(5 minute read)
Last week, I shared 5 out of the 9 deadliest dropshipping mistakes you can make and how to avoid them. This week I’ll complete the list with the other 4 deadliest dropshipping mistakes on my list, plus some bonus tips you can implement right away!
eBay Dropshipping Mistake #4: Stock availability
Since you don’t hold the stock at your premises, you’re completely reliant on your supplier’s stock count. Now, most of the suppliers won’t offer to share their exact stock levels with you. You might be surprised to know that many of them don’t do it because they don’t have an accurate system to monitor this, especially the smaller suppliers who don’t want to spend money on inventory software which were quite expensive to run until recently (today, there are quite a few of those for less than $50 a month).
Moreover, even if they are using some sort of system to track inventory, there’s no convenient way to allow you a restricted access to those numbers (again, there’s software with restricted access now, just not many).
But, knowing your supplier’s stock count is critical! This is what happened to us several times:
We were selling a tablet and sales were steady at about 1 item per day. Then one day, I woke up and saw 14 sales. I was very happy of course and so I updated my dropshipping supplier. Then, after a couple of minutes, I received a reply that he had run out of stock. It turned out that the buyers turned to me because other sellers were out of stock and I didn’t have the information from my supplier that he had run out of stock as well.
I had three options:
- Cancel all the sales and refund the customers – risking some very angry customers and possibly negative feedback.
- Source the same tablet from other suppliers – risking losing money on each sale.
- Stall while I tried to figure out when my supplier would have more stock to send the tablets then – risking angry customers wanting their products immediately and having to wait much longer than they expected.
Now, you see how neither of these options is a good situation to be in…
Key takeaway: Demand from your supplier to share his stock count with you. If he can’t share the exact numbers, then he should at least notify you once the stock count goes below a certain number.
If he has no convenient way to share the numbers, at least ask him to send a screenshot of the stock count once a day/week.
eBay Dropshipping Mistake #3: Order Processing Automation
At first, when you are just starting out and work with the first couple of dropshipping suppliers, you won’t feel this pain. However, trust me, once you have a few orders every day from three or more suppliers, it will become a huge hassle to manage and you will regret not anticipating this and not taking action early on to prepare the ground for this type of operation.
For a very long time, we were dealing with 5-10 suppliers on a daily basis, placing orders through emails and excel sheets while tracking payment information with more excel sheets. We also had to get the tracking numbers through skype or email, which we then had to manually transfer to our customers. As the work load grew, more often than not we began to miss things only to find out after a very frustrated customer left a negative feedback or opened a PayPal dispute.
The negative effects on our business became so big that we had to find an automated solution and we regretted not doing it sooner.
Today, you have tons of order processing solutions, but back then, many of them didn’t exist and the ones that did didn’t answer all our needs. As you know by now, we eventually decided to build a comprehensive solution and called it CrazyVendor (which is still used today by a select group of established ecommerce businesses).
Key takeaway: It’s hard to know how a business will pan out in the early days, but if you’re serious about your retail business, then think ahead and prepare in advance so that you’ll be able to scale quickly.
eBay Dropshipping Mistake #2: Communication!
I think this one is self explanatory, so I’ll keep it short.
As online business owners, we knew that our online shops worked 24/7, sales were happening 24/7 and customers were leaving messages 24/7…we always felt that we had to be there for our customers 24/7 to provide the best customer support possible simply because of the fear that they would buy from someone else if we didn’t respond quickly.
As a dropshipping business, that meant that we needed our suppliers to be there for us 24/7, we knew that it was not realistic in most cases, but we needed to know that if our regular guy was on holiday or what not, there would be someone else well informed for us to speak to. One of the worst positions to be in is being a customer waiting for a package with your supplier on the other side being MIA.
Key takeaway: When you start a relationship with a dropshipping supplier, always ask him for a second point of contact and get their full contact details (skype + phone + email + etc).
eBay Dropshipping Mistake #1: Know your products
I placed this one as my number one for a good reason, there is no better way to impress your customers than to provide professional advice that exceeds their expectations.
I would go as far as saying that a seller who doesn’t understand anything about what he’s selling and only does it for the profit margin cannot build a sustainable business.
We flew to the largest tradeshows to meet our dropshipping suppliers in person and spent a whole week playing with the products, learning from the experts and understanding what we were selling to the bolt level. This made a tremendous difference on our business and it will surely do the same for you.
Pro tip: Before you start selling something, set the time to go through the line of products together with your supplier and learn about the most frequent questions/issues of each product. It will save you so much time later on and enable you to provide instant customer support.
Summing it up
In the last two articles, I tried to bring all the knowledge and experience we’ve accumulated during almost a decade of dropshipping. We’ve made countless other mistakes, but I tried to share only the ones that are most critical in my eyes.
If I missed anything major, please do comment below and share your experience to help the rest of us avoid it and build a better dropshipping business.
See you next week!