Dropshipping is an e-commerce business model wherein entrepreneurs do not need to hold the physical inventory of the products being sold on their website or social marketplace. This model appeals to entrepreneurs seeking efficiency and low overhead, but it can come at a cost.
The global Dropshipping market is touted to cross US$243 billion by 2023. According to the Industry Research report, Dropshipping market is poised to grow at a CAGR of 20.7% between 2022-2028 and is projected to cross US$621 billion by 2028.
By now, most entrepreneurs would have an idea of how dropshipping model works, however, to be a successful Dropshipper, you need to know how to leverage the power of Digital Commerce to your advantage.
Bitter Truths About Dropshipping
Table of Contents
- 1 Bitter Truths About Dropshipping
- 2 1. You Don’t Control Your Supply Chain or Inventories
- 3 2. Lack of Effort to Resolve Customer Complaints and Enquiries
- 4 3. Highly Competitive Field
- 5 10 Tips to Skyrocket Your Dropshipping Conversion Rate
- 6 1. Communicate Proactively
- 7 2. Seamless Inventory Management
- 8 3. Retrieve Abandoned Cart
- 9 4. Be Accessible on All Channels
- 10 5. Make Use of Labeled Data to Direct Your Marketing Strategy
- 11 6. Have an Active View, Not a Backward One
- 12 7. Availability at All Times Increases Customer Trust
- 13 8. Go Beyond Your Customers’ Expectations to Make Them Feel Special
- 14 9. Reduce Recovery Time Objective with Prompt Verification
- 15 10. Provide Consistent Support on Video and Calls
- 16 Launch and Grow a Successful Dropshipping Business
1. You Don’t Control Your Supply Chain or Inventories
Heavy reliance on third-party suppliers has plagued the Dropshipping industry since the beginning. When an entrepreneur must rely on third-party vendors for one of the most crucial processes of running an online business, i.e., fulfillment, it raises several red flags.
If the supplier fails to fulfill the orders to the satisfaction of the customers, it will inadvertently affect your business. Similarly, if the supplier shuts the shop, your entire business operation can get disrupted overnight. It would also do you good to remember that you may not be the only business engaging your supplier’s services.
2. Lack of Effort to Resolve Customer Complaints and Enquiries
When your order fulfillment relies heavily on your supplier, you do not have full visibility of the process to be able to provide informed customer support. If your customers receive defective items or incorrect products, you have to constantly go back and forth between interacting with your suppliers as well as your customers to sort out the issue.
Without a comprehensive communication solution, you would end up wasting your time by jumping between different communication channels.
3. Highly Competitive Field
While Dropshipping has proven to be one of the most profitable ventures for more than a handful of entrepreneurs from around the world, it cannot take away from the fact that Dropshipping has low barriers to entry. This means anyone can start a Dropshipping store and add to an already overflowing pool of players in the market. Without identifying and defining a niche, it is next to impossible to stand out from the crowd and expect the business to take off.
10 Tips to Skyrocket Your Dropshipping Conversion Rate
1. Communicate Proactively
The biggest threat to Dropshipping isn’t your competitors—it’s the fact that your suppliers or wholesalers are selling your products on their websites. It’s important to interact with your customers and offer them a unique experience to convert them into loyal customers.
After visitors are redirected to your product page, you can set up your engagement widget to proactively greet the visitors with a pre-configured smart greeting to encourage them to initiate a conversation with your support team for a personalised shopping experience.
2. Seamless Inventory Management
One of the differentiators between Dropshipping and other e-commerce business models is that it does not involve physical inventory management. While there is an upside to this, there is also the risk of not having complete control over your supply chain.
When your inventory is managed by a third-party supplier, flawless communication with customers as well as suppliers becomes a particularly important cog in the wheel for running the operation. If you are just starting, there is a high chance that you are operating alone.
If that is the case, you cannot afford to waste time and effort jumping between various communication channels to engage with your customers and your suppliers. Unify all channels of interactions through a comprehensive communication widget. Scale your business without leaving the comfort of your website.
3. Retrieve Abandoned Cart
It is important to have a complete view of the visitor’s journey through your website to understand little things that can add up. Most of the time customers leave without purchasing because of a poor experience. To offer personalised service and ensure your customers get what they came looking for, your engagement widget must provide you with the roadmap of their journey through your online store when customers reach out to you for support.
For example, when visitors initiate a conversation with you, your communication widget must be able to provide you with a comprehensive view of how the visitors’ navigated through your website to the point where they initiated the conversation.
When the visitors return the next time as customers, your team should have a complete view of their previous interaction data to have a contextual interaction with the customers and be able to better understand their pain points. This can be easily achieved by labelling your interaction data with pre-defined enquiry labels to help you deliver more personalised services.
You can fuel your retargeting campaigns by drawing key insights from the labelled interaction data and enticing your website visitors to complete their purchases by offering exclusive discount coupons.
4. Be Accessible on All Channels
You may run a full-fledged Dropshipping store or even a one-product store, but what is important to remember is that experience precedes purchase. The nature of Dropshipping business is volatile. Unlike the big players who are more established and have built trust over a longer time, you, as Dropshippers do not enjoy customers’ confidence yet. While confidence cannot be earned overnight, the first step to gaining it is being accessible on all channels that are being used by your target audience.
Customers should be able to reach out for support and inquiries using social media, chat apps, emails, SMS, live chat, calls, video calls, or any other channel of their choice. To maintain your sanity and to have an all-inclusive view of your customer interaction data, you should be able to manage all these conversations on a single platform.
5. Make Use of Labeled Data to Direct Your Marketing Strategy
Your interaction with customers is more than just a pile of data, it is a treasure. But if it is left unattended and unlabelled, the interaction data is not going to prove much useful.
To identify customer intent, you must define a consistent naming convention to categorize your interactions with customers and label them to turn unshaped data into actionable insights.
These insights can help you drive marketing campaigns and send timely notifications such as restock alerts, exclusive discount coupons, product delivery updates, etc.
6. Have an Active View, Not a Backward One
By this mid-point, your Dropshipping store has started performing well. You have hired staff to manage customer inquiries but you should not have to wait till the end of the conversation to see if the interaction was favorable to your business. To maintain the upwards trajectory of your Dropshipping store, your customer engagement solution should enable you to monitor the conversations on the go.
Armed with the ability to monitor chat inquiries in real-time, you can easily jump into the conversation and assist your staff in delivering an excellent customer experience, which in turn will ensure that the customer makes an informed purchase. When customers make informed purchases, it automatically brings down your RTO (Return to origin) rate and reflects positively on revenue.
Let’s face it. Many dropshippers start their business in China. The product cost is cheaper than anywhere in the western world. This is largely due to China’s cheap labour costs and its access to an abundance of resources.
One of their main challenges is to connect with customers and suppliers in Mainland China as calls and chat might be affected by the local network and regulations.
A Dropshipper must pay attention to key capabilities such as unifying PSTN, IP calls and WeChat, giving your team and customers seamless experiences in connections. You can switch from call or chat to offer a multimedia experience like video calls, screen sharing, and file sharing for better engagement with your customers and suppliers in China.
7. Availability at All Times Increases Customer Trust
When you are running a Dropshipping store it is important to note that the customers are always on the fence about purchasing from your store. It is highly likely that they have never heard of your store before and have only landed on it by clicking on an Ad campaign you are running on Facebook, Instagram, TikTok, or Google. One unpleasant experience is what it takes to lose a customer forever.
Your focus should be to eliminate any red flags that could avert a customer from your website. There are many ways in which a customer determines a Dropshipping store’s credibility, but nothing is as important as the availability of customer support.
A smart communication widget should support flexible routing capabilities and be able to redirect customer inquiries based on the location and browser language settings, to offer a personalized experience to your customers.
72% of customers are more likely to buy when the information or interactions take place in their language. If customers have the option to interact with your team in their native language, you can see a positive impact on your conversions.
8. Go Beyond Your Customers’ Expectations to Make Them Feel Special
Let us take the example of a print-on-demand merchandise store.
If your visitors have liked a Hoodie design on your store, but it is listed as ‘out-of-stock,’ and they decide to reach out to you to see if you can help, what would you do?
Let us play out two scenarios to see how Dropshippers would approach this issue.
Dropshipper A: Informs the customers that the store does not currently have the hoodie in their desired size and asks them to check back later.
Dropshipper B: Understands the customers’ needs and quickly reaches out to other suppliers to check the hoodie size availability. Upon receiving the supplier’s confirmation of availability, the Dropshipper communicates this to the customer and confirms the order over chat.
According to you, which Dropshipper would convert more sales?
When you are running a print-on-demand store, it is important to remember that your customers do not see you as a print-on-demand store, but as an apparel store. So, you have the flexibility to fulfill their orders using any other supplier’s service.
But to be able to service your customers to the best of their expectations, you need to be able to communicate effectively with your customers and your suppliers effortlessly, and in real-time.
9. Reduce Recovery Time Objective with Prompt Verification
Reduce the number of fraudulent orders and bring down your return to origin percentage by sending text messages to your customers immediately after they place the order so that they can click and verify the order.
Give them the flexibility to reach out to you by placing a direct chat link in the SMS for additional support. Timely communication about shipping updates via email and SMS channels goes a long way in establishing trust and reliability. To save you time and effort, you should be able to create and manage your communication campaigns through a single platform.
10. Provide Consistent Support on Video and Calls
Most of the communication widgets are not built to handle customer support effectively. While some solutions are good at providing live chat capability on your website, they fail to unify all communication channels like social media, emails, SMS, calls, video calls, etc.
As your business and team grow, managing support becomes an integral part of your business sustenance program. A single inbox can help you centralize your communications with customers and suppliers, providing you with a consolidated database of valuable interactions that can be used to drive your business growth strategy.
Let us revisit the print-on-demand scenario.
Your customers wish to print a customized design for a special occasion on the hoodie or a pair of socks. They decide to reach out to you through the smart widget on your website.
You can instantly bring in your designer to join the chat and turn the chat into a video conference call, where your customer can easily share their expectations directly with the designers. All this without the fear of their design-brief getting lost in translation through the communication loops.
Launch and Grow a Successful Dropshipping Business
While starting a Dropshipping business is one way to get your e-commerce venture up and running quickly, the path is strewn with a lot of competition.
This experience can be enhanced by CINNOX, a total experience communication solution that delivers a seamless customer experience across channels.