When starting out in dropshipping, most people are completely new to the idea, and the concept of e-commerce as a whole – still working day jobs and trying to learn as much about this new career prospect as possible.
Forums after forums, search after search, youtube video after video – the internet provides a wealth of knowledge that you should actively pursue, but be cautious of ill-informed posts and comments from peers with grave misconceptions.
Before you run with your tail between your legs and settle for the 9-5 lifestyle for the rest of your life – give me about 4 minutes to change your perception on dropshipping while I debunk these 6 common dropshipping misconceptions.
Do you know that this story has been passed around for decades?
That’s because the dropshipping business model has been around for a few centuries – but before the internet revolution, it was done via mail order companies through catalogs or door to door salesmen.
The first mail-order catalog in the U.S. was Tiffany’s Blue Book in 1845 – which paved the way for other large businesses to follow suit such L.L. Bean and Eddie Bauer – all of which are still thriving companies today.
Heck, even IKEA started out as a dropshipping company 70 years ago by a HECKIN 17-year-old in a small Swedish town.
So yeah, the business model is not dead- and it’s not going to die anytime soon and if I haven’t convinced you yet, maybe this article on Amazon’s trillion dollar valuation will.
So why does this rumor get tossed around so frequently?
There are a few reasons.
As more and more people find out about the business model and read success stories of people who “get to work their own hours” and “get to work from home” they become attracted to the idea of making that their own reality without realizing the amount of hours that went into building that type of success.
Yes, it is true that eventually, the idealized situation of working your own hours remotely is attainable once your store becomes a success, but there is still a foundation you need to solidify before getting there.
So many people dive headfirst into an empty pool without doing any proper research and expecting to just set up a store and start making hundreds of sales overnight – unfortunately, that is not how it works.
There is also no definitive time frame on how long it will take for that success and freedom to come along, it is completely situational.
DO. NOT. COPY. SUCCESSFUL. STORES.
So many online businesses fail because they see stores taking off and they want that same success for themselves now.
I’ve seen everything from product lines to color schemes and logo’s basically torn off of one store and slapped on another.
What a way to kill a business before it has a chance to take off.
As mentioned above – this is not a one size fits all business model and what works for one company most likely will not work for yours – especially since that company has already been established and an imitator is anything but appealing.
That’s not to say that learning and observing marketing tactics are off the table – because those are ingredients for success – just as mimicry is an ingredient for failure.
Be unique, study and observe, your time for success will come.
Just like any other business, there are trends and strategies that phase in and out and it is a responsibility as an entrepreneur to stay on top of the current business trends and what is going on in the industry as a whole.
Not actively learning while earning will lead to disastrous outcomes, make sure to take time each day to inform yourself on industry updates.
So what all of my points boil down to is – people don’t find success because of their own self-sabotage and then proceed to blame it on the model dying out.
I’m going to share a little story with you guys.
I grew up in Indiana, and I kid you not – when Nordstroms announced they were going to plop themselves down in our mall – it was THE event of the year that everyone was looking forward to.
We had a perfectly good Macy’s, Lazarus (did I just age myself?), Dillards, and even a Saks outlet store – who am I kidding, the foundation of our town at the time was department stores.
When the ribbon cutting ceremony happened (cue eye-roll) people went B-A-N-A-N-A-S.
So what was so special about another department store that my mom would hold me hostage in?
People love having “new” and fresh options – so there will always be room in any market if the foundations are set up correctly.
Although it seems like dropshipping is a highly competitive industry, there will always be ways to squeeze in.
As Danny Iny eloquently states in his INC article:
“When a market is saturated, many competitors sell similar products and services. That tells you the market has many eager buyers. Otherwise, it wouldn’t be sustainable for so many players to be in it.”
So my point here is:
It doesn’t matter how much competition is out there – as long as you have a unique selling proposition and a great brand that people can align with – you won’t have any issues dropshipping your products.
First of all, rude, my dropshipped Edouard Manet knockoff socks and I take much offense.
Second of all, yeah there are some products out there that probably shouldn’t be distributed and sold to eager consumers, but that’s where another one of your entrepreneurial responsibilities comes into play.
When choosing products to sell on AliExpress, be selective about the supplier you are buying from.
Keep these key metrics in mind:
You only want to buy from a supplier with a high average star rating.
You want to look at how many orders that supplier has sold of the particular product, the higher the number, the more reliable the product.
You want to select a supplier that has been selling for at least one year, 2 is ideal.
Look out for any top-rated brand badges that appear on the product page, these are the good sellers.
The higher the rating, the less likely your customer will be unsatisfied with the purchase. Ideally, choose products with a 4.8 or above.
Looking at stats like these is not limited just to AliExpress – any dropshipping company will have reputable metrics to find products that are of great quality to sell to your customers.
Which brings me to the next fib –
Wrong, SO WRONG.
You will find dropshipping companies in most countries, and for this article, I am mostly going to focus on dropshippers located in America. However, if you are located abroad, a simple Google search will provide you with all of the information you may need.
So let’s begin to debunk this fabrication.
Selecting suppliers this way usually means the cost of good will be higher but on average, the suppliers have higher ratings.
It is true that competing against Amazon is unlikely when it comes to pricing and the shipping times, however, customers who buy from Amazon usually directly go there with an intent to purchase a particular product.
You, on the other hand, target the impulse buyers.
There has never been a time when I have been lured into a store by an ad and thought, “Wait, I better check Amazon…”
No, I want to make the purchase now and your customer’s decision on the purchase is solidified by the presence of social proof, testimonials, persuasive product descriptions, and customer support – especially the live chat support.
There is no denying the power that Amazon has in the marketplace, but, what they do lack are fast, efficient support and unique products – and that is why we see so many booming dropshipping businesses aside from Amazon.
Yes, it is true that dropshipping is infamously associated with low-profit margins, however, this does not mean you can’t be profitable.
You can compensate the low margins with higher pricing (within the competitive range) and more ideally, by selling larger volumes.
I know its hard to imagine being able to sell anything in large volumes at a bit of an increased price when you just start out – but with the right techniques and processes in place – you can definitely make it happen.
As I’ve mentioned before, a strong presence of social proof and customer support are imperative for the success of any business, but optimizing your stores’ design and having a strong brand identity will turn any visitors into buyers.
There are even subtle ways you can increase your average order value so that way you can make more money with each person that buys from you. If you want a comprehensive understanding of these methods, read our blog post on how to increase your store’s average order value!
So, friends, here are the 6 common dropshipping misconceptions and the truth behind each of them. I hope I was able to clear up any suspicions you have and any apprehensions on starting your own business.
If there are any questions you have that I did not address in this post, make sure to leave them in the comments below and check out our post on how to effectively increase your stores’ average order value!