Is dropshipping the best option for you?
It all depends on your business. If you’re thinking about dropshipping, here are some questions to ask yourself:
- How do you want your brand to grow?
The look and feel of your business’s customer-facing aspects is your brand. A lasting impression of a brand can help increase customer loyalty.
Dropshipping gives you less control over product quality, the delivery experience, and the final package’s aesthetics, but you may be able to create a branded online experience. A customer may not purchase from your brand again if the products and packaging do not meet their expectations.
Product customization is often limited by dropshipping providers. Your brand’s differentiation from the competition may be difficult given this limitation.
- How much control do you want over the quality of the product?
Other aspects of your business, such as customer acquisition, brand loyalty, and return rates, can be significantly impacted by product quality. At the beginning of your dropshipping relationship, you might be able to inspect the products’ quality, but you probably won’t have much control over the products’ quality regularly.
Your business may receive negative customer reviews if the products do not meet customer expectations.
- How soon do you need the products shipped?
Customers who shop online frequently anticipate fast shipping. Nearly 84% of respondents to a recent survey said that delivery was a crucial aspect of their online purchasing experience.
Inconvenient shipment times can hurt your business. Review the normal shipping charges and delivery times before working with a dropshipping supplier.
- How much capital is available to you?
The dropshipping business model lets you wait until customers place orders before purchasing products. Dropshipping may be appealing to entrepreneurs who want to start a business without spending a lot on inventory. When compared to sourcing, storing, and shipping products on your own, some alternatives, like third-party fulfillment, also allow you to launch and run your business with less capital.
- How much do you want to make in profit?
Contrasted with other plans of action, for example, possessing a retail location or building your request satisfaction focus, outsourcing has a lower obstruction to section. Sadly, this may increase your company’s level of competition.
Dropshipping-related businesses may face intense competition. Because they have invested so little, dropshipping sellers frequently can offer products at low prices. Dropshipping may result in low-profit margins for your company.
If you position your business outside of any highly competitive industry in a niche, you might be able to solve some of these problems. Through market research, networking, and sales, you can find niches that could be profitable or that are less competitive. or put money into making your brand stand out.
- Are you prepared to deal with inventory and supply issues?
You may have little to no control over the supply chain if you use dropshipping. Your drop shipper may not be able to fulfill all of your orders if there are production delays. It is hoped that this will be the exception rather than the rule if you are forced to notify your customers that an item is out of stock. One strategy for avoiding product shortages is to source goods from multiple dropshipping services. You can rely on another supplier when one is out of a needed item. However, the logistics and fulfillment aspects of working with multiple suppliers become more complicated, which may defeat the purpose of a dropshipping strategy.
- How will you deal with replacements, returns, and refunds?
E-commerce businesses must deal with returns. The process of returning an item can sometimes be as straightforward as a customer contacting you about it. After the customer returns the product, you issue a refund and get in touch with the dropshipping supplier to get a credit or reimbursement. However, this is rarely the case.
Prepare yourself for more complicated procedures for replacement and return. Before drafting your refund and return policy, take the time to learn how a dropshipping service handles returns.
Consider the steps involved in an e-commerce transaction. Before signing on with a dropshipping supplier, ask the following questions:
- Who is accountable for flaws?
- Who bears the cost of returning defective goods via shipping?
- How much does the supplier charge for restocking?
- What is the customer return window?
Before you make any changes to your business model, you can gain a better understanding of a dropshipping agreement by asking questions like these.
- How will you handle inquiries and concerns about customer satisfaction?
Even if you don’t physically handle the products, you might still need to answer questions and address concerns from customers about a shipment, the delivery, or the quality of the product.
A seemingly insignificant misunderstanding with your dropshipping supplier can result in bad customer feedback and reviews. Consider the entire purchasing procedure from the perspective of the customer to avoid this.
Consider the following aspects of the customer experience in particular:
- Do customers receive a shipping notification when placing their orders?
- Do packages arrive within the timeframe anticipated?
- Are the products delivered in good condition?
- Does the packaging accurately represent your brand?
- Create a positive customer experience by optimizing each of these touchpoints, which can help you get positive reviews and build brand loyalty.
Key players in the dropshipping model
Let’s take a closer look at some of the key players and the roles they play. The seller of record, or your e-commerce company, is the first person to be discussed.
Seller of record
You are the first step in the dropshipping process. You are the person identified as selling the product to the end user because you are the seller of record (SoR). You set the price, keep track of the purchase as revenue, and pay the sales tax on a specific sale. You are the seller of record because you own the products before they are shipped to the customer, even if third-party stocks and ships them.
Using a dropshipping service is generally permitted by Amazon’s dropshipping policy for sellers, provided that you identify yourself as the seller of record.
They produce goods for wholesalers and retailers to purchase. You can buy products from manufacturers, but the large quantities you need to buy can make it hard to start or grow your business. Dropshipping services may be offered by some manufacturers.
Wholesalers buy from manufacturers and sell to retailers at a slight markup in a typical product supply chain. They act as intermediaries; In most cases, they don’t sell to end users; however, they might offer drop shipping services to retailers.
Consider your business model and fulfillment requirements, among other things, when choosing dropshipping services.
Drop Shipping Policy
Drop shipping, or allowing a third party to fulfill orders on your behalf, is unacceptable unless it is made abundantly clear to the customer that you are the official seller.
Drop shipping can violate policies in the following ways, which could prevent you from selling on Amazon’s Merchant Fulfilled Network (MFN):
- If the shipment does not identify you as the seller of record or if anyone other than you (including the other online retailer) appears on packing slips, invoices, or the external packaging, it is strictly prohibited to purchase products from another online retailer and have that retailer ship directly to customers
- It is also strictly forbidden to ship orders with packing slips, invoices, external packaging, or any other information indicating a seller’s name or contact information other than your own.
When a customer sees packaging, invoices, or receipts that identify a seller other than Amazon or you, they become confused about how their order is being fulfilled and who they should contact if they have any questions or concerns.
If you intend to use a drop shipper to fulfill orders, you must always:
- Ensure that you and your supplier have agreed that they will only identify you as the seller of your products on all packing slips, invoices, external packaging, and other information about the products;
- Before shipping the order, remove any packing slips, invoices, external packaging, or other information indicating a third-party drop shipper;
- Be in charge of receiving and processing product returns from customers
- Adhere to all other terms of your seller agreement and Amazon policies that apply.