The TRUTH about starting starting your own online business
5 HARD TRUTHS about dropshipping..
Are you being bombarded with weirdly specific social media ads from so called ecommerce gurus selling “$500 dropshipping courses at $9.90 for a limited time”?
If you can relate, then you and I are on the same boat. With the onset of Coronavirus causing industries to crumble, almost all of us are feeling insane job insecurity so it is understandable to try to look for other avenues of income. Not to mention, according to Statista, the ecommerce industry is set to be a $6 trillion dollar industry by 2022.
So back in January, I forked out $600 for a 3 day workshop centered around dropshipping. The course was quite helpful as it taught me the basics of dropshipping, how to create a simple yet converting Shopify store, how to list products, order fulfilment and facebook ads marketing. But was it worth the $600? Probably not.
Fast forward to 2 weeks after the course, I had decided to start my own (now defunct) dropshipping store and this is what I learnt.
1. Low profit margins.
Sure, since you are neither managing a retail store nor storing physical inventory, the overhead is low — but so are the returns. You put less money in, but you get less money out. The main expense is your social media marketing costs. If you are doing initial Facebook ad testing, you may need to spend at least $20 per day for at last 3-4 days to see how your ads fare with your target market. Depending on the results, if you are making sales, you may need to spend more to make sure the ads reach a greater audience. Many first time dropshippers usually end up spending hundreds or even thousands of dollars just on ads.
2. Highly competitive.
You are not the only one trying to get a share of the soon to be trillion dollar ecommerce pie. Like yours, many other dropshipping businesses are opening each day. So if you want to be competitive, you have to really think about what sets you apart. Why would customers buy from your store and not others? What are you selling that no one else is? As the barrier to entry is low, the fight for survival is intense.
3. No control over supply-chain.
Imagine ordering a mug, that has the words “Good luck” on the body, as a farewell gift to your colleague and getting a mug where the letter l in “luck” was changed to “f”. Yikes!
As a dropshipper, you have no control over what your supplier sends your customers. Since you cannot do quality control, you have to make sure that you work with the right suppliers. One way to check the competency of the supplier is to look at customer reviews. If you are using Aliexpress merchants, make sure to always use suppliers with at least a 4.7 rating.
4. Legal liability issues.
Although this isn’t a common problem for dropshippers, it’s worth mentioning. At the end of the day you are a business, so try to make sure that you are not selling contraband or copyrighted items as those can land you in serious trouble. Any business with legal problems will never truly gain customers trust.
5. Difficult to build a brand.
If you thought that building an online brand was going to be easy, you are in for a surprise. Building a brand is not just about facebook and instagram posts, you have to think about the whole process from brand image to customer journey and after sales experience. If you want customers to continuously repurchase, you need to make sure that their initial shopping experience is great. I know customer service is not a glamorous job role but if you do not respond to customers enquiries/ requests, you will get negative publicity and lose potential sales.
No business or brand can be built in one day or with $0 dollars. While dropshipping business is relatively cheaper compared to traditional brick and mortar stores, there is a lot of effort involved. So if you are truly ready for a challenge, you might want to try starting your own business.