What are the challenges of dropshipping?
A dropshipping business is easy to set up, requires minimal investment, and boasts low overhead costs, but it also comes with certain challenges. Since the seller doesn’t hold inventory, they must rely on suppliers to keep their inventory updated and fulfill orders in a timely and professional manner.
This means that sellers have no real control over product availability, product quality, how the products are packaged, how and when they are shipped, or how the return and refund process unfolds.
This lack of control makes dropshippers vulnerable in case of canceled orders, shipping delays, or damaged products. Any issues that might appear in the process can result in loss of customer trust and damaged brand reputation because the order is placed through the seller, and they are ultimately responsible for it.
A common issue that might arise is when a customer places an order for multiple items and receives them from different suppliers at a higher shipping cost than expected.
Because the dropshipper has no control or visibility of the supplier’s inventory, they can end up with a dissatisfied customer. This is an issue that can be avoided by implementing dropshipping inventory management software that syncs the retailer’s store with the supplier’s inventory so that the customer can make an informed decision and know if they’ll be charged extra for shipping.
Another downside to dropshipping is that profit margins are lower compared to traditional retail business models.
This is because droppshippers are forced to sell goods at low prices to compete with other stores carrying the same products. Since dropshipping businesses are so easy to set up, the market is highly competitive. There are many retailers selling goods at very low prices in an attempt to gain customers, build brand awareness, and start making revenue as fast as possible.