You might have heard the term "dropshipping", and have even thought about starting a dropshipping business. It seems to be easy on paper. But when you actually start doing it, you'll find whole bunch of issue need to be taken care of before you can get your first order.
Dropshipping has been a popular eCommerce business model since online shopping was invented. The basic concept is simple: you do the online selling part only, and leave everything else to others.
Here is a simple dropshipping example. Let's say you find some really cool T-shirts on some eCommerce website, say, AliExpress, at very low price, and you want to sell them with some markup to make a profit. What you can do is to setup an online store, say, a Shopify website, and list those cool T-shirts on your website. When someone buy it from your online store, you go to AliExpress, aka the fulfillment site, and place an order there with your order's shipping address. The AliExpress seller will send the T-shirt directly to your customer, and you pocket the price difference.
Sounds easy, right?
Well, it might be easier than starting an eCommerce business with your own warehouse and inventory, which most likely involves non-travail amount of start-up capital. But it's definitely not as easy as you thought.
First of all, the marketing challenge.
This is probably THE biggest issue faced by nearly all dropshippers. How to draw Internet traffic, especially those who are likely to buy, to your store. If we were in 2011, a good SEO optimized web store would get you decent amount of traffic and sales. But we're in 2021. The Internet is pretty much dominated by a few monopolies such as Google, Facebook, Twitter, Reddit, ... (note that I'm not mentioning the eCommerce giants like Amazon or eBay because there is no way you can drive traffic from their platforms to your little web store.)
The most reliable and effective way to get traffic is through online advertising. The problem is, it's expensive and tricky. Are you familiar with search ads, display ads, shopping ads, social ads, keyword match types, audience targeting, behavior targeting, lookalike targeting, tracking pixel, UTM tags, .... ? If you don't have a lot of experience in this area, you could be paying a lot without getting much result.
The shipping pain.
Keep in mind that you don't have the product at hand. You're relying on your supplier, the seller on AliExpress, to fulfill your order and ship the product to your customer, hopefully, in time. There are a lot things beyond your control.
We've seen shipment taking more than a month to arrive, or lack to tracking code for weeks, or even worse, package getting damaged, lost, or simply not being shipped out at all. If you were your customers, would you be happy with this?
This issue is not particular to 2021. But the pandemic certain makes it much worse. If you're in for dropshipping this year, make sure you fact in all the worst scenarios.
The return and refund.
We all wish everything could be just rainbow and unicorns. Unfortunately it's far from the case. Return and refund is always a huge pain point for all dropshipper, much worse than those holding their own inventory, because dropshippers has even less control on the products they sell.
When a customer is not happy with the product, be it defects or change of mind, you'll need to address it. But given that you're not the only sending out the product directly, it's going to be a lot messier, because your supplier may not accept return and refund. In that case, you'll have to eat the cost. Even if your supplier support return, it's usually pretty messy to arrange it given that your may not even know where to return it.
Dropshipping on Facebook Marketplace might be the way.
Dropshipping has never been easy. But 2021 could be even harder for dropshippers. Nearly all dropshipping problems come down to two critical issues: getting cost effective traffic and reliable suppliers.
The first issue might be solved by moving your dropshipping business to Facebook Marketplace. For the second issue, luckily you have us:)
To learn more about dropshipping on Facebook, check out Why you should start a Facebook dropshipping business in 2021.