It might feel like everyone and their pet now has a drop-ship store, and that’s probably true; the market is full of them

So why do so many people say it’s a bad idea to open one? 90% of drop-ship stores fail in their first month, over 92% fail in the first six months and around 5% make it to their first year. People think that it will be a quick and easy way to get a few extra pennies at the end of the month, but it's not. It requires the same hard work and dedication any other business would take. One person’s bad experience doesn’t mean that’s it's not worth doing.

I want to take you through a few keys factors, using my own experience with running my store on what works, and what doesn’t.

Investment:

People believe that it’s an easy way to make money that doesn’t require a lot of investment, they are wrong. If you are just opening your store, you need to advertise like you would with any other e-commerce business. I would recommend having around £500pm in your business for advertising. If you don’t have that kind of money yet, wait a little longer until you do. 

Patience

It's very rare any business is a huge success overnight, even the biggest brands in the world like Apple started in a garage. You won’t make this a full-time business overnight, so it’s better to set expectations before going into this. Unless you hit the ground running with a big ad budget and a very unique product it's unlikely you will make much in your first year.  

Wrong Platforms

The most popular platforms for marketing drop-ship products are Facebook, Google, and Bing. Do your research, let’s say you want to sell mugs on your drop-ship store - all those markets are flooded with the same product. You are going to have to fight an uphill battle, find unique selling environments that fit your products. Are you selling home goods? Maybe skip those larger platforms and advertise on Pinterest, or get paid placements on home decor websites. 

Website

The design and feel of your website is the key to your success. Don’t knock something up quick on a self-build website, its best to have a custom built E-commerce platform that is trustworthy, reliable and easy to navigate for your customers as well as a robust checkout process. Use the same principles you would use with a physical store. Do you want your store to feel like a market, or do you want it to feel like a known, established and trustworthy brand?

Prices

The reality of most drop-shipping stores is that there are 1000s of stores that have the same products as yours. People have been using the internet for shopping for so long now that they know they can usually find the same product cheaper elsewhere. The best way to make a profit is to look at volume if you are selling say, a mug (it’s always a mug) and it costs you £1.20 to buy and ship, but you charge the customer £17.99 for it, there is a high chance someone else is selling it for cheaper. If it's not a unique product, sell it for just over double what it costs you to buy and ship. In the case of our mug, that would be around £7.99 when you factor in the cost to advertise. While that price may look low to you, it’s a great deal to your customer, so you will sell more.

Customer Support

I have personally run into this a lot. If you run a store, it's your responsibility to do customer support. This means you reply quickly to messages, take calls and issue refunds. In 2020 it's very easy for upset customers to destroy your business through word of mouth and online reviews. The unfortunate truth about drop-shipping is that from time to time, you will end up sending out bad products. I can’t stress enough that you need to be ready to go above-and-beyond for your customers. 

Shipping Issues

Most drop-shipping stores rely on China, with typically shipping being 20 or more days. Most people won’t be happy to wait that long. It’s best to find a local supplier that can get stock out within a few days. If you think you can just order each thing individually from China, your store is going to fail. 

Product

What are you selling, and why are you selling it? Many people think that they need to populate their store with 1000s of products that cater to a single demographic; it doesn’t work like that. The best thing to do is to find your hero products and focus on those. Sure, you can expand your range over time, but starting big means you are likely to have a big fall. My drop-ship store carries a total of 1 product, I have many variations of that product, but I knew exactly what it was I wanted to sell and how I was going to sell it. I could have easily expanded my range to cover a host of accessories too, but then it wouldn’t be the destination it has become for people who want it.

Reading this blog, it may seem like this is just too hard to do. But believe me, if you find a reason for your store other than ‘I want to make extra money’, you can make it work.

Of course, you can always ask us at UNBXD, we are here and happy to help with everything you need to get up and running!