It’s important to know the issues that sometimes arise with drop shipping and what you can do to avoid them.
Here are a few pitfalls that make retailers wary of the practice:
Visibility and Communication
Drop shipping relies on a tight relationship between the merchant and supplier. When an order is sent, a retailer must know the supplier received it, whether it’s in stock, and when it ships.
Retailers fear that they will be left in the dark about the order’s status. If a customer asks about their order, the seller must answer. A supplier should be transparent about shipping schedules, but that is not always the case.
Sellers need to understand the prices of the wholesaler they work with. It is important that you know the total price of every drop shipped item (the product, shipping, etc.). This helps to accurately set prices in your store.
Some drop ship companies attract sellers with low wholesale price of items, but make their money by tacking onto outrageous shipping charges.
Picking the Right Vendor
Merchants must be diligent about who they decide to work with. Drop shipping is now a more popular, feasible practice. Merchants should be wary of posing vendors offering false “wholesale” prices hoping to take advantage of new sellers. They offer “wholesale” prices that are actually marked up.
The product moves through many hands from the manufacturer to the consumer. Each entity hikes the price up along the way. This allows the merchant to make a profit.
However, online selling is very competitive. Merchants often find themselves in a pricing war to continually lower their price. This results in merchants selling at very low margins, even at a loss!
Margins vary greatly depending on the product type.
Suppliers run out-of-stock, too. This is a common problem of drop shipping, especially with popular items. It’s often out of the seller’s control.
The wholesaler should keep you updated. However, it’s up to you to ensure that your customer is able to receive their products, or arrange for a substitution if possible.
Remember that the supplier is invisible to the consumer. Answering to the customer is your responsibility.
Thank you for your time and attention.