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3 Dropshipping Mistakes that Affects your Profit Margin

3 Dropshipping Mistakes that Affects your Profit Margin

3 Dropshipping Mistakes that Affects your Profit Margin

As in the case of a brick and mortar store, there is nothing passive about a running a Dropshipping business. The process of setting it up is relatively easy, but it is nothing compared to the effort and details needed to successfully manage it.

Truth be told, the profit margin of each Dropshipping transaction is often on the low side. The profit you earn on each deal is basically the difference what customers pay and what suppliers charge. Sadly, this isn’t a constant because of variation in factors like product prices, shipping cost, availability of stock, tracking information, and of course, percentage of fraud.

Though you may not have complete control over some factors that could reduce your profit margin, you can definitely sustain it by not making these 3 Dropshipping mistakes:

Also Read: How to start your successful DROPSHIPPING BUSINESS with AliExpress

#1

Believing that all customers are driven by lower prices

Though no one will pass up the opportunity to get great value at lower prices, there is no guarantee that it will make most customers will complete their purchase order. At the early stage of your Dropshipping business, competitive price advantage may seem like a great marketing strategy. However, as more competitors come on board, it loses its sustainability.

Here are 3 facts to make you consider switching to a strategy like the customer advantage:

  • Delivery time estimate ranked among the top factors influencing online shopping.
  • 1/3 of shoppers most often choose to pay a fee for faster delivery.
  • 46% of online shoppers said that receiving their product within the expected delivery time frame led them to recommend an online retailer.

If nothing at all, these facts prove that delivery time is a deciding factor for many customers. This is exactly what the customer advantage is really about. It requires you to go beyond merely offering products to finding solutions to the problems faced by your target customers.

#2

Running out of stock

Once customers complete a purchase order, the last thing they worry about is the process involved in shipping the products over to them. So, telling them you are out of stock (i.e. your supplier is out of stock) is one sure way of losing them and whatever stellar review you would have received.

To avoid being in this position, it is best you have more than one product supplier. Alternatively, you can offer them a similar product or refer them to another supplier. The aim is to ensure that they aren’t stranded even if you make little or no profit. Retaining your customers is definitely worth the hassle.

Also Read: 9 Steps To Start A Dropshipping Store With Shopify

#3

Poor product description

Not just an outline of your products’ features, a product description is a final pitch, your final shot at convincing customers to complete their purchase order. Rather than just paste a copy of the product review pasted by your suppliers, it wouldn’t hurt to spend more time creating the right product descriptions. The right product descriptions don’t just outline the features of the products, they also help customers understand the value they stand to enjoy by completing their purchase order.

So, to help create the right perceived value of products, you can put up a video product review, a nice close up of your products, or a really engaging product review.

It’s all good if you have made one or all of these mistakes. However, it is important you addressed them right away. Remember the hardest part about managing a Dropshipping business isn’t setting up but actually finding, convincing, and retaining customers. From today, commit to sticking to only the best shipping practice because in the end, it is the only way to really scale and grow your Dropshipping business.

Kindly leave a comment if this was helpful.

Also Read: Alidropship Custom Store: The best for your dropshipping

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