Three reasons why dropshippers fail

Jul 13, 2020 Adam Eleiko Adam Eleiko

Every dropshipper dreams of making big bucks. One of the main appeals of dropshipping is if you are successful, you can quit your 9 to 5 job and be rid of your commute and terrible boss for the rest of your life. Digital nomad entrepreneurs even dream of traveling while either maintaining their dropshipping stores or automating them while they're on the go. But dropshipping is a tough industry, and most entrepreneurs don't make it. So we scoured the internet and found three important reasons why most dropshippers fail. 


They choose bad products

Products that are used in dropshipping businesses and stores around the internet come mostly from China, especially products from Aliexpress and Alibaba. While there has been a recent movement within the country to improve products from China and fix their business reputation, there are still many suppliers who don't care for quality. But it's not just products from China anymore either, so a dropshipper needs to do the research on which products are good and which will cost you your business's reputation. Many dropshipping forums trade information on suppliers, so forums are a good place to start. 


There's not enough money to sustain cash flow

The subject of cash flow is a topic that is not well discussed on major dropshipping sites, yet not having enough will doom your business. When you run out of cash, you'll be unable to purchase a customer's product from A supplier when they order it, pay for shipping, and maintain your website. Sure, the customer does pay for their product and extra shipping if they ordered it, but the money from their purchase isn't instantly delivered, so you will need to use your store's own cash until you receive their money. Quite a few dropshippers use a credit card so they won't have to use the cash in their bank accounts.


Their online store is marketed towards a general audience.

Finding a niche is a difficult and frustrating endeavor, so many new dropshippers take what they think is the safe route and open a general store. But dropshipping in 2020 requires niche store creation because the market for general stores is absolutely saturated. Plus, if you're using aliexpress items to create your store, you'll have the same products that many other general stores already have. So, here are two rules you need to know when creating the theme or niche for your store.

The first rule of finding a niche is to start with a subject that you know well. Do you like pet products, or winter clothes, or audio gear? Find a niche that you understand so you can evaluate products and answer customer questions. 

The second rule is to do your research and find out in the niche you're an expert in has an audience to which you can market. Conduct keyword research on a few potential niches and see how often the term is searched. There is plenty of videos online that teach you how to find profitable niches.


Conclusion

There are three major reasons why a dropshipper's new business would fail. First, they choose bad products that lower the reputation of their store and cause customers to return them. Second, their cash flow dries up, and they are not able to sustain their business expenses as they come through. And third, they create a general store which is harder to find an audience for than a niche store. A good droppshipper needs to know these issues so they can avoid doing the same thing in their own business.

Adam is a 6 figure dropshipper, eCommerce enthusiast, and head of digital marketing at SaleSource - the all-in-one eCommerce tool.

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