According to Investopedia, 90% of startups failed in 2020. The truth is harsh. Starting out in dropshipping, you should learn from their failures to avoid committing the same mistakes.
Dropshipping is not dead, the business is growing rapidly, and a lot of people have succeeded.
How to get your business off the ground? After extensive research, we’ve concluded the top 15 mistakes that most dropshipping beginners make.
We’ll cover key aspects, including:
- Business plan
- Product strategy
- and so on.
Let’s go into details now!
Top 15 Mistakes to Avoid When Dropshipping 2022
1. Not Having the Right Mindset
Most people start dropshipping because it is advertised, as a get-rich-quick business model – no upfront costs, no skills needed.
A lot of people share crazy numbers online, which makes beginners impatient. However, these people have been in dropshipping for a long time, and they didn’t become successful overnight.
In fact, a dropshipping business is like any other business in the world.
To run it successfully, it takes time, effort, and dedication.
2. Start with an Unrealistic Budget
A lot of people naively think that they can start dropshipping successfully with $100, $200 or so. Obviously, the startup capital is far from enough. The money might be sufficient for you to pay for a plan and get a good dropshipping store.
It’s recommended to start with $2,000 or $3,000 to run Ads and test products.
3. Not Having a Business Plan & KPIs
Most beginners start aimlessly. They don’t have goals in their mind, needless to say, effective ways to achieve these goals. You should write a business plan by setting:
- SMART goals -goals that are specific
For example, get 10,000 visitors in May. Create effective KPIs every month and use Analytics tools to keep track of your progress.
4. Ignore Problems with Profit Calculation & Taxes
Take into account all expenses when calculating your profit, including product costs, advertising costs, transaction fees, refunds, discounts, shipping fees, Shopify plans, and so on.
You can integrate your Shopify store, Facebook Ads account with tools like Lifetimely and OrderMetrics to make book-keeping easy. In this way, you can file taxes more easily.
Don’t be the last-minute taxpayers. Make sure to stay up to date with your taxes. This can save you a lot of trouble. Talk to a CPA to get help.
5. Not Establishing a Legal Entity
Being a sole proprietor is easy; however, sole proprietorship means higher risks. You’d better set up an LLC in your local country.
In this case, your business will be liable for the losses instead of you. To learn more, you may resort to a local attorney.
6. Not Doing Enough Product Research
Don’t choose any random products you think they’re going to sell. Use product research tools to find out the demand, analyze your competitors and see whether you can fill in a gap.
It’s recommended to choose products that solve problems. Be aware that products under $25 can’t give you a good margin and that impulse buying doesn’t work for too expensive products.
7. Sell Copyright or Trademarked Products
This might be difficult to understand for beginners. As intellectual property is protected by law. You should avoid selling products with Disney, Marvel movies, famous cartoon characters, patented designs, etc.
8. Not Checking Product Quality & Shipping Time
Before you decide to run Ads, order a sample to check the product quality. Otherwise, your customers might be disappointed, and you’ll receive a lot of negative feedback.
What’s more, if the delivery takes 3 ~ 5 weeks, you aren’t going to get happy customers.
Make sure to check the shipping options and compare them before you place an order.
9. Not Having a Good Refund Policy
This may lead to a lot of trouble. If you don’t dropship on platforms like Amazon and eBay, you don’t need to be as generous as big e-commerce businesses, Offering 100% money back for unreasonable returns.
Bear in mind that the goods that are returned can’t be sold as the new ones. It’s recommended that you only accept returns and refunds for faulty and broken items.
10. Not Networking with Suppliers
Your dropshipping business relies on its products and order fulfillment. Therefore, you should develop good relationships with your suppliers.
They sell products to a lot of online retailers, with their help, you can easily find the winning products. If your business runs well and you help them make a lot of money, they will be willing to give you higher discounts.
11. Run a General Store or a One-Product Store
It is too difficult to pick an item in a general store, and a one-product store offers few choices. It’s recommended to start with a branded niche store to target people with similar interests.
Add a bundle of products, write good product descriptions, highlight the selling points of your products with high-quality images.
In this way, when people visit your website, it will be recognized as a good brand.
12. Not Knowing How Ads Work
It takes too long for organic traffic to convert into qualified leads. To make products go viral, you should run ads to reach out to a large number of the target audiences. If you advertise the same product with another seller on Facebook, don’t worry.
If your ad can get a higher feedback score, the cost will be lower. Before running Ads, make sure to go through the Facebook Ads policies and educate yourself, add tens of products to your dropshipping store, and get likes on the Facebook business page to improve the credibility.
If you want to save costs, consider using TikTok Ads.
Other mistakes that dropshipping beginners make are as follows:
(These points are commonplaces, and I will just leave out the details.)
13. Earn credits too late & Get stuck with cash flow.
14. Too Afraid to Invest money and Scale.
15. Not having enough discipline & persistence
These are all the Top 15 Mistakes to Avoid When Start Dropshipping Business in 2022. Make sure to avoid these mistakes before you start dropshipping.
If you have any questions, please feel free to comment below. See you next time!
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