Trial and error are an inevitable part of doing business. As entrepreneurs, we find that mistakes are sometimes needed to produce breakthroughs. As the ancient Chinese proverb says about learning from our mistakes, “Failure is the mother of success.”
Indeed, there is no replacement for hands-on experience when dealing with real-world problems while running our own businesses. Some missteps may be unavoidable, but you can save yourself from costly mistakes and years of wasted time by learning from these lessons that I learned the hard way.
Related: 5 Things to Know Before Launching An Ecommerce Business
With the clarity of 20/20 hindsight, here are five things I wish I knew before starting a dropshipping business:
1. Put emphasis on product quality
If I could go back to the time when I first started dropshipping, I would have told my younger self to put product quality above everything else.
I wish I knew I shouldn’t trust product quality without seeing the product itself.
A lot of dropshippers source their products from AliExpress and Alibaba, which are great platforms. However, don’t do what I did, which was choosing the supplier with the cheapest prices.
That was a big mistake because suppliers would compromise product quality and the quality of packaging in order to offer the most competitive prices. We didn’t check the samples, because we were dropshipping. As a result, we got a lot of customer complaints that the products did not match the ones used in the advertisements.
We started looking back and reflecting on what went wrong. We realized that the suppliers we chose were those who were offering the lowest prices but were providing subpar products.
Put the lesson in action:
Don’t always go for suppliers that offer the cheapest prices without checking the quality of their products first. Doing so could hurt your bottom line in the long run. Always place a test order with your chosen suppliers so you can check product quality and see exactly what your customers will receive.
Doing your due diligence right from the start will save you from making costly mistakes in the future.
Related: Focusing on a Single Product May Be the Key to Dropshipping
2. Do not rely on just one supplier
In the past, we were relying on just one supplier for all orders of one viral, hot-selling product, and we were swamped by the amount of orders that came in for this product. We quickly ran out of stock.
Because we had a really good relationship with this supplier, we sent him all of the orders. He wasn’t able to keep up with that amount of growth, but he kept quiet about it. Long story short, we had a backlog of orders that we could not fulfill on time and we got a lot of chargebacks from angry customers because of the long delay.
When you get a lot of chargebacks, you run the risk of your merchant account being shut down.
Following this setback, we now look for three to five suppliers for every product that we sell. And even though we know that Supplier A could fulfill all of our orders, we now split our orders among other suppliers to serve as a backup.
We use this formula:
60 percent goes to Supplier A
30 percent goes to Supplier B
10 percent goes to Supplier C
This way, we are also building up relationships with other suppliers whom we can tap into in the future should things go awry with Supplier A.
Put the lesson in action:
Your suppliers will form the foundation of your dropshipping business, so selecting good suppliers is crucial to the success of your online store.
When starting a dropshipping business, look for three to five reliable suppliers. Assess each of these carefully so that you can identify the supplier who should receive the bulk of your orders.
This way, you’ll diversify your risk and could potentially minimize your downtime.
Take note that even the best suppliers can run out of stock. This is a common situation in dropshipping, especially when you are selling popular products. Your supplier should keep you updated when there is a manufacturing or supply chain problem. However, it’s your responsibility to ensure that your customers are able to receive their products and to ensure that your clients are informed about delays in shipping times.
Dropshipping relies on the relationship that exists between a seller and a supplier. Taking the time to forge strong relationships with different suppliers will definitely pay off in the long run.