Tips for Dealing with Challenges In The Dropshipping Business Model
Dropshipping is a great way to start an online reselling business as it requires small initial capital investment. However, this business model has its own challenges, and therefore, you need to prepare for them well in advance so that you can run your business profitably without any hassles. Nowadays, there are many online sources that can aid you in establishing a great dropshipping business. One such platform is esources.co.uk, which offers everything for starting a dropship retailing business right from e-commerce websites to references of dropship suppliers to market research reports.
How to Prepare for the Challenges of a Dropship Business
- Always associate with reputable dropship firms that are known for offering good-quality products and delivering orders on time. It is best to get their references through a reliable trade directory like esources.co.uk, which has an extensive database of suppliers across various product categories. Before registering with a firm, obtain feedback through various sources, including forums, review websites, and acquaintances. In this manner, you will be able to avoid scams that are quite prevalent in the dropship industry.
- The profits in online retailing are very thin. And, when you dropship, your buying price is more than wholesale price, which further dents your profits. Therefore, to build a profitable dropshipping business, it is important that you choose your products carefully after doing extensive market research, studying the consumer patterns, demand, and pricing. Remember that your margin is not just buying price minus sale price. It is actual sale price minus the total cost of buying dropship items and cost of marketing, selling, and customer service. Look for products that can help you earn at least a 15 percent margin.
- Often dropshippers face problems due to shortages. In order to avoid such situations, you should look for dropship suppliers that have web-based integrated systems to allow retailers check the real-time status of inventory. If any item is low on stock, you should not put it on sale. Another trick is to buy items that you sell in large numbers in advance so that you can fulfill your order commitments on time. And even if, after taking all precautions, you come across such a situation, you should compensate your customer by offering free shipping or free credits for the next purchase. The customer will feel that you have gone an extra mile to make him or her happy, and this will help you build trust among buyers.
- Return and exchange is another big problem for dropshippers. You could incur huge losses if your return policy is not in line with that of your dropship suppliers. Suppose you allow your customers to return products within 30 days of purchase, but your supplier has only a 15-day window. Then, if your customer returns a product after 20 days, you will have to bear the expense of buying a new product and shipping it to the customer. Therefore, develop a policy that not only makes your customers happy but also help you keep your losses on account of returns minimal.
Dropshipping can be a great way to earn good money if you prepare yourself to deal with its challenges. If you are interested in accessing valuable resources that could make dropshipping simple for you, please visit esources.co.uk