The Truth About Dropshipping: 13 Typical Mistakes You Don’t Want To Make
The truth about dropshipping is that, just like in any other business, it will work best if you put some effort into it. With little or no experience, entrepreneurs tend to repeat mistakes all beginners make – but that’s not a problem! As long as you get guidance from someone who already has the experience of dealing with these issues, your store will be just fine.
When AliDropship launched its first self-owned dropshipping stores, we had two goals. First, to test the AliDropship plugin and other in-house solutions and improve them. Second, to test marketing strategies, promotion materials, niches and products.
Now, our Ecommerce Department keeps doing in on a daily basis. In articles like these we share the results with our readers.
This time, we’ve prepared the list of 13 dropshipping mistakes that are common in the industry – and that we came across personally. Now that we have in-depth experience in sorting them out, we’d love to share our professional insights with you.
1. Ignoring price spikes on AliExpress
As you know, the AliDropship plugin can automatically change the prices in your dropshipping online store depending on how they change on AliExpress. But just like in any other store, these prices and the shipping costs never stay the same.
It’s great that you don’t have to check the prices for each and every product on your website. But when it comes to items you’re promoting right now, ignoring these fluctuations can turn an advertising campaign into a disaster.
For example, if the shipping cost on AliExpress suddenly goes up by $5, buying this product will cost you not $10 as before, but $15. In some cases, it can completely “swallow” your margin or even push you into the red. That’s why you should keep an eye on the price and either change it on your store or look for another supplier when something like this happens.
2. Ignoring the cost of conversion
Beginners often estimate the potential expenditures for a given item by summing up the wholesale price on AliExpress, the shipping cost and taxes. So, anything above the result becomes your profit margin.
But the truth about dropshipping is that this kind of math does work if customers come from your organic traffic, i.e. mostly free audiences who found the website in Google. Most sales actually come from advertising. And that is never free.
The cost of conversion is a parameter that tells you how much you paid for converting a single user into a buyer. Or, in other words, how much you paid to make this person buy from you.
According to AliDropship team’s experience, the cost of conversion can sometimes be as high as $20. So, make sure to take it into account before setting the prices.
3. Selling cheap products in single units
It seems like a good idea to find affordable goods on AliExpress to sell them at a huge markup. For example, this toy is really cheap.
So if you start selling it, the profit is going to be enormous, right? We used to think so too.
The problem is customers usually buy only one unit of such products. Because of the cost of conversion, attracting buyers becomes really expensive – and all you achieve is a single sale. It’s often not worth it.
It doesn’t mean you can’t or shouldn’t sell affordable goods. After all, as long as buyers come from organic traffic, it’s totally OK. But if you want to advertise the product, you’d better choose goods that people buy in quantities.
4. Spending little and expecting hundreds of sales
Sales don’t come from nowhere. Yes, plenty of people share their success stories telling everyone how much dropshippers make. But most people don’t ask how much these dropshippers spend on advertising.
As a result, there’s a perception that all you need is to pay $50 for a campaign and then wait for the money to fall right on your head.
Unfortunately, it doesn’t work this way. The truth about dropshipping is that you have to pay to attract customers. Nowadays the team spends hundreds and even thousands of dollars on a single Facebook campaign and that’s normal as long as it generates sales. If it doesn’t, we turn it off before the expenditures get too high.
The small sums you can see on the screenshot are the ad sets that didn’t work, so we had to turn them off. The larger sums are what worked well, so we kept them running.
5. Spending much while seeing no results
The opposite example of dropshipping failure is when the owner of a store keeps spending money on promotion even when these efforts bring no results.
Of course, you have to be patient with your dropshipping online store and experience helps a lot here. But common sense works well too! If it’s been a week and you’ve spent three hundred dollars to get only 2 sales… STOP RIGHT NOW!
One of our team members said it sometimes feels like playing black jack or other gambling games. You just keep telling yourself that luck is going to come and you just have to keep betting.
Be real. Stop when it’s obvious that the campaign isn’t working.
6. Jumping to conclusions
Although I said that by dragging feet and postponing the decision to turn a campaign off, you only make it worse, hastiness is just as bad.
Back when we started experimenting with dropshipping stores, we made a few mistakes of this sort. When an advertising campaign results in a sale in less than a day after the launch, of course your first urge is to increase the budget. Why, it’s working!
And that’s when things start to get really bad. Days pass, but the very first sale remains the only one, and you realize that the decision was premature.
Same goes for situations when you decide to turn off ad sets too fast. If you don’t have a lot of experience and can’t tell for sure if a campaign is a failure, then avoid snap decisions. Wait at least a day or two before making a decision.
7. Not preparing your dropshipping online store beforehand
Let’s suppose you have launched several advertising campaigns on Snapchat, Instagram, Facebook, etc. And they’re doing great: lots of people click on the ads and visit your site and… only few of them buy. Why? Maybe because the site isn’t working properly.
In online business, it’s very important to make the site as comfortable as possible. After seeing an interesting ad, people will come to your store and try to buy something. But the truth about dropshipping and similar online businesses is that you can lose potential customers at any moment. If the site is slow or buggy, or the payment gateways aren’t working properly, they’ll leave.
One must also pay special attention to the corresponding product page, as this is where your leads will come. A product page must be perfect so as not scare away or disappoint potential buyers.
Advertising is very much like inviting guests. You clean the house, cook the dinner and decorate the place before the guests arrive.
8. Not testing anything
Any business requires market research, and even in this case there’s no guarantee your prognoses will come true. The truth about dropshipping is that you don’t have to buy or manufacture products before trying to sell them. That’s a huge advantage, but you still need to test them.
Inexperienced dropshippers often ignore this advantage and invest tons of money into advertising what they think is going to succeed. In the meanwhile, testing dropshipping products can save you a lot of money.
9. Not remarketing
Even if you launch the best ad ever created on Earth, only a few percent of the audience will actually buy anything. Most likely, out of 100 viewers only 2-5 will make a purchase. But it’s a mistake to think that the other viewers are lost forever.
There are plenty of reasons why people decide not to buy anything.
Certainly some of them don’t need your product and there’s no way you can change their mind. But sometimes a person simply doesn’t have the required sum of money at the moment. Other people want the product but would like a discount. Some even decide to make the purchase later but forget about it.
Whatever the case is, by remarketing the audience, you can make lots of sales for little money.
10. Having only one dropshipping supplier
It’s not easy to find the right supplier as you have to consider a number of factors and even that doesn’t guarantee the guy is reliable. No wonder many entrepreneurs stop looking after finding one.
However, relying only on one supplier can lead to a huge dropshipping failure. It’s a matter of diversification: safety comes from variety! If something happens to one of them, you can quickly switch to another one. If you lose one product, you will still have plenty of others.
To find the best, time-tested suppliers and their products on AliExpress, try our free database, AliDropship Insights.
11. Not trying to increase the average order value
Average order value is how much money you earn with one sale. It matters because, as I mentioned above, attracting a customer usually costs money. That’s why after you succeed, you want that customer to buy as much as possible.
But many beginners are happy with selling a single product. In the meanwhile, they lose the opportunity to make their dropshipping online store even more profitable.
12. Targeting too narrow audiences
At the first glance, targeting seems like a simple task. You’ve got a product and you need to find people who would buy it. For example, if I sell toys, I’m going to advertise them to parents.
Of course, it’s the right decision, but often the obvious audience appears to be too narrow, which causes low profit. In the meanwhile, if you test target audiences (even those that seem to have little to do with your product), you may discover unexpected opportunities.
13. The ultimate truth about dropshipping: people often give up too soon
Most people fail at first, even the talented ones! But we learn from failures, gain experience, get better and wiser.
Our team members used to make mistakes too! Even today they take risks and fail from time to time, but that’s Ok. Business is not a straight highway, but an alpine path with slopes and turns. If your very first experience resulted in no sales, it doesn’t mean you should give up!
The truth about dropshipping: bottom line
Dropshipping isn’t one of those “how-to-get-rich-quick” schemes. As you can see, people make lots of mistakes, miss opportunities and fail to realize their failures.
But that’s how business works. You learn from other people’s mistakes and from your own. With time you will get enough experience and knowledge to make a successful dropshipping online store.
So, the truth about dropshipping is that it requires work. And AliDropship team is always here to help you with tips and recommendations as well as our solutions and services. How would you like the opportunity to become an owner of an already functioning and profitable online business made and managed to the best of our ecommerce knowledge?