9 Proven Ways to Reduce Risks for Your Dropshipping Store

Dropshipping is an attractive retail business strategy for people looking to get high returns for minimal investment. With dropshipping, a middleman takes care of warehousing and storage for you. No need to rent a physical warehouse or set up expensive equipment to run a proper facility.

Running an online store takes a lot of time, effort, and money. Dropshipping store owners will need all the help they can to grow their business without bloating their expenses. Unfortunately, many beginners fall for costly mistakes that ruin their business. Avoid rookie mistakes with these helpful, risk-reducing tips.

How to Reduce Risks for Your Dropshipping Store

1. Triple Check Orders Before Shipping

Customers often order items by mistake and sometimes, they forget to add more items to their basket before checking out. If a customer reaches out to update their order, you must coordinate these changes with your dropshipping partner immediately. You're on the customer-facing side of the business, so you're the one who gathers information on what customers need. And as the vendor's main point of contact, you're responsible for sharing information with the vendor. Such information includes order changes made outside the selling platform. 

Ignoring order changes and cancellations, even by accident, can be costly. First, you may need to arrange the return of wrong items or shipment of missing items. Both scenarios can take up both your time and money. Second, when these concerns are not addressed properly, you'll most likely get negative reviews and potentially lose repeat customers. A good way to avoid any of these scenarios is to have a solid tracking system for order amendments. And when there is an oversight in order fulfillment, you must have customer handling guidelines in place. Here's an example of a step-by-step strategy for when a customer complains about an incorrectly fulfilled order:

1. Offer an apology.
2. Explain what must have happened that resulted in the wrong fulfillment.
3. Compensate customers by fulfilling the correct order. You can also consider offering a small token like a free sample or a small discount for their next purchase.
4. Track such incidents to monitor how often they happen and how much these mistakes cost you.
5. Review your customer complaint report regularly to find and close gaps in your operations.

2. Don’t Sell Too Many Products

An amateur move in dropshipping is offering too many things at once. The dropshipping industry is quite competitive; you may be tempted to offer as many products as possible to appeal to more people. While offering a wide selection may seem appealing to sellers, potential customers may find it off-putting. Browsing fatigue is real. It happens when customers scroll and scroll through endless products only to end up not finding anything that interests them. When thinking of what products to add to your portfolio, always remember the paradox of choice — when there are too many options, customers end up stressed, indecisive, and less likely to make a purchase decision.

You can easily avoid this problem by picking a niche and sticking to it. Focusing on a certain product category gives you more focus. You can target a smaller but more engaged and profitable audience. It's also great for marketing. You'll be able to learn more about who your target audience is and how to engage with them effectively. Make sure to pick a niche that is not just profitable but something you're passionate about. Having background knowledge about the niche allows you to curate a list of more appealing products that your target customers will like.

3. Sell Multi-Use, Long-Lasting Products

Sustainability is something we can all contribute to. You can be environmentally responsible and still profit by selling long-lasting products. Many people, especially the eco-conscious crowd, are turning away from single-use products as they make an effort to reduce waste. Many consumers are willing to spend a bit more for something long-lasting rather than buying a cheaper, low-quality alternative. While the world still has a long way to go in banishing single-use items in the name of convenience, you can do your part by offering reusable and long-lasting products.

4. Don’t Fall For Shortcuts, a.k.a Black Hat SEO

There are no shortcuts to success, which also applies to dropshipping businesses. Every business owner wants clients to find their store on the first page of search results as soon as they open up. However, a reputable online presence takes time to build, and this is something that beginners should understand and accept. Search engine optimization (SEO) has been around for a while. Search engines have had more than enough time to recognize dodgy SEO tactics and penalize those who use them. Using Black Hat SEO, or the practice of increasing a site's rank in search engines through underhanded tactics, can get your store noticed at first — but not for long.

Major search engines like Google have been cracking down on SEO violators, and the penalties are severe. You can either be blocked or suffer from lower search rankings. Common Black Hat SEO strategies include doorway pages, page swapping, keyword stuffing, and invisible text. Don't fall prey to Black Hat SEO tactics and the promises of agencies that use them. You can build up your online presence slowly, surely, and honestly. There are plenty of skilled SEO specialists out there who can create a solid SEO strategy to help you steadily climb the search rankings.

5. Leverage Influencer Marketing at the Right Time

These days, partnering with social media influencers to market products is all the rage. Influencers are individuals with a lot of followers on social media platforms like Instagram, TikTok, or YouTube. Their followers highly regard their thoughts and opinions, which is why many brands collaborate with these influencers. Getting the right influencer to mention or highlight your product even in just one post can boost your sales.

While influencer marketing works, using this marketing tactic too early can mean using up your marketing budget with very little returns. For one thing, influencer collaboration is not cheap. The more followers and engagement an influencer has, the more money they will likely charge for every post. The return on investment is not balanced too early in the game, so it's best to use your initial marketing budget for more cost-effective strategies. Once you've already solidified your brand's identity and online presence, then influencer marketing may be a sensible strategy.

6. Use Quality Packaging

Many online shoppers have had the unfortunate experience due to low-quality packaging. Imagine being excited to unbox their order only to find it damaged in transit. While this is often out of the control of the retailer, there are some things you can do to minimize the risk of damage.

One way to do this is to require your vendor partner to use quality packaging. Make sure the boxes are sturdy, and your packing material is protective. If products are highly breakable, then there should be a “fragile” sticker on the packaging. Make sure that packaging requirements are part of your agreement with your vendor. It may seem costly, but it will save you a lot of trouble and complaints in the long run.

7. Offer a Variety of Payment Options

The way we pay for things has changed drastically in recent years. Various digital payment options are now available and sometimes favored over cash and check payments.

For example, some people prefer to use digital wallets like PayPal or Venmo. Others might want to use their credit or debit card. Some might even want to pay with cryptocurrency. Make sure to offer a variety of payment options for your customers. This way, they can easily checkout and pay in the method that's most convenient for them.

8. Offer Good Return and Exchange Policies

Another way to keep your customers happy is to offer good return and exchange policies. This shows that you stand behind your products and are willing to make things right if something goes wrong. Your return policy should be clear, concise, and easy to understand. Don't make your customers go through hoops to return or exchange products. Your policy should be generous enough to give your customers a hassle-free experience.

9. Support Sustainability and Environmental Initiatives

The world of dropshipping is a contributor to global carbon emissions. While you may not be able to avoid having a high carbon footprint, you can do your part in trying to offset them. Support environmental causes that are dedicated to promoting sustainability and offsetting carbon emissions. Plenty of charitable causes are dedicated to planting trees, waste management, food shelters, and other similar causes.

Consider involving your customers by allowing them to contribute to your supported charities at checkout. You can also integrate your corporate social responsibility efforts in your communications or on specific product pages. Let your customers know that a portion of the proceeds of a specific product will be donated to a good cause. Doing so will make customers feel good about their purchase and be more aware of your brand's values.

Hopefully, these dropshipping tips can help you avoid the common risks of running this type of online business. Dropshipping may not be as tricky as other retail business structures, but it comes with its own challenges. The best way to succeed in this industry is to familiarize yourself with such risks and find ways to reduce or, even better, eliminate them. Doing so can help your dropshipping store get through the shaky first few years.

 

9 Proven Ways to Reduce Risks for Your Dropshipping Store

Dropshipping is a retail business strategy that attracts a lot of people. There is an unlimited earning potential despite minimal investment cost. With dropshipping, a middleman takes care of warehousing and storage for you. There is no need to rent a physical warehouse or set up expensive equipment to run a proper facility.

Running an online store takes a lot of time, effort, and money. Dropshipping store owners will need all the help they can to grow their business. Unfortunately, many beginners fall for costly mistakes that ruin their business. Here are tips on avoiding rooking mistakes, mitigating losses, preventing risks, and scaling a dropshipping business effectively. 

Triple Check Orders Before Shipping

Customers often order items by mistake and sometimes, they forget to add more items to their basket before checking out. If a customer reaches out to update their order, you need to coordinate these changes with your dropshipping partner to fulfill the request. Customers are more likely to be dissatisfied or angry if they discover that several goods are missing from their purchase or that some of the canceled items were still delivered. Ignoring order changes and cancellations, even by accident, can be costly. It may result in negative reviews and loss of loyalty from your customers.

Since you’re in charge of sales and marketing, you need to inform the vendor of any order changes made outside the selling platform. A good solution is to create a plan to turn your customer’s negative experience around when this happens and create a process that will allow you to avoid this scenario altogether. For instance, when a customer reaches out to you after an incorrectly fulfilled order, offer them an apology and compensation to make them feel heard and accommodated. To prevent this from happening in the future, make sure you have a solid tracking system for additional order requests.

Don’t Sell Too Many Products

An amateur move in dropshipping is offering too many things at once. With the vast selection of dropshipping suppliers out there, you may be tempted to offer as many products as possible to broaden your target market. While offering a wide variety of items for sale is appealing, potential customers may find it off-putting. Browsing fatigue is real, and it happens when customers scroll and scroll through endless products only to end up not finding anything that interests them. When you’re thinking of what products to sell, always remember the paradox of choice — when there are too many options, customers end up stressed, indecisive, and less likely to make a purchase decision.

To avoid this problem, pick a niche and stick to it. Focusing on a certain product category allows you to cater to a smaller but more engaged audience. It’s also great for marketing because you can target the right customers better. Lastly, pick a niche that you are passionate about. Having some background knowledge about the niche allows you to curate a list of more appealing products that your customers will like.

Sell Multi-Use, Long-Lasting Products

Sustainability is something we can all contribute to. You can be environmentally responsible and still profit by selling long-lasting products. Many people, especially the eco-conscious crowd, are turning away from single-use products as they make an effort to reduce waste. In fact, many people are willing to spend a little bit more for a sustainable product rather than buy a cheap one with poorer quality. While the world still has a long way to go in terms of banishing single-use items in the name of convenience, you can do your part by offering reusable alternatives.

Don’t Fall For Shortcuts, a.k.a Black Hat SEO

There are no shortcuts to success, which also applies to dropshipping businesses. Every business owner wants clients to find their store on the first page of search results as soon as they open up. However, a reputable online presence takes time to build, and this is something that beginners should understand and accept. Search engine optimization (SEO) has been around for a while. Search engines have had more than enough time to recognize dodgy SEO tactics and penalize those who use them. Using Black Hat SEO, or the practice of increasing a site's rank in search engines through underhanded tactics, can get your store noticed at first — but not for long.

Major search engines like Google have been cracking down on SEO violators, and the penalties are severe: be blocked or have lower search rankings. Common Black Hat SEO strategies include doorway pages, page swapping, keyword stuffing, and invisible text. Instead of falling prey to Black Hat SEO or the incredible promises of agencies that use these tactics, build up your online presence slowly but surely instead. There are plenty of skilled but honest SEO specialists out there who can create a solid SEO strategy to keep your online store steadily climbing the search rankings.

Leverage Influencer Marketing at the Right Time

Partnering with social media influencers to market products is all the rage these days. Influencers are individuals with a lot of followers on social media platforms like Instagram, TikTok, or YouTube. Their followers highly regard their thoughts and opinions, which is why many brands collaborate with these influencers. A few seconds of video or even just one picture of the right influencer using, wearing, or buying your product can boost your sales substantially.

While influencer marketing definitely works, using this marketing tactic too early in your business’ lifecycle can lose you a lot of money. For one thing, influencer collaboration is not cheap. The more followers and engagement an influencer has, the more money they will likely charge for every post they make featuring your products. The return on investment is not balanced too early in the game, so use your initial marketing budget for other less costly strategies instead.

Use Quality Packaging

Many online shoppers have had the unfortunate experience of receiving their order only to find that it’s been damaged in transit. While this is often out of the control of the retailer, there are some things you can do to minimize the risk of damage.

One way to do this is to use quality packaging. Make sure your boxes are sturdy and your packing material is protective. You should also include a “fragile” sticker on packages that contain items that are more likely to be damaged.

Offer a Variety of Payment Options

The way we pay for things has changed drastically in recent years. Gone are the days when cash and checks were the only payment options available. Now, there are a variety of digital payment options that cater to different needs.

For example, some people prefer to use digital wallets like PayPal or Venmo. Others might want to use their credit or debit card. Some might even want to pay with cryptocurrency. No matter what your preferred payment method is, make sure you offer it to your customers. The more options they have, the more likely they will find a payment method that works for them.

Offer Good Return and Exchange Policies

Another way to keep your customers happy is to offer good return and exchange policies. This shows that you stand behind your products and are willing to make things right if something goes wrong. Your return policy should be clear, concise, and easy to understand. It should also be generous enough to give your customers a hassle-free experience.

Support Environmental Causes

In the world of dropshipping, there is a lot of carbon footprint involved when products are shipped to different parts of the world. While carbon footprint is inevitable, you can do your part to help offset its effects by supporting environmental causes. Plenty of charitable causes are dedicated to planting trees, waste management, food shelters, and other similar causes.

You can also involve your customers in the goodwill by offering them a chance to contribute to your supported charities at checkout. You can also integrate donations to your store and let your customers know about it by stating that a portion of the sales of a specific product will go to a certain charity.

Hopefully, the dropshipping tips mentioned above give you better insight into the common risks of running this kind of online business. While dropshipping might not be as tricky as other retail business structures, it’s not completely without risk. Familiarizing yourself with these risks and knowing how to prevent them can help your dropshipping store outlast the shaky first few years and reduce risks that could potentially end your business.

About the Author: Catherine VanVonno, Ph.D.

Catherine describes herself as a Human Connector, which is quite fitting for the work she does as President and CEO of 20four7VA. She's an expert in connecting growing businesses with the right remote talent from anywhere in the world. Aside from overseeing the daily business operations and managing the company's finances, she also engages in resource speaking and writing articles on business growth solutions and impact hiring.