As the founder and CEO of an e-commerce and dropshipping mentoring company, the first thing I tell them is that dropshipping is not easy. While it is a beautiful and relatively easy business to start, there is much to learn. However, you can’t be afraid. Just like when learning to surf, you need to get over your fears of standing up on the board and riding the waves. You will never learn without doing it.
Of course, you can minimize your risks and speed up the process by learning from others, but in the end, the best way to learn is by trial and error. (Ideally, you should learn from others while taking action.)
Having said that, there are some things that I, as a mentor, see that prevent mentees from succeeding. Some of these might seem obvious, but believe me when I say that things can fall through the cracks when you become overwhelmed. It’s at this point where I want to help you establish systems and look out for certain issues that might arise:
1. Not knowing the platform
Whether you use Shopify, WooCommerce, Amazon or anything else, you need to know how to effectively use the platform. Not being able to get started because there is a hitch or because you get stuck on a technical issue is something that should be kept to a minimum. You should neither get bogged down nor run into bottlenecks because you don’t know how your store works or how to change things on it.
2. Not knowing the risks
While dropshipping greatly lowers your risk of starting a business, it still has some risks. If you were to start a retail store, you would have to pay for the racks, displays, hangers, tills, employees, rent, etc. Even though you’d benefit from foot traffic coming from a physical store, the initial costs of all of these things would be difficult to overcome. However, starting a dropshipping store still has its risks. It is important that you know them. (It’s just like becoming a day trader; you must practice risk management.
3. Not choosing the correct suppliers
Dropshipping is a much easier way to start a business, but it doesn’t mean that it’s downright simple. Choosing a good supplier can make or break you. If you think about it, paying the supplier to ship your inventory is almost like outsourcing. Besides having to pay for the product, they must perform the duties of your shipping/logistics department. If they are not able to get your products to your destination in a safe and sound way, your business will fail. You must review their rating and communicate with them. If you find that they are not communicative or if they are just not good, find someone else. It’s not a bad idea to think of your supplier as your partner.
4. Not choosing the right type of store
While you might still be able to get a general store to succeed, I have found that one-product or niche stores are the way to go these days. Being able to brand and create a great customer experience that can differentiate you from others is important. This cannot be overstated.
5. Not having patience
Building expertise and finding success is an iterative process. There is no such thing as finding long-term success overnight. While you might get lucky and find a product that works in the short run, it won’t last if you don’t learn the skills necessary to maintain it properly. The only way to find true success is to slowly test and optimize.
6. Not having a proper budget
After watching a few informative videos, I’ve found that many people tend to think that dropshipping is magical. They believe that all they need to do is pay a small fee for an online store, and then they can parlay that into $100,000 in one month. Unfortunately, that would be very difficult to do. In my experience, it will take at least a few hundred dollars to test the viability of any product, and many well-known dropshipping stores often make between 20% to 30% of your profit. It’s important to consider all of these factors as you’re budgeting.
7. Not knowing your numbers
Numbers will tell you a story. It’s the story of how your business is performing. By knowing your numbers, you can learn where in your business you have to focus and where to improve, and by determining wherein the process (the funnel) there is room for improvement, you can optimize and improve your margins. Perhaps the most important numbers to keep track of in this (and any other) business is cash flow. You need to know how much you’re spending on your products (cost of goods sold) and your advertisement costs and when you ultimately get paid. (These things can also be analyzed and further refined.)
The bottom line is dropshipping is not easy. You must go in with the mentality that it is a real business and that you must constantly seek to improve it. Only by doing things well will you be able to maximize your chances of success. Also, don’t be hard on yourself. Rome wasn’t built in a day, and neither will your business. It’s a process — and one that must be taken seriously.