your responsibility to do the chasing or even dish out refunds at your expense.
Competitive market
Nowadays, the dropshipping ecommerce market is over-saturated, making it highly competitive. The goal of dropshipping is to locate a specific product niche and sell to people who aren’t aware it exists. But, when everyone is jumping on the bandwagon, trying to become millionaires, the customers begin to see what’s going on.
You only tend to hear the success stories about dropshipping. The successful few make it look very easy in return for your hard-earned money in a dropshipping “course”. Question is, if they’re so successful, why are they sharing their secret? It’s likely because their dropshipping opportunities have dried up.
Opt for Fulfilment Services
If you’re looking at dropshipping because you’re worried about managing stock yourself, UK fulfilment services such as ours exist to help with this. We leave you to worry about managing a business rather than storage or whether your customers have received their products. Our service will mean orders can be dispatched swiftly and tracked until delivery. This means you can enjoy the freedom from warehousing and shipping that dropshipping offers but with the added reassurance that everything is in hand. And, if you ever need us, we are a quick phone call away.
