Dropshipping
Starting any type of retail business is never an easy task. It typically requires a large outlay of cash in the beginning to purchase stock, invest in warehouse or store space, and handle initial overhead costs. With all the other expenses required to start a business, buying stock is often the straw the breaks the camel’s back with regards to finance. It’s often the largest expense of any retail startup, and sometimes it’s just too much and the business fails to get off the ground. Plus, there’s always the risk that you’ll spend thousands of dollars on products that never sell, and you’ll be out of all that money and stuck with items you can’t get rid of. But there is a better way!
Instead of spending a fortune upfront on product, and then having to find warehouse space to store it, and figuring out the logistics of packing and shipping it to customers, why not just use dropshipping? Dropshipping will allow you to get started with little to no upfront investment, while still being able to offer customers the products you want to offer! In this section, you’re going to learn the basics of dropshipping, and how to find the best suppliers.
So let’s get started!
What Is Dropshipping?
Imagine setting up your own online store with dozens, hundreds, even thousands of products without having to spend a single dime upfront on inventory. Instead, you find products on another website (let’s use Amazon in this example since most people are familiar with it), add products to your site, and price them higher than they are being sold on the original size (Amazon).
Let’s say you are selling a frying pan that sells for $14 on Amazon. You price it at $20 on your website. When a customer orders it, they pay you $20. Then you go to Amazon and order it for $14, having Amazon ship it directly to the customer, and you keep the $6 difference. Pretty slick, right?
Only dropshipping doesn’t require you to pay full retail price like ordering from Amazon. Instead, you can often get prices that aren’t all that much higher than true wholesale prices. Of course, you have to be careful. Some so-called dropshipping companies are actually selling at or very near retail, so it’s nearly impossible to make a profit. Sometimes they charge a monthly or yearly fee to access their inventory, which cuts into your potential profits even further. You also have to make sure the company isn’t going to be slow with shipping, which could seriously harm your reputation.
Dropshipping has a lot of pros and cons, so let’s take a look at those before we continue.
Dropshipping Benefits
You don’t have to use dropshipping to be successful in e- commerce. You can find success with just one simple, inexpensive product with a relatively small upfront investment. You can also find success investing a great deal upfront in stock and offering a wide variety of items. It’s totally up to you and your circumstances.
However, if you want to have a full e-commerce site, and you don’t have a lot of money to invest in the beginning, dropshipping is the perfect business model to help you get started. You can always invest in inventory later, once your business is profitable enough.
Keep in mind that dropshipping is not a perfect business model. There are a few issues you need to keep an eye out for, which we will address in the next chapter. But there are some big benefits, too. Let’s take a look at some of the biggest benefits of drop shipping.
1. For one thing, you don’t have to invest a huge amount of money in the beginning to get started. All you need to get started is a domain, website, and the software to run your shop. In most cases, you can get started for less than a hundred bucks.
2. Also, you don’t have to spend as long sourcing products. One of the most time-consuming elements of e-commerce is finding the right products for your shop, and when you use dropshipping, you’ll often be able to source multiple products from the same supplier.
3. It’s also very easy to add inventory to your shop, because most major dropshipping suppliers either have a plugin you can use to automatically add inventory to your shop, or they have CSV files you can import into your software to control your stock. This is a huge time saver.
4. Another great thing about dropshipping is that there is much less risk involved. Since you aren’t investing in product upfront, you don’t have to worry about getting stuck with unsold inventory if you buy something that turns out to not be as popular as you anticipated.
5. It’s also very nice to not have to worry about having warehouse space, managing inventory, and sending out packages. These are all things that are expensive and time- consuming, and they are completely avoided by using dropshipping.
These are just a few of the biggest benefits, and you can probably already see how great it can be for someone who’s just getting started!
Cons Of Dropshipping
Let’s take a look at a few of the most common problems that might come along, and how you can minimize the potential of experiencing them.
Products Out Of Stock
One of the most common complaints you’ll get is when certain products are out of stock, especially if they are particularly popular and hard to find. This can happen to any store, even monolithic stores like Amazon. And it definitely upsets customers when it happens.
However, it’s important to keep track of stock to minimize the potential of upsetting customers, because they will be a lot unhappier if they think you have the product in stock and place an order only to find out the product was out of stock than they would be just being notified before they purchase that the product isn’t available. For this reason, it’s a very good idea to use some sort of plugin that will automatically update your site whenever products are out of stock.
Product Returns
Every single company on the planet must deal with returns. Even if you have a strict no-returns policy, you will still have to deal with unhappy customers that attempt to get a refund. And telling them no will just result in very angry customers. I know someone who purchased a lot of items from one very popular discount shopping app, found that the quality was terrible and the sizing was way off, and could not return them because the company had a no-returns policy. The customer was very upset, and left bad reviews for the company all over the place. And this person was far from the only person complaining about not being able to return items.
For this reason, it’s not a good idea to have a no-refunds policy on physical products. This will just lead to chargebacks, which could get your account with PayPal or any other billing company canceled. It’s not worth the chance. Plus, people who are unhappy with their purchase and cannot return it will spread bad reviews, which can have a negative impact on sales over the long run.
Always make sure your product descriptions are as accurate as possible, and make sure to have sizing charts and pictures to minimize returns. If a product is under $20, you might just ship another item to the customer without requiring them to return the original. If the product is over that price, have the customer ship the return to you, and when it arrives, send them a new one as quickly as possible. If it is returned because it’s damaged or defective, return it to the supplier. Otherwise, you might just send it out to the next customer that orders it, assuming it’s still in new condition.
Slow Shipping
Depending on the supplier, you may have unhappy customers because the shipping is a lot slower than they are used to. With the prevalence of free 2-day shipping with Amazon Prime and sites like Walmart, customers are used to getting their purchases very quickly.
Since dropshippers don’t have deals with shipping companies, and because some even ship directly from China, shipping can often take days, weeks, or even a month or two. Many customers won’t be happy waiting that long. If you use dropshippers based in your home country, you will probably get faster shipping, however the prices you get will probably be higher, resulting in lower profit margins.
How Dropshipping Works
Before you can truly understand how dropshipping works, it’s important to understand the basic supply chain. Products you see in stores often go through three, four, five, or even more companies in the supply chain before they arrive in stores.
Manufacturers
Manufacturers are the first step in the supply chain. (Unless of course you count the companies that supply the raw materials, but that’s a different arm of the supply chain.) Manufacturers create the products, but most of them don’t sell directly to the general public. Instead, they typically sell through a wholesaler, or sometimes another middleman brokers the sale of the product from the manufacturer to the wholesalers. Occasionally, manufacturers may sell directly to retailers, but they usually don’t deal with selling direct to companies.
Wholesalers
Wholesalers are middlemen. They buy from the manufacturer and resell at a higher price to retailers. They usually don’t make an enormous profit per item, but they make their money by selling in bulk. Wholesalers may offer dropshipping, but usually they just sell to retailers.
Retailers
Retailers buy their products from wholesalers, or directly from manufacturers. They sell directly to the public, often at fairly large markups. They may offer dropshipping, but because they are selling at full retail, they usually don’t.
Dropshippers
Dropshippers usually fall somewhere between the wholesale and retail areas of the supply chain. They purchase from wholesalers, or sometimes manufacturers, but sell at near retail prices. Dropshippers cannot sell at wholesale prices unless they manage to buy their products directly from manufacturers, which is relatively rare. They usually exist on fairly slim profit margins, because they have to sell below retail in order for those who do business with them to also make a profit, and yet they have to buy at the same wholesale prices as most retailers.
Avoiding Scams
Before we get started talking about finding quality dropshipping sources, it’s important to note that there are companies out there that are borderline scams, and others that are nothing but scams. These companies prey on people who don’t know any better, claiming to offer wholesale prices and actually selling at retail, or even higher, or not even shipping anything to customers at all. There’s no way to be certain to avoid scams, but there are a few things you can do to lessen your chances.
First, as a general rule, say no to monthly fees. Those companies that offer monthly fees usually make most of their money on those fees, because they realize that customers will have a hard time finding products to sell that they can make a profit on. Thus the average customer won’t even order anything at all, and the company still makes money via that fee. Keep in mind there are a few legitimate companies that do require participation fees, but those will usually be easy to spot because they’ll have more positive reviews online than other companies, as well as more recommendations.
Next, be sure to check the company’s prices to be sure they aren’t selling at or very near retail. If they are, you’re not going to be able to make any money with them.
Finally, be sure the company doesn’t just sell directly to the general public. If they don’t require you to apply for an account, often requiring a business license or tax ID number, they usually aren’t legit.
Investigating Companies
There are so many scams and near-scams out there that it can be quite tricky to find a legitimate dropshipper that isn’t going to scam you. Even if you find a legitimate dropshipper, you still have to make sure they have prices that will allow you to make a decent profit, and will provide fast shipping and quality service to you and your customers.
It’s vital to check a company out thoroughly before doing business with them. The first step, of course, is to check for online reviews and check their Better Business Bureau report (if they have one).
To check for online reviews, try searching for things like:
1. [Company name] scam
2. [Company name] reviews
3. [Company name] legitimate
These searches should pull up information about the company. If not, it probably either means they aren’t bad enough to have a lot of complaints, OR they are so new that no one has filed any complaints online, yet. Remember, every company eventually has some complaints. Amazon has been touted as having some of the best customer service there is via many sources, but they have thousands and thousands of complaints. No company is perfect.
Complaints may not even be founded. Sometimes it’s the shipping company that causes the problem, and even when the company goes above and beyond to rectify the problem, the customer still insists it’s the company’s fault and that they are “scammers”. Sometimes the customer misunderstands some element of the ordering process, or even makes a mistake like forgetting to order expedited shipping. They try to blame the company, and the company’s reputation suffers.
So you should expect there to be some complaints about any company. It happens to every company. But if there are far more complaints than there are positive experiences, it’s a red flag for sure.
You should also speak with someone at the company directly before doing business with them. This accomplishes two things:
1. It confirms that the company actually does respond to customers, and that they are easy to get in touch with.
2. It lets you ask the company important questions.
Here are some questions you can ask companies before you decide to do business with them:
1. How long have they been in business? The longer they have been in business, the more likely it is that they are a legitimate company that will be reliable.
2. Which company do they use for shipping? You want to make sure they use a reliable company like UPS or FedEx for shipping, because some of the smaller shipping carriers may be cheaper, but much less reliable.
Dropship Detective
3. Who are their clients? They may not be willing to divulge this information, but if they have some major companies using them, they’re probably a legitimate company.
4. What is their return policy? You need to know their return policy inside and out. What happens if the item doesn’t fit, or the customer doesn’t like it? What about defective merchandise? How do they handle returns? Who pays for shipping? These are all questions you need to know, because if a customer wants to return a product and the company won’t help, you will be responsible for handling it.
5. What types of payment do they accept? You need to know when payment is expected, and what forms of payment they accept. Some companies may offer net-30 terms, which means payment is due 30 days after purchase, while others may require immediate payment.
6. Do they send shipping notifications? The company should send notification emails to your customers when their items ship. This prevents you from having to do it. While this isn’t a deal-breaker, it’s a very nice thing to have.
7. Do they offer custom packing materials? You may want to have your own shipping labels on the products, as well as your own packing slip, coupons, etc. This is a very helpful feature.
8. What are their prices like, and are there any fees? You need to know how much they charge for products, as well as whether or not they charge any fees for “membership”. Legitimate dropshipping companies will rarely charge a membership fee or participation fee. A few do, but this is rare.
9. Do they sell to the general public? If so, chances are their prices are too high to make a decent profit. True dropshippers will not sell directly to the public, and they will usually require a business license and/or tax ID number before you can access their system.
10. Can they integrate with your platform? It’s important to be able to have your inventory sync with theirs so customers don’t order products that the company doesn’t have in stock. Some companies have inventory systems that can integrate directly with popular shopping cart platforms, saving you big headaches down the road.
You may have your own questions to ask, and that’s great. Make sure you ask any questions you have upfront, so you don’t have to worry about it later.
Ecommerce Platforms
There are many different e-commerce platforms that have become popular in recent years. Shopify is perhaps the most well-known these days, but there are also platforms like Big Commerce and WooCommerce.
So which one is best?
Choosing a platform is purely subjective, of course. It doesn’t really matter too much which one you choose, because any of them can help you achieve your goals, but there’s always one that will meet your specific needs better than the others. They all have their strengths and weaknesses, so let’s take a look at some of the most popular e-commerce platforms, and why you might choose one over another.
BigCommerce
BigCommerce is a very popular choice. They have more features out of the box than other platforms, but at a price. The basic plan starts at $29.95 per month and scales based on the features you want and how much you make in sales per year. They have fewer apps available than other platforms, but they offer a lot more functionality built in, so you may not need many extensions since a lot of what you want may already be included. There are some free themes available, but if you want a paid theme they can be quite pricey, ranging from $145 to $235 each.
WooCommerce
WooCommerce is a great option, because it’s free. However, it may not always be the best option since it doesn’t have a lot of functionality built into the base program. There are lots of free themes available, as well as some free extensions, but a lot of the free options are buggy.
There are plugins and themes you may want to extend its functionality that do require payment, but most of these are a one-time payment, not an ongoing monthly fee like some other platforms. However, they can be prohibitively expensive if you’re just getting started.
WooCommerce is run on WordPress on your own hosting, so you will have to pay for a hosting account, whereas other options like BigCommerce and Shopify are run on their servers, so your hosting is included in your monthly price.
Shopify
Shopify is, in many ways, the most ideal platform for drop shipping. It’s affordable, and scales with your store’s size. It has a wide variety of plugins and themes available. And it’s also ideal for one main reason – Oberlo.
Oberlo is a plugin that will let you import products from AliExpress (one of the best sites for drop shipping) quickly and easily, keep track of inventory, and much more. It takes a LOT of the hassles associated with dropshipping out of the equation, allowing you to focus more of your time and attention on getting traffic and sales, rather than dealing with all these other things. Best of all, you can get started with Oberlo for free on Shopify!
Themes
All of the major e-commerce platforms have a variety of free themes, with varying degrees of quality and features.
Not only that, but the paid themes for Shopify are more affordable than those of BigCommerce. (Shopify’s paid themes range from about $100 to about $180, while BigCommerce’s range from about $145 to $235.) WooCommerce themes have a wider range of prices, because many of them are available from external developers. You can definitely get away with a free theme in the beginning, and there are lots of them to choose from, however a paid theme will usually have extra features that allow you to customize your site to your liking, which can significantly boost sales.
Extensions
All of the platforms have a large number of apps that can extend the functionality of the software, and they can all be pricey. You can probably get away without using extensions in the beginning, and just add additional functionality later.
Choosing a Niche
Now that you’ve chosen a platform for your shop, it’s time to choose a niche. You may already have a niche in mind, and that’s great. But before you get started, it’s critical to make sure that niche is likely to be profitable before you get started. While starting an e-commerce shop with drop shipping requires minimal financial investment upfront, it still does require some investment, as well as plenty of time.
We’ve all heard the saying “time is money”, and that’s very true. The last thing you want to do is invest your hard-earned money and lots of time only to discover the niche isn’t as profitable as you hoped!
In order for a niche to be profitable, it must:
• Have a large number of interested people.
• Have a large number of people who are either passionate or desperate.
• Have a large number of people who can afford the product.
• Have products available at a price where you can make a profit.
What about competition?
Don’t worry too much about competition. Having competition is a good thing. It means the niche is more likely to be profitable.
Having too much competition isn’t necessarily a deal breaker. You can overcome the competition in a number of different ways. But if there’s an extreme amount of competition, you may find it difficult to gain traction.
If you really think a niche will be profitable, and you’ve done research that supports it, I wouldn’t worry about the competition.
Given how inexpensive it is to get started with dropshipping, it’s not a huge risk if you later discover the niche isn’t as profitable as you thought, and you can always sell the site later if you don’t see the kind of success you hope for.
Getting Traffic
Now that you have chosen your niche and set up your shop platform, you can set up your shop and get it ready for traffic. Consult with your chosen platform’s documentation for advice on setting up your store. Once it’s up and running, it’s time to concentrate on getting traffic. There are many ways to do that, both paid and unpaid. We are going to take a look at both, but you can pick and choose the methods you believe will work best for your situation. We’re going to concentrate on social media, because that is the easiest way to generate traffic, and it won’t cost much, if anything, in the beginning.
Facebook
Facebook has both paid and free methods of promotion. I highly recommend using paid promotions if you have the capital available, because you can reach a lot more people. But you can also reach people without spending money if you’re short on capital. Join some groups related to your niche and start posting regularly. Then, with permission from the group’s owner, ask if you can drop a link to your shop. You might even run contests for group members and give away store credit to get more attention.
Pinterest
Pinterest is one of the best ways to generate traffic to a shop, because it’s been proven to be the single best platform for selling. While other platforms might bring in more volume, Pinterest will usually convert better. It’s a good idea to start a separate Pinterest account for each niche or store you create, because people often won’t follow accounts that are random and unorganized. If you want people to follow you, then you need to have a tight niche, with several boards that have interesting pins. To grow your following on Pinterest, start out by following a number of accounts in your niche, but make sure you’ve already set up your profile thoroughly and created a few boards. This will get more people to follow you back.
Here are a few more tips for Pinterest:
• Use keywords in your name (Example:RecipeGirl|Cooking & Food)
• Use keywords in the description of your pins
• Set your best images to the cover of each board
• Use keywords as your board names, don’t get cute
• Make all your own pins taller than they are wide to standout
• Pin often and consistently throughout the day, but not too many at once
• Only pin the very best content to keep your quality high
Instagram
Instagram can also be great for sales, especially if you can get good engagement. To get people to interact with your posts, make sure all your images are interesting enough to get people to like and comment.
Tips for Instagram marketing:
• Follow big accounts in your niche
• Always use several hashtags in every post, at least 5
• Like posts from your followers so they will return the favor
• Post regularly, but only a few times per day
You can use other social media platforms, too, but these are the best to concentrate on in the beginning.
Finding A Dropshipper
There are thousands of companies that offer dropshipping, but not all of them are legitimate. I’m going to list a few places where you can start your search, but please don’t think I’m personally recommending these sites. As always, do your due diligence before using any company.
Dropshipping Aggregators generally have a large number of products available from many different manufacturers. They often charge a monthly or yearly fee for access, but that fee often goes toward providing automated inventory control that integrates with your shopping cart.
Some aggregators may charge higher prices than other dropshippers, but you can generally find some items you can make a profit on. There are a few aggregators that claim to sell at direct wholesale prices.
Dropshipping Aggregators:
Salehoo
($67 per year)
Doba
($60 per month)
Inventory Source
($25+ per month)
Oberlo (Works only with Shopify)
Dropshipping directories are another way to find legitimate companies that offer dropshipping. Some directories actual vet companies before they are added, while others simply add all dropshippers they find.
Dropshipping Directories:
Worldwide Brands
($299 for lifetime access)
Wholesale Central
(free)
WorldWide Brands has been around for a very long time. They are expensive, but you get lifetime access, and the reason they cost so much is because they carefully vet all companies before adding them to their directory. This doesn’t mean you won’t run into occasional problems, but it makes your job a lot easier. If you can afford this fee, it will save you a lot of time. Wholesale Central is free, but companies are not thoroughly vetted, so you’ll need to do a lot more work to check out each company before doing business with them.
If you’re using Shopify and Oberlo, you’ll be using a very inexpensive dropshipper called AliExpress. AliExpress
came from the Alibaba site, which has been the largest site for finding dropshippers and wholesalers for a long time. AliExpress is great for dropshippers, because there are no minimum orders, products are usually priced at or near wholesale prices, and you don’t have to provide a bunch of documents like tax IDs or business licenses as you do with many traditional dropshippers and wholesale companies.
One thing to keep in mind is that most products from AliExpress will be shipped from China, so it may take several weeks for customers to receive their orders. If you use them, be sure you let customers know how long shipping is likely to take before they order. Make it very, very clear. But there is one big benefit to using AliExpress, and that is that you can choose products that have free shipping, which means you won’t have to charge shipping to your buyers. This will help soften the blow.
Some Hurdles to Overcome With Dropshipping
Reducing Returns
Returns are probably the biggest problem you will ever face with dropshipping, because many dropshippers either don’t accept returns, take a long time to ship items, or require you to pay for another item to ship to the customer instead of accepting the item back and then sending out a replacement. There are a few ways to combat this, and we’re going to talk about some of the best methods for reducing returns.
What Causes Returns
There are three main reasons people return items. There may be occasional situations that fall outside these three main areas, but these situations will likely be quite rare, so we are going to focus only on the most common causes.
1. Buyer error.
This happens when buyers don’t read the description properly, choose the wrong size or color, etc. Your supplier probably won’t accept refunds due to buyer error, so it’s important to have a clear policy in place for situations such as these. It’s a good idea to accept all returns, because this will create loyal buyers, but you may want to charge your customer for the return shipping on the item since it wasn’t your fault they made a mistake.
2. Description error.
If there is an error in the description, it is ultimately your fault. Even if the description came straight from the supplier, it is up to you as the owner of your website to check all descriptions for accuracy before publishing an item for sale. So if a buyer receives the wrong item, always accept responsibility, even if you feel it isn’t your fault.
3. Damaged or defective item.
Most suppliers will accept returns for damaged or defective merchandise. If they don’t, you shouldn’t be working with them. When you receive a complaint about damaged or defective merchandise, don’t ask the customer to pay any sort of shipping fees, and make the return as easy as you possibly can.
Returns are going to happen, no matter what steps you take. They’re just a fact of doing business. But there are ways to reduce returns, and the key is looking at the three reasons people typically return merchandise, and how to mitigate those as much as possible. Now, let’s move on to the next section, which is where we will start looking at simple ways to reduce returns.
Choosing the Right Supplier
It’s especially important to choose the right dropshipping company right from the start in order to make everything go as smoothly as possible. So, let’s talk about some ways to choose the best supplier for your needs. Choosing the right company is probably the single most important thing you can do to make your business run as smoothly as possible, especially when it comes to returns.
First, always use a supplier in your home country, if possible. There may be times when this isn’t a possibility, because the suppliers in your company may be overpriced, have certain restrictions, won’t ship to other countries, or there may not be a supplier that has what you need in your country.
If you use a supplier in China, for example, shipping times will be longer and there may be more mistakes in the ordering process. But Chinese companies often have drastically lower prices than other suppliers, which can often outweigh those occasional issues.
If you must use an overseas supplier, be sure they have a good reputation, have reasonable shipping costs to the countries you want to do business in, and have a good return policy. If you cannot find information about a company online, be sure to place a few test orders and have them sent to your address to be certain the orders are fulfilled correctly, that shipping costs aren’t too high, and that your order arrives in a timely fashion. It’s critical to understand a supplier’s return policy before you decide to do business with them, as this can be one area that can make or break your company. It’s important to find out such information as:
• Does the company accept returns, and if so, under what conditions?
• What is the time limit for returns?
• Do they charge restocking fees for returns, and if so, how much?
• Do you have to pay return shipping fees?
• Do they accept returns on orders where they sent the wrong size or made another error?
You’ll need to know these things in order to make your own return policy. Be sure you follow the return policies of your strictest supplier, so if you have three suppliers, and one will accept returns for 60 days, one for 30, and one for 15, yours should be 15. You might even want to give yourself a little wiggle room and knock a few days off, just in case. This will help you account for shipping delays and such.
If one supplier’s restocking fee is 20%, one is 10%, and one has none, you should use the highest—20%. You can always refund part of the restocking fee if a particular supplier doesn’t charge your customer one. It’s also a good idea to NOT put your address for returns on your website, because you may need to have the customer send the product directly to the supplier, or you may need to have the customer send the product to you instead. So, tell customers to contact you if they need to return an item, and you can give them the appropriate address to send the product to.
Also, be sure you clearly state that all returns over a certain value MUST include a tracking number. This will help you avoid issues with customers saying they sent the product back when they didn’t, or items being lost in transit. This is especially important for more expensive items, but you may not want to require this for cheaper items since the tracking could cost more than the item itself.
If the item was defective or damaged, or if the company sent the customer the wrong item, be sure to refund any return shipping costs to the customer. Simply ask for a receipt for their shipping costs and send them a refund. It isn’t fair to expect the customer to accept the burden of paying for return shipping on an item that was not what they ordered.
Use Accurate Descriptions
Another way to reduce returns is to make sure you always use accurate descriptions and photos when you add products to your store. One of the biggest causes of returns is when a buyer receives a product that isn’t exactly like it was described on your store.
Sometimes this happens because the supplier gives you the wrong description, which is a very good reason to order every product you sell yourself before you decide to put it on your store. This lets you check out the order and shipping process, product quality, and accuracy of description ahead of time. To make sure you have the best possible descriptions, make sure to add any of the following elements that are applicable to the product you are adding:
1. Accurate sizing charts for wearable items.
Provide sizing charts in both inches and centimeters to make sure buyers from around the world can find their size. Don’t forget to include instructions for measuring, too. Many people don’t know how to do it properly.
2. Multiple pictures from different angles and with details.
Don’t forget that items can look surprisingly different from varying angles, so it’s a good idea to show multiple angles and close-ups of important elements.
3. Go in-depth with your description.
Try to include as much detail as you can about the product when you write the description. Anticipate potential questions and answer them in the description. This not only helps reduce returns, but also helps reduce customer service issues where people write in to ask questions about a product before they buy.
4. Write unique descriptions.
Don’t just use cut-and-paste from the vendor’s website, or import products with a CSV file and not change anything. Not only will your SEO suffer, but the descriptions may not be accurate. Make your descriptions as unique as possible.
5. Include warnings, if necessary.
If you have a product that may have downsides for some users, be upfront. For example, if you have a product that contains a known allergen, state this in the description in bold text. It’s better to lose a sale than to have to deal with a return later.
Do NOT simply post items and descriptions directly from your supplier without checking them carefully for accuracy! Sometimes suppliers outsource the writing of item descriptions, or they hire individuals whose first language is not English to write them, and they end up with inaccurate descriptions or text that cannot be understood.
Always check every description carefully before it goes live on your site, even if you are importing thousands of products via CSV. It’s a lot of work, but it will save both you and your customers a lot of hassle in the long run.
Handling Returns
Returns can be tricky when it comes to dropshipping. The customer has already waited for shipping, which can be rather long if you are stuck using a company that ships from overseas. Then they discover they have a problem and are unhappy. You want to solve these types of issues as quickly as possible to keep customers happy, but it’s not always reasonable to send out another item before the return comes in, especially if the product is expensive. So, let’s look at a few ways you can handle returns and keep your customers as happy as possible.
First, it’s not usually a good idea to deny returns. This can lead to chargebacks, which could result in you losing your ability to process credit cards. However, there have been some companies that have done this successfully.
For example, Zulily is a popular app that promises rock-bottom prices, but they are very clear in their policies that tell customers that shipping times may be long, and that they do not accept returns. They have built a very strong company on this philosophy, and they did it by being completely transparent and forthcoming. They didn’t try to hide anything from their customers. They do have their naysayers who don’t like their no-returns policy, but they have built a strong customer base through their honesty. It works for them.
So, if you are going to have a no-returns policy, be certain to present it to customers in a way that it can’t be missed, and let them know it’s one way you keep prices as low as possible for them. If you’re using an overseas supplier that has long shipping times, you might want to keep a small number of the most popular or expensive items on hand in case of returns so you can send out a replacement quickly, without having to wait for shipping from overseas.
This way, you can have the customer send their return to you instead of back to the company overseas, and you can quickly send out a replacement as soon as you receive their return. Then you can either send the item back to the company for a refund, or you can keep it and send it to another customer if it is in new condition.
This is a good reason to start out with products that are priced on the lower end, and to keep the range of products available on your site relatively low. Imagine a customer ordering $300 worth of merchandise and returning it. You might have to eat the cost by either shipping the return merchandise to the customer at your expense, or issuing a refund, both of which cost you money.
Third-Party Logistics
Another option for handling returns is using a third-party logistics company, also known as 3PL. A 3PL is a company that handles product shipments, returns, etc. It’s estimated that 86% of Fortune 500 companies and 96% of Fortune 100 companies use third-party logistics services.
This is because they don’t specialize in logistics themselves, and it makes more sense to outsource it to companies that already have these procedures in place than to try to develop their own systems from scratch. Don’t wait until your company has grown so large that it becomes difficult to merge your own logistics with a 3PL company. If you’re fulfilling 10-20 orders per day, it’s already time to start looking into this type of system.
Of course, you may not want to have a 3PL handle the entire logistics process for you. This usually requires purchasing products upfront and sending them to the company’s warehouse, which is more of an investment than the average retailer using drop shipping can handle. However, there’s a company that is making is much easier for companies that use drop shipping to accept and process returns. It’s called Returnly, and they specialize in handling returns for companies.
Returnly integrates seamlessly with many different Shopping Cart platforms, including Shopify, ShopifyPlus, Magento, Salesforce, and more. Returnly takes the difficulty out of managing returns and puts it into your customer’s hands. Your customer can submit their return online and manage the entire customer process themselves, and Returnly will manage the logistics of the return.
You will have to have a credit card on file with Returnly so they can charge it for returns and shipping and such. You can set your own return policies, which Returnly will honor, so you can prohibit returns on certain items, create your own custom return windows, etc.
Refunds & Chargebacks
It is inevitable that you will run into situations where customers will request refunds instead of exchanges, or may even request a chargeback with their credit card provider. This is obviously not ideal, as you will have to return the customer’s money with no guarantee that the product they send back to you will sell, and some dropshipping companies do not accept returns unless the product was incorrect or defective.
Chargebacks are even worse, because they can affect your ability to process payments if you get too many of them. For this reason, it’s very important to have a clear return policy in place, but to go out of your way to keep customers happy if you can. Even if you have a policy that does not allow returns, it’s probably a good idea to honor returns from customers who are very unhappy in order to prevent a potential chargeback and to prevent loss of merchandise.
If your customer is unhappy and wants to return a product, denying the return will mean you lose the money AND the product. If you allow the return, you may lose the money, but you will get the product back and avoid a chargeback. Returns are never ideal, but they are much easier to deal with than a chargeback.
Remember, denying a return will potentially cost you both the money AND the product, whereas allowing the return will at least get you the item back to sell again or send back to the supplier. Be sure to keep very detailed records of purchases, returns, and communication with buyers. This way, you have at least some sort of defense in the event that a customer tries a chargeback. If you can prove the item was delivered, or that you tried to work with the customer on a return, the billing company may rule in your favor and refuse the chargeback.
Conclusion
Running an online shop the traditional way can be frustrating and expensive, but dropshipping can make the process a lot easier and a lot cheaper. You can make the process even easier by using Shopify and Oberlo, which will help you import products, manage stock, handle shipping, and more.
You’ve learned some ways to deal with some of the most common problems you might encounter with dropshipping, such as products being out of stock, or customers who need to make returns. You may still have the occasional issue, but most people find they have a lot fewer hassles when using dropshipping, because they don’t have to deal with inventory and shipping themselves.
You’ve also learned how to get traffic, which is one of the most important elements of any online business. I hope you decide to give dropshipping a try, and I hope you find that it works well for you and makes you a lot of money. I wish you the best of luck!