DropShipping: The 10 most common mistakes when starting
THERE ARE MANY REASONS FOR THE FAILURE OF YOUNG COMPANIES
Whoever decides to start their own company naturally wants to achieve maximum success with the company. At least this means that the company survives economically and generates enough money to enable the operator to live a comfortable life. If this succeeds, most of the wishes and dreams that led to the decision to found a company at all initially come true. best dropshipping tools
If it doesn't work instead, then, unfortunately, you often have to struggle for a long time with the consequences and consequences of failure. So there is a good case for dealing with the question of why young companies fail at all. In this way, strategies can be developed in good time to avoid failure. If we first take a more general look at the reasons why young companies fail, then we usually come across gaps and shortcomings in terms of funding. The companies run out of financial breath during the start-up phase because the costs incurred are underestimated and the income received is overestimated. As a dropshipping retailer, you are more on the safe side, since there are no special costs during the start-up and start-up phase and no high costs during operation.
DROPSHIPPER ARE ALSO NOT PROTECTED AGAINST MISSTEPS
Of course, a drop shipping company can still be smart. Here we are often dealing with very specific causes. These relate partly to e-commerce in general and partly to the DropShipping trading model in particular. among the causes on the basis of general characteristics of e-commerce are the missing or incomplete market analysis. Anyone who, as a founder, does not deal extensively with the potential of the targeted market risks the financial wreckage. A lack of product knowledge has already brought down many start-up projects. If we take a look at the causes that relate specifically to drop shipping, then what is particularly noticeable here are those reasons that are related to the suppliers.
The manufacturers and wholesalers with whom DropShipping works have a great responsibility and are crucially involved in the question of whether a business is developing positively or negatively. Therefore, you should urgently look here when it comes to finding and combating the most common mistakes when starting drop shipping companies in advance.
THOSE WHO KNOW THE WORST MISTAKES CAN CONSCIOUSLY AND EFFECTIVELY PROTECT THEMSELVES
With foundation mistakes, it is such a thing. This includes the most common causes that can lead to a young company failing shortly after the start. Inexperienced founders have the disadvantage that they often do not yet know this potential well enough. In this way, they hardly have the chance to prepare adequately for what is to come. Unfortunately, you usually only have the relevant experience if you have been in business for a few years.
Exactly then, however, knowledge about start-up errors hardly benefits. Of course, those founders and entrepreneurs who have already experienced that their companies have perished economically are particularly familiar with such causes of failure. We should therefore definitely find a way to know the most common mistakes of founders in the field of drop shipping, without having to experience them first. If this happens, then it is usually already too late. dropshipping
Now you could, of course, turn to experienced entrepreneurs and ask them to accompany their own start-up and start-up process, making sure that not too many mistakes occur. The problem here, however, is that, on the one hand, there are not very many entrepreneurs who are willing to provide information and, on the other hand, that they are constantly working so that they would devote their valuable time to advising and supporting future competitors. In the search for a better and more realistic way, you will be interested in the following 10 sources of error, which we would like to introduce to you and give you on the way.
We recommend that you study the presented errors, reasons and causes very carefully. Try to internalize the individual sources of interference and pay particular attention to the many recommendations in the text that will help you to avoid these errors. You are laying the stable foundation for a long-term stable company that is in good economic shape and financially provides you with everything you need.
you should definitely avoid these errors
MISTAKE 1:
IGNORED MARKET AND CONSUMER INTERESTS
Products cannot be sold without an adequate need in the market and a corresponding interest among consumers. Before you decide on a specific trading area, you should carefully analyze the market potential. In this context, not only investigate whether the respective goods are in high demand, but also get an accurate impression of the competition and the current prices on the market.
If you manage to discover a promising niche that has so far been sparsely populated, then your chances of successful sales increase. If you have reasonable doubts about the success potential of products, then you should choose another product area.
MISTAKE 2:
NOT ENOUGH TIME IS INVESTED IN THE SELECTION OF SUPPLIERS
If you choose a dropshipping supplier too quickly, you risk missing crucial details. Every potential dropshipping provider has to be put through its paces before starting specific cooperation. This requires extensive research, which ideally also involves personal interviews. Appropriate trade fairs and commercial exhibitions are one way to get in touch with potential suppliers.
Test the performance of the potential wholesaler extensively. Place a few test orders and, above all, check the quality of the products and the reliability of the delivery. Ask existing customers of the respective supplier about their experience with DropShipping with the company and research online for opinions and ratings.
MISTAKE 3:
THE CONDITIONS WITH SUPPLIERS ARE NOT NEGOTIATED WELL
The profit is made when shopping. Keep this old principle of successful merchants in mind and carefully check the purchase prices at your DropShipping suppliers. False shame when negotiating list prices is out of place here. Your counterpart is an experienced dealer and will not feel attacked by an open request for special discounts and better prices.
However, not only consider the pure product price but also agree with the costs and fees for shipping and handling with your suppliers. Talk about minimum order quantities and any surcharges that may apply. In any case, these conditions must be clearly agreed before starting the cooperation, as they are very important for your future profits.
MISTAKE 4:
PRODUCTS ARE TRADED THAT YOU DON'T UNDERSTAND
When choosing a product area, you should not be guided solely by market opportunities and the profit margins that can be achieved. Make sure that you have a personal reference to your future range if possible. Remember that you can describe and document products with which you are well versed much better. As a stranger, you would already be faced with the task of putting together a range that is suitable for consumers.
When deciding on a particular product group, keep in mind that you must regularly answer customer questions, both before and after your purchase. If you choose products that interest you personally, you will be keeping an eye on the markets, the technical innovations and the trends and you do not have to invest any additional working time.
MISTAKE 5:
THE COSTS IN DROPSHIPPING ARE UNDERESTIMATED
Anyone who chooses a company model based on DropShipping often has in mind the low start-up costs. Even if this business model requires significantly less capital than a comparable concept in classic trading, you will still face various costs. You should definitely know these and take them carefully into account when planning. Think, for example, of the software and design of your future online shop and the expenses for programming interfaces to the respective suppliers.
THOSE WHO KNOW THE WORST MISTAKES CAN CONSCIOUSLY AND EFFECTIVELY PROTECT THEMSELVES
With foundation mistakes, it is such a thing. This includes the most common causes that can lead to a young company failing shortly after the start. Inexperienced founders have the disadvantage that they often do not yet know this potential well enough. In this way, they hardly have the chance to prepare adequately for what is to come. Unfortunately, you usually only have the relevant experience if you have been in business for a few years.
Exactly then, however, knowledge about start-up errors hardly benefits. Of course, those founders and entrepreneurs who have already experienced that their companies have perished economically are particularly familiar with such causes of failure. We should therefore definitely find a way to know the most common mistakes of founders in the field of drop shipping, without having to experience them first. If this happens, then it is usually already too late. dropshipping
Now you could, of course, turn to experienced entrepreneurs and ask them to accompany their own start-up and start-up process, making sure that not too many mistakes occur. The problem here, however, is that, on the one hand, there are not very many entrepreneurs who are willing to provide information and, on the other hand, that they are constantly working so that they would devote their valuable time to advising and supporting future competitors. In the search for a better and more realistic way, you will be interested in the following 10 sources of error, which we would like to introduce to you and give you on the way.
LEARN SUCCESSFULLY FROM THE MISTAKES OF OTHER DROP SHIPPERS
We have put together the most common and most difficult causes for the failure of young companies. We were guided by the e-commerce industry on the one hand and the DropShipping trading model on the other. You, therefore, do not expect any unimportant general places, but instead a very differentiated elaboration of the most common sources of error in the business area you have chosen.We recommend that you study the presented errors, reasons and causes very carefully. Try to internalize the individual sources of interference and pay particular attention to the many recommendations in the text that will help you to avoid these errors. You are laying the stable foundation for a long-term stable company that is in good economic shape and financially provides you with everything you need.
you should definitely avoid these errors
YOU SHOULD DEFINITELY AVOID THESE ERRORS
In order for a drop shipping trade to really start successfully, it is important to rule out potential sources of error. Below we present the ten most common mistakes made by inexperienced dropshipping retailers. If you take these sources of error into account when setting up your own dropshipping business and avoid them consistently, you have good prospects for a profitable and long-term flourishing company.MISTAKE 1:
IGNORED MARKET AND CONSUMER INTERESTS
Products cannot be sold without an adequate need in the market and a corresponding interest among consumers. Before you decide on a specific trading area, you should carefully analyze the market potential. In this context, not only investigate whether the respective goods are in high demand, but also get an accurate impression of the competition and the current prices on the market.
If you manage to discover a promising niche that has so far been sparsely populated, then your chances of successful sales increase. If you have reasonable doubts about the success potential of products, then you should choose another product area.
MISTAKE 2:
NOT ENOUGH TIME IS INVESTED IN THE SELECTION OF SUPPLIERS
If you choose a dropshipping supplier too quickly, you risk missing crucial details. Every potential dropshipping provider has to be put through its paces before starting specific cooperation. This requires extensive research, which ideally also involves personal interviews. Appropriate trade fairs and commercial exhibitions are one way to get in touch with potential suppliers.
Test the performance of the potential wholesaler extensively. Place a few test orders and, above all, check the quality of the products and the reliability of the delivery. Ask existing customers of the respective supplier about their experience with DropShipping with the company and research online for opinions and ratings.
MISTAKE 3:
THE CONDITIONS WITH SUPPLIERS ARE NOT NEGOTIATED WELL
The profit is made when shopping. Keep this old principle of successful merchants in mind and carefully check the purchase prices at your DropShipping suppliers. False shame when negotiating list prices is out of place here. Your counterpart is an experienced dealer and will not feel attacked by an open request for special discounts and better prices.
However, not only consider the pure product price but also agree with the costs and fees for shipping and handling with your suppliers. Talk about minimum order quantities and any surcharges that may apply. In any case, these conditions must be clearly agreed before starting the cooperation, as they are very important for your future profits.
MISTAKE 4:
PRODUCTS ARE TRADED THAT YOU DON'T UNDERSTAND
When choosing a product area, you should not be guided solely by market opportunities and the profit margins that can be achieved. Make sure that you have a personal reference to your future range if possible. Remember that you can describe and document products with which you are well versed much better. As a stranger, you would already be faced with the task of putting together a range that is suitable for consumers.
When deciding on a particular product group, keep in mind that you must regularly answer customer questions, both before and after your purchase. If you choose products that interest you personally, you will be keeping an eye on the markets, the technical innovations and the trends and you do not have to invest any additional working time.
MISTAKE 5:
THE COSTS IN DROPSHIPPING ARE UNDERESTIMATED
Anyone who chooses a company model based on DropShipping often has in mind the low start-up costs. Even if this business model requires significantly less capital than a comparable concept in classic trading, you will still face various costs. You should definitely know these and take them carefully into account when planning. Think, for example, of the software and design of your future online shop and the expenses for programming interfaces to the respective suppliers.
In addition, calculate the costs for setting up your future job, for the production of business stationery and also include the advertising and marketing expenses that are necessary to make your future shop known on the Internet. Although you can do without a warehouse and employees for warehousing and shipping when dropshipping, you should think early about who can support you in handling customer inquiries and support tasks and what this support will cost you.
MISTAKE 6:
THERE ARE NO RULES WHEN RETURNING GOODS
If you sell products to private customers on the Internet, you are legally obliged to grant the buyer a 14-day right of return. Please keep in mind that this right does not apply between you and your dropshipping supplier. This is because traders are trading here and the rules of private consumer protections do not apply in this environment. Under certain circumstances, it is possible to agree with an extraordinary right of return with the dropshipping supplier.
If your supplier is not ready for this, then you should plan to sell return goods on eBay. Keep in mind that you will not usually get the originally planned sales price with such returns. Be sure to clarify with your DropShipping suppliers how to proceed in warranty and guarantee cases. In any case, agree on whom the customer can send a defective product back to during the warranty period and how he will receive a replacement.
ERROR 7:
COMMUNICATION WITH THE SUPPLIER IS POOR
In order to convince yourself of the performance of a dropshipping supplier of your choice, you should personally and on-site get a precise picture of the company of the future partner. Although today a large part of the commercial communication takes place via telephone or email, there is no substitute for personal contact, especially at the beginning of the cooperation. In direct dialogue, you have better options for negotiating the specific prices and conditions.
In the company premises of your potential supplier, you can get a comprehensive picture of the seriousness and performance of the company. Check whether the products on offer are actually in the warehouse and have the processing structures and processes in the company explained to you. Pay particular attention to how quickly incoming orders are processed and ordered goods dispatched.
ERROR 8:
THE WORKLOAD IS UNDERESTIMATED
Online trade via drop shipping is associated with significantly less processing effort than classic mail order. However, the modern form of online trading cannot do without planning and structure. You should therefore definitely plan indispensable work steps and an increased amount of time.
On the one hand, you should not underestimate the effort involved in the care of prospective buyers and customers. On the other hand, the business relationship with your dropshipping suppliers can also involve more work, if, for example, inventory is not updated via the data interface, but has to be transferred manually.
ERROR 9:
THE ABILITY TO DELIVER THE GOODS IS NOT OPTIMALLY CHECKED
As a drop shipping online retailer, it is your responsibility to ensure that the products you offer are deliverable. If a product is not available or is only available late, this will fall back on your reputation as an Internet retailer. When trading drop-shipping products on eBay, you as a provider are even obliged by the guidelines for sellers to make sure that the products can be shipped immediately after they have been sold.
You can also economically hit the consequences of delayed availability of products. For example, if a customer orders two products, one of which is not available as scheduled, the shipping costs are usually double.
ERROR 10:
GOODS WITH HIGH RETURN RATES ARE SELECTED
Returns of products are part of the everyday work of every online retailer. Both the law and the general rules for customer friendliness require an unconditional right of return of at least 14 days. Returned goods can in many cases no longer be sold regularly, but instead have to be sold elsewhere, usually at a lower price. The online dealer has to bear the resulting losses himself.
Against this background, the envisaged product areas should also be checked with regard to the return rate to be expected. The market knows various product categories that are particularly susceptible to returns and can, therefore, be classified as unsuitable for dropshipping. An example of this is the clothing area. Here the return rates sometimes reach up to 40 percent.
MISTAKE 6:
THERE ARE NO RULES WHEN RETURNING GOODS
If you sell products to private customers on the Internet, you are legally obliged to grant the buyer a 14-day right of return. Please keep in mind that this right does not apply between you and your dropshipping supplier. This is because traders are trading here and the rules of private consumer protections do not apply in this environment. Under certain circumstances, it is possible to agree with an extraordinary right of return with the dropshipping supplier.
If your supplier is not ready for this, then you should plan to sell return goods on eBay. Keep in mind that you will not usually get the originally planned sales price with such returns. Be sure to clarify with your DropShipping suppliers how to proceed in warranty and guarantee cases. In any case, agree on whom the customer can send a defective product back to during the warranty period and how he will receive a replacement.
ERROR 7:
COMMUNICATION WITH THE SUPPLIER IS POOR
In order to convince yourself of the performance of a dropshipping supplier of your choice, you should personally and on-site get a precise picture of the company of the future partner. Although today a large part of the commercial communication takes place via telephone or email, there is no substitute for personal contact, especially at the beginning of the cooperation. In direct dialogue, you have better options for negotiating the specific prices and conditions.
In the company premises of your potential supplier, you can get a comprehensive picture of the seriousness and performance of the company. Check whether the products on offer are actually in the warehouse and have the processing structures and processes in the company explained to you. Pay particular attention to how quickly incoming orders are processed and ordered goods dispatched.
ERROR 8:
THE WORKLOAD IS UNDERESTIMATED
Online trade via drop shipping is associated with significantly less processing effort than classic mail order. However, the modern form of online trading cannot do without planning and structure. You should therefore definitely plan indispensable work steps and an increased amount of time.
On the one hand, you should not underestimate the effort involved in the care of prospective buyers and customers. On the other hand, the business relationship with your dropshipping suppliers can also involve more work, if, for example, inventory is not updated via the data interface, but has to be transferred manually.
ERROR 9:
THE ABILITY TO DELIVER THE GOODS IS NOT OPTIMALLY CHECKED
As a drop shipping online retailer, it is your responsibility to ensure that the products you offer are deliverable. If a product is not available or is only available late, this will fall back on your reputation as an Internet retailer. When trading drop-shipping products on eBay, you as a provider are even obliged by the guidelines for sellers to make sure that the products can be shipped immediately after they have been sold.
You can also economically hit the consequences of delayed availability of products. For example, if a customer orders two products, one of which is not available as scheduled, the shipping costs are usually double.
ERROR 10:
GOODS WITH HIGH RETURN RATES ARE SELECTED
Returns of products are part of the everyday work of every online retailer. Both the law and the general rules for customer friendliness require an unconditional right of return of at least 14 days. Returned goods can in many cases no longer be sold regularly, but instead have to be sold elsewhere, usually at a lower price. The online dealer has to bear the resulting losses himself.
Against this background, the envisaged product areas should also be checked with regard to the return rate to be expected. The market knows various product categories that are particularly susceptible to returns and can, therefore, be classified as unsuitable for dropshipping. An example of this is the clothing area. Here the return rates sometimes reach up to 40 percent.
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