I want to start off by saying that dropshipping can be very lucrative, and there are plenty of people who are very successful with the dropshipping model.
However, what we tend to see from new or even existing clients is a failure rate for dropshipping where the bad greatly outweighs the good.
Let's go over these 5 reasons below:
1- You Cannot Control When Your Supplier Ships
Platforms like Amazon and Poshmark have shipping requirements. When a customer purchases your inventory, Amazon, Poshmark, or whoever you use to dropship with expects you to ship that product in a specific amount of time.
If you are not able to confirm a valid tracking number for your customer within that timeframe, your Seller Performance will take a "ding". Too many "dings" will result in a suspension, or even a full ban on your account - Especially with Amazon.
When you hold your own inventory or ship using Amazon FBA instead of dropshipping, you are able to ship products out and guarantee you have a valid tracking number for that item in the time allotted.
2- You Cannot Predict When Supplier Inventory Will Run Out
Let's say you have a HOT product that is selling 10-20+ units per day.. Maybe even more! Well, that's excellent news while the product is in stock.
However, at any given moment and at no fault of your own, your supplier could run out of inventory. So what do you do?
Do you go find that product from another supplier, possibly at a higher price than you can afford? What if no other supplier offers that item? Then what?
What happens is you have to start canceling orders, which hurts your seller performance - Especially on Amazon.
As we mentioned above, too many of these "Dings" will result in an account suspension or all out account deactivation.
Having the inventory on hand allows you to know EXACTLY what your inventory levels are, and when you need to stop selling specific items.
3- Product Quality Is Never Guaranteed
Suppose you're dropshipping, and you find a "Flashlight" from your suppliers website with a great sales rank.. They have great pictures and give you the full description to list the product with.
You list the "Flashlight", and it takes off selling. Now all you have to do is place your orders and start fulfilling to your customers.
You don't know this now, as it will take a few days for your customers to receive their items, but that "Flashlight" pallet that your supplier is pulling from has defective units in it, and your customers are receiving less than good quality merchandise.
Now, you start receiving "Items Not As Described" dings on your Seller Performance reports. Not to mention, the negative feedback and 1-star reviews that start hitting your account. Return requests start pouring in (we will discuss these later), and you are in a jam.
As mentioned above, too many of these "dings" on your Seller Performance, and your account is being suspended and/or shutdown.
This can be avoided by having the ability to put your hands or eyes on the merchandise before it's listed for sale, and making sure to stay away from products that can have unseen defects.
4- Proper Customer Support Cannot Be Given On Products That Are Sight-Unseen
When a customer messages you about specifics on shipping, the product, or anything else related to an item that you do not have in your possession, how do you answer properly and in a timely manner?
Either you have to take a lot of extra time going between your supplier and the customer answering questions, guess, or outright lie.
Any of the above choices are either unprofitable, or going to get you in trouble when the customer finds out that you gave them wrong information.
This is where customer feedback will hurt your Seller Performance. Too many "Product Not As Described" or other types of customer complaints will put your Account Health in a bad position that will be hard to come back from.
When you're new to selling, and you encounter these issues, it's almost impossible to come back from these mistakes.
5- You're Required To Deal With Returns - Even When Your Supplier Does Not Take Them
Returns are a part of every business. Places like Wal-Mart and Target have an entire department at the front of their stores dedicated to returns.
The same applies for ecommerce platforms like Amazon, eBay, Poshmark, Mercari, etc.
Sometimes, customers just change their mind and want to send the product back. Other times, that product the customer received may be broken, damaged, used, or even not the same item that they originally ordered - after all, you didn't get to inspect the item before it shipped, did you?
So are you just going to deny their return request? Technically, you could, but in the end you will lose that battle.
With platforms like Amazon, you can deny a return request, but that opens the door for the buyer to file a claim, do a chargeback, and open an entire dispute process against you that hurts your Seller Performance.
These types of claims, if not handled quickly and with accuracy, WILL get your account suspended and/or shutdown with no recourse of action for you.
But let's go another route..
Let's say you do take the returns, and decide to ship them back to the supplier.. What happens when your supplier decides they are not taking returns from you anymore? Are you going to fight with them about it, or accept their decision?
Fighting with your supplier about their business rules could get your business denied outright, which leaves you without a supplier AND dealing with the returns.
If your supplier doesn't take the returns, now you are stuck with taking back in possibly wrong, defective, or unsellable merchandise. Where are you going to store it all? Where are you going to sell it?
Not all returns will be in bad shape, but there is a good chance that you will get some returns that you cannot do anything with.
This could have all been avoided by having access first hand to the products you were selling.
What Becomes Of These Accumulative Issues?
As I mentioned above, these issues can result in your being suspended or even banned from selling on the platforms you're currently selling on.
That will either shut your business down completely, or you will have to shell out hundreds and possibly even thousands of dollars for an expert to help go back and forth on your behalf with these platforms so you can start selling again.
So what I would recommend is this: DO NOT DROPSHIP
Hold your own inventory, and sell it Merchant Fulfilled or with Amazon FBA.
If you need help with this process, we can help you. We carry brand new designer inventory that sells great online, and allows you to have confidence in what you're selling.
We also teach new Amazon and Poshmark sellers how to open and setup their accounts properly.
Learn more about that below:
Click Here To Learn About👉 Amazon Business In A Box
Click Here To Learn About👉 Poshmark Business In A Box
