Dropshipping is music to the ears of most aspiring entrepreneurs. They think of dropshipping as the most lucrative business model that they can use to make quick money. To run your Dropshipping business smoothly you must implement Ecomcircles software to track your product so that your business stays organized and can effectively dropship. Yet, like every other business model, dropshipping comes with its fair share of pitfalls to avoid.
Here are some common mistakes to avoid when doing dropshipping.
- Don’t be a Copycat
Do not try to copy and sell what everyone else is selling. Being a copycat doesn’t help and you don’t need to run after “hot products” in clothing, shoes, or electronics brands.
When every other brand is trying to sell the same type of product, the supply increases rapidly. The demand for that particular product does not increase with that speed. This means that more of the businesses are entering the same product category and type. This “me too” approach only results in lower profit margins and more competition.
The next section covers in detail the importance of selecting the right niche to develop a more sustainable dropshipping business. Similarly, you need to have a higher level of product knowledge of your niche. You can save yourself from costly mistakes by taking some dropshipping courses like drop shipping titans (here’s a detailed review of the course).
- Buy Niche Merchandize
Working with a dropshipping supplier offers many benefits. One major advantage is the freedom to experiment with different merchandise to find the top-selling products. The traditional retail operations require the retailers to maintain big warehouses and store products in bulk quantities. In drop shipping retailers do not need to risk investing money in inventory unless they know for sure they can sell a product at a profit.
- Sell Bundled Products Whenever Possible
One way of achieving success in merchandising is to club together relevant products and offer them via a package deal. Dropship retailers particularly use this strategy to reduce the shipping costs on products they receive from the same warehouse. Product bundling saves big on money, letting you sell products at higher profit margins.
You may find products that are selling but offer a very low-profit margin. In such a scenario you can search for other products that people buy along with that product so that you can bundle them. The add-on products increase the overall sales price and increase your profit margin on the product. Electronics retailers in particular use this strategy to earn higher profit margins by adding other related products to a particular item.
- Price Does Matter
One rookie mistake that many drop shippers make is trying to compete just on the basis of price. Price is not the only thing that differentiates you from your competitors. If you try to compete on the basis of price, you won’t go far because larger competitors will start to sell their inventory at breakeven. Thus, do not start a price war with your competitors as you won’t be able to win.
The only retailers who can sustain such a low price competition are the big ones with deep pockets. Take for instance giants like Costco and Walmart that deliver products at almost wholesale prices. Since they have the financial muscle to lower prices to such a level.
Pricing and Other USPs
Price does matter in dropshipping but still going too low to win business is not the right strategy.
Instead of trying to get business by lowering the price, try to find ways to justify a higher price. Consider competing based on service quality, expertise, product knowledge, free shipping, bundled deals, or other ways to ask for more price. Try to find something that the customers care about and no competition is providing it to them.
- Seasonality and Dropshipping
Online retailers also rely on seasons to sell merchandise in dropshipping. Still, many drop shippers avoid overstocking because of the fear they may not be able to sell all of it on time. Since it later becomes difficult to get rid of the leftover merchandise once the season is over, taking valuable warehouse space in the off-season. They only keep enough inventory to sell within a season.
Thus, if the online retailers do the forecasting of demand correctly for each season, they can use dropshipping to get some extra sales.
When you are starting dropshipping, you are bound to make some mistakes. That’s OK since you are learning and improving with time. Don’t get discouraged, instead take those valuable business lessons you have learned and avoid making mistakes that will hurt your profits. Find useful articles, tutorials, product research tools, and webinars online to learn so that you can improve your skills and exceed your business goals.