In an earlier post, it was discussed what the top five reasons why to use drop shipping were. Now, we will discuss the top five problems with drop shipping. Let’s recall what drop shipping is. Drop shipping is a supply chain management technique in which a retailer does not keep goods in stock, but rather transfers customer orders and shipment details to either a manufacturer or a wholesaler, who then ships the goods directly to the customer. Although this may seem like a good business deal, it comes with a few major issues as well.
1. Fulfillment Problems
Many drop shippers regularly face fulfillment problems. You many guarantee your customers that the product they are ordering is in stock, however, when the time comes for fulfillment, the product ends up running out of the supplier’s store. The entire burden will be left to you and will be upon you to communicate to the customers and inform them that their orders will not be delivered on time, as promised. In addition, some suppliers may take too long to ship the products, making customers become impatient and may withhold future business. Most drop shippers overcome this problem by increasing the time between order placement and shipping.
2. Dealing with Returns
To improve customer satisfaction and establish strong customer relations, drop shippers are required to have an easy and efficient return policy. In such cases, the drop shipper will be responsible for refunding the customer’s money or replacing the product. The problem with drop shippers returning the refunded items to their vendors is that vendors may reject the items, impose restocking charges, or delay confirmation of received items. If the drop shipper receives the items by himself, it may be difficult for him to resell them. In most cases, the drop shippers are the ones who suffer losses when items are returned by customers.
3. Minimal Branding Opportunities
If you are running a drop shipping store, the chances of branding your store are very minimal. The reason is you do not have any control on the products being sold, their packaging, labeling, or even the contents in the purchased box. This makes it very difficult for you to do any form of customized branding for your store. Most distributors and online sellers create the impression of their stores by branding the product boxes or attaching notes on the package. However, this type of branding is unusual in drop shipping since the supplier determines the final look of the order package and labels. Therefore, it is very challenging for you, as a drop shipper, to make a memorable impression on consumers.
4. Incapacity to Fix Order Problems Directly
There are several problems that are associated with shipping, including order cancellations, order changes, lost deliveries, product damages, etc. The customer’s expectation is that these problems will be fixed immediately after contacting you. However, drop shippers ship on the suppliers’ account and thus the problem has to be communicated to the supplier and the shipping company for it to be fixed. Most drop shippers find themselves failing to meet order expectations of their customers whenever a problem arises that needs to be fixed.
5. Higher Shipping Costs
When using drop shipping, products will pass through the hands of several drop shippers before reaching the final consumers. The different drop shippers will charge different shopping costs, which increases the overall shipping costs of the products. Many times, the drop shippers involved will try to pass any extra cost they incur onto the final consumer, reducing the competitiveness of prices in the market.