6 Indicators You Should Stop Dropshipping

Dropshipping is a great way to start an e-commerce. It is a direct partnership between suppliers and manufacturers to accept orders for their goods or products. The startup costs are minimal, and it is an easy way to test products in a new market. However, there are several drawbacks to dropshipping and some significant limitations. Here are six indicators to stop dropshipping and consider fulfillment alternatives.

Product Delivery Times Don’t Meet Customer Demand

indicators you should stop dropshipping

Suppliers and manufacturers are not agile in servicing and fulfilling individual orders. Their primary focus is producing and fulfilling large wholesale purchases. The bulk of their profit is made through large-scale orders. Dropshipping and any DTC sales will always be secondary. Therefore, you can expect far longer delivery timelines using dropshipping than meets consumer demand. According to Medium.com, the average dropshipping delivery time is 12-60 days.

Lower Margins

Dropshipping is essentially marketing and selling for the manufacturer. As the e-commerce owner, you can expect lower margins. Without the benefit of negotiating a larger volume order price, each sale you make will be slightly less than if you fulfilled in-house or through a 3PL. It is crucial to evaluate the entire cost of dropshipping. Even though you may save initially, it could cost you more than you think.

You Need to Scale

indicators you should stop dropshipping

The e-commerce brands that thrive have a proven customer service track record. When something goes wrong with an order, the customer will call you, not the manufacturer. Therefore, you need to have the ability to problem solve quickly. This is easier if your supplier is domestic but becomes exponentially more complicated with an international provider. From language barriers to time zone differences, getting an answer could take several days vs. hours. Even if your supplier is located in the US, communications can fail. If you have experienced this frustration, it might indicate that you should stop dropshipping.

Inventory Control is Out of Control

When you dropship, you have a 0% say in how much inventory the supplier creates. Furthermore, you are stuck when a more prominent company places a larger order and buys out all YOUR stock. Your business and revenue are at the mercy of your manufacturer. At any moment, the supplier could decide to discontinue producing your product. One way to avoid this is by diversifying your manufacturing and sourcing multiple locations that can fulfill your orders. Quality control gets tricky, but you would be far less likely to have a complete inventory blackout.

Quality Control is Unknown

Unless you receive product orders regularly, you have very little assurance in what ends up in the shipped box. The unboxing experience for your customer is out of your hands. Damages and returns are more common with dropshipping, which means that your customer service teams might be busier than if you chose a fulfillment alternative.

Communication Failures

Does this sound familiar? Your sales are up, and your market test confirms there is still room for growth. However, you are concerned if you run a campaign to boost sales, fulfillment would falter. Your business is probably feeling restrained, indicating that you should stop dropshipping. When you have been accepting lower margins, but the numbers show you could maximize earnings by buying wholesale, managing inventory, and fulfilling, it might be time to switch.

Fulfillment Alternatives for Dropshippers

Check out our post on the differences in “Logistics Providers Explained: 1PL, 2PL, 3PL, 4PL, and 5PL.” There are many fulfillment alternatives, but we have found the sweet spot for e-commerce businesses seeing indicators to stop dropshipping benefit considerably from a 3PL relationship. Here’s why:

indicators you should stop dropshipping

Beginner’s Guide to Third-Party Logistics (3PL)

The world of e-commerce is always changing, therefore understanding the roll of Third-Party Logistics is integral to keeping up. In light of this our beginner’s guide to third-party logistics (3PL) will delve into the essential aspects, offering insights into fulfillment services, warehousing, and much more.

Read More…

Working with a 3PL can help to ensure faster delivery times, accurate tracking for those deliveries, and even manage returns when something goes wrong. Furthermore, you will have more inventory control when working with a 3PL. Falcon Fulfillment can offer flexible inventory storage based on demand, seasons, and space. This gives you more control in ensuring adequate product levels and minimizing backstock.

If you are witnessing any indicators that you should stop dropshipping, chat with us to see if we can help. Get in touch today.

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