February 18, 2020
Top 5 Reasons Dropshipping Businesses Fail

Top 5 Reasons Dropshipping Businesses Fail

Hey, what’s up everybody? Anton Kraly here from DropShipLifestyle.com. In today’s episode of Dropship Weekly I’m
gonna be sharing the top five reasons that dropshippers fail. These are reasons I see all the time from
different emails I get, and honestly, I’m guilty of some of these myself. Now last week I did a video that was sharing
the statistics on failure rate. So if you wanna see that, look up in the cards
and I will post a link to that, so you can go to that video, again on business statistics
and failure rates. But today we’re gonna get into the actual
reasons that businesses are failing. So, with that being said, let’s get started
with today’s episode of Dropship Weekly. So, quick note before I get into the list
of five. This video is not for the people that think
they failed because they made a Shopify account for free one time on a free trial, and never
did anything, and didn’t get results and said, “I failed.” Okay, that doesn’t count, this isn’t for you. These are for the people that are actively
building stores, and reasons some of them are not seeing the success that they want
to. So, reason number one is having a bad niche,
okay? Having the wrong type of product to sell. Now this has a whole bunch of different kind
of subcategories that would make a niche good, but some of the easy wins I can give you is,
one of them is if you’re trying to sell restricted products, and what I mean by that is products
that are either, you know, illegal, which obviously you shouldn’t do that, but most
of the time it’s products that are in a gray area. What I mean by that is they’re things that
you probably can sell, and they’re legal to sell in most states, but you’re not going
to be able to run your traditional Google Ads, you’re not going to be able to promote
them on Facebook, or any other of the main platforms that drive most traffic. So, an example of this, like a bad niche that
I’ve seen a ridiculous amount of times over the past couple years, is CBD oil. You know, the stuff that’s made from, I don’t
know, similar to hemp, and supposed to make your joints better or something. But, a ton of people want to sell that for
some reason, which okay, if you want to try it, try it. But guess what? You’re not going to be able to advertise it
with traditional Google shopping ads, you’re not going to be able to run traditional Facebook
Ads, and it just limits you so much. So, a really big reason why people do fail,
again, is getting into a product that is restricted. Now, another thing that people do, which I
guess someone was teaching this a few years back. I mean, they must’ve been, because people,
for some reason, think they can sell copyrighted and trademarked products. You know, I’ve mentioned this before, but
you see these websites that sell Game of Thrones sweaters and pillows, and all this stuff,
and it’s like, “You’re not authorized to sell that, you probably shouldn’t do that, and
guess what? You’re going to fail if you try to sell something
that is copyrighted or that’s trademarked that you’re not allowed to sell.” So, big reasons with niches, those are some
of the ones that are just obvious, right? These are the most glaring examples. Now, another reason why people fail is if
they have bad suppliers. Okay, maybe you have a good niche, but reason
number two would be you don’t find the right supplier. Now, some things that could fall into this
would be if you’re trying to sell on Shopify, I don’t know, if you’re trying to sell digital
pens, right? And your supplier is just some person you
saw that’s selling them on Amazon or on Ebay, and you’re trying to work with the arbitrage
model, where you sell it on your store, then you go on Amazon and try to find it cheaper,
or then you go on Ebay and try find it cheaper. That would be a reason to fail, of having
bad suppliers, because you don’t really have suppliers, you’re just kind of randomly trying
to find these little deals here and there. That’s not a lasting business model, that’s
a big reason people fail. Something else that would fall into bad suppliers
is if you’re exclusively dropshipping from China to the states, or to any other country
where it takes three weeks, and people get a package with a whole bunch of Chinese lettering
on it. Again, not saying it’s impossible to make
money with that model, but it’s some big reason people fail. When you have suppliers that are located as
far away as China, if somebody gets something three weeks later, guess what? They’re not gonna be happy, unless it’s something
really worth waiting for. Based on the amount of negative press that
dropshipping from China has gotten over the past couple years now, and not just in our
communities, but in mainstream media, it’s definitely having more and more of a negative
association with it. So, having suppliers that come directly from
there to your customers in the states, not a good idea. I have nothing against having products made
in China, we’ve done plenty of that, but at least have them in a warehouse closer to the
customer, so that they can get there in a reasonable amount of time, so that they can
be repackaged, and so that the customer could have a good experience, and so that you can
have a lasting business. Now, something else that would fall into bad
suppliers, is let’s say, again, we’re using this example, right? I’m selling these digital pens, and I find
suppliers in the states. Okay, great. Let’s say I find three of them, and I get
approved to sell their products, and I start selling them. But what I realize is that maybe two of them
have terrible customer support, meaning me being their customer, right? The company that makes this pen. Meaning when I get a sale on my website, and
I submit it to them, maybe they don’t even reply to my email, right? Maybe they don’t ship the order for two weeks,
maybe they never respond, maybe they say, you know, three days later, “Oh yeah, we don’t
have those anymore.” You know? That kind of relationship. Maybe they ship it to the wrong customer address
over and over again, maybe they add on extra fees for dropshipping. There’s all these things that even domestic
suppliers can do that make them really hurt your business, if you continue to have relationships
with them. A side note on this, if you’re watching this
video and you’re part of my Dropship Blueprint, that’s the course that was voted best eCommerce
course by Shopify, go into the section where I’m talking about bronze, silver and gold
suppliers, and that’s where I show you how to weed out those ones that will hurt your
business. If you have enough of them, and if you work
with them long enough, they will be a reason your business fails. So, definitely something to be cautious of,
even if you are following the Dropship Lifestyle model, and working with domestic suppliers. Now, third reason that people fail, is if
their websites are just unprofessional. What do I mean by that? I mean, if you go to it, and I don’t know
a better way of saying it, but if it looks like a joke, if it looks like something that
was thrown together in a few hours, if there’s typos all over the place. If links are broken, if there’s no way for
the visitor of your website to get in touch with you, if the add to cart system and whole
checkout process is clunky. You know, there’s so many things that we do
on our websites to build that trust with the visitor, so that, of course, we can have conversions,
so we could have people buy. If you throw a website together and don’t
really have a system to follow, or you don’t really know what you want it to be, it’s very
possible that what you’re left with if an unprofessional website that you start sending
traffic to, and then when no one buys, you wonder why. That’s a big reason why, okay? So, again, if you’re part of Dropship Lifestyle
and you’re watching this, go through all of modules three and five in my Dropship Blueprint,
and that’s where I show you everything we do to build your website, and make it optimized
to convert. Then in module five, I give you a whole bunch
of extra things we do to our websites and our product pages to make sure it’s professionally
designed, and to make sure we get that conversion rate that we need to succeed and not lead
to failure. So definitely check that out. The fourth reason, okay? Again, this is one that in the beginning,
as I scaled my businesses, I definitely had a struggle with. That is customer service and not having excellent
customer service. Now, when you … Let’s say you did everything
else right, you have a good niche, you have good suppliers, you have a good website, you’re
getting traffic and people are buying. If as you scale, and as you can’t handle customer
service yourself anymore, because there’s so many orders coming in, which means there’s
so many more inquiries coming in, which means there’s so many more just everythings that
need to be taken care of on a day to day basis, you need to be able to put systems in place
and people. Usually we work with virtual assistants for
these roles, but you need to be able to out those in place, so that the business doesn’t
fail. What will happen if you don’t maintain a great
level of customer service as more and more sales come in, is those people, they’re not
gonna buy from you again, and they’re gonna tell people, “Hey, I bought from this company,
and things didn’t work out so well.” So make sure as you make more money, as you
scale, customer service goes with the business, it grows together. In the beginning, if you’re doing everything
yourself, which I recommend, make sure you are offering great customer service. So, emailing people back when they email in,
answering the phone if someone calls, you know, responding to live chats. Just put the app on your phone and respond
to people. Offer that and you won’t fail, okay? If you don’t offer all that, and if people
start to feel like you don’t care about them, then they’re not going to give you their money
and you’re going to fail. So, that’s reason number four. Now, the fifth reason, this is one for people
that are a little bit further on, right? Let’s say you’re doing all of those things,
right? You’re, you know, again, your suppliers are
great, you have a great niche, your site looks amazing, you have great customer support. The biggest thing that I see from there that
leads to decline and ultimately failure of businesses, is getting into a fixed mindset. Now, I’m one of the people that believes if
you have a business and it’s not growing, it will start to decline. I don’t believe there’s this equilibrium that
you can get at and just maintain forever, it’s just not how things work. So, the way you can think about this is having
a growth mindset versus a fixed mindset. What happens to a lot of new entrepreneurs
that build a business, that’s maybe making them, you know, $10,000 a month net profit,
they are extremely, extremely, comfortable with that, because it’s making them more money
than they made at their old job, they’re able to travel now, they have more freedom and
they have more time, and life is good. But because of that, they’re there, right? They think they made it, and they did, that’s
great. You know, making $10,000 take home a month
is amazing. But if you’re there and you’re coasting, then
you can’t coast forever, because then it will go down, and it’ll be nine, then it’ll be
eight, then it’ll be seven, then it’ll be six. Unless you’re working on having it growing
all the time, then eventually you will fail, with, you know, giving it enough … a long
amount of time. Maybe that’s five years, maybe that’s 10 years,
but eventually you will fail. So, how do we combat that, right? How do we not have a fixed mindset? And how do we switch to a growth mindset? Well, a big part of it is taking some of those
profits and reinvesting them into growing your business. Whether that’s through new content, whether
that’s through increasing your ad budget, whether that’s through, you know, joining
Masterminds to learn more there. Whether that’s through opening up new ad channels
you haven’t used yet or hiring more team. You need to have that mindset, and you need
to be putting money back in. Because again, even if you’ve reached what
you think is your peak, and you reached what your goal was, it’s not going to stay like
that forever. If you’re not growing, you will die, you will
fail. So, not saying go nuts and, you know, try
to quadruple your business every year, which in the beginning you definitely could, but,
you know, over time make sure growth is something that’s always on your mind and a big role
of what you do in your business. Now, that’s the five, guys. I’m going to give you a sixth, just as a bonus
here. This one is lack of persistence. So, this is for the people that get maybe
the ball rolling a little bit and experience a setback, and then they give up. Setbacks are real, I can’t even count how
many I’ve had. Sometimes I’ll be having conversations and,
you know, something will spark a memory of something I did wrong or [inaudible 00:11:09],
something got messed up in, you know, a transaction or in a business, or with a traffic source,
just so many years ago. Then it’s like, “Wow, I totally forgot that
happened,” and it was a huge deal. The reason that I could even forget these
things is because so many of them happened, right? We have setbacks, and being persistent is
key in actually not failing. So, I’m going to pull up on my computer right
now, and I’ll share these as screen overlays so you can see them on the side of this video. But, I looked in our Facebook Group that we
have for members of Dropship Lifestyle, and I was looking … I just searched the word
“failure,” and a whole bunch of stuff came up, because I wanted to see what our community
has to say about this, right? Most people that mention the word fail or
failure, they were talking about how to overcome it and how they have. So, the post right here is from [inaudible
00:11:56], and you could pause the video and read the whole thing if you want. But, she was … The part I highlighted says,
“The biggest thing I’ve learned is that we all make mistakes, some beyond our control
happen, and we might fail, but that doesn’t mean we have to give up, or that it is not
meant to be.” So, she talks about some things that she’s
experienced since launching. Again, she experienced failure, and now she’s
posting her $71,445 month in sales, and how in this day that she posted this, she got
three orders for a total of $3,680. Again, somebody that experienced failure,
but persisted, okay? So, you know, hopefully … and if you’re
the type of person that gets motivated by seeing these stories and you’re part of Dropship
Lifestyle, definitely go through our Facebook Group, because you will see a ton of our success
stories, starting with people that experienced failure and then persisted. The one that I’ll throw on the screen now
is from Joey. He’s saying when he built his first store
he failed horribly in a crowded niche. Remember, niche election is important. But then … you can pause this if you want
to read more. But then I highlighted further down where
he said one year from when he initially bought his second domain, he turned Google product
listing ads on, which we teach in the Dropship Blueprint, and in just 61 days he crossed
$100,000 in sales. Okay? His post starts, “I failed horribly,” and
then his second story he crossed $100,000 in 61 days. Yes, that’s revenue profits, probably like
$25K, but he was able to do that after failing and not giving up. I’m going to share one more, because I know
people do get motivated by this, and I understand why. You might be experiencing some failure right
now, but again, persistence is key. This post is from Issac, he’s saying that
his first store failed, right? The first store that he ever built, it failed. Then he has a new store that he’s been running
and building for the past four years. He just sold it, he sold it for a very good
amount of money, and he’s saying that he pushed through everything that, you know, he experienced
while things didn’t work, and his new store is performing two times better than it ever
has. He’s making a great exit when he sells it,
and the new owner is super happy. He’s super happy, because now he has this
bank roll, and he’s building his next business. So, yeah, that’s the bonus step number six,
be persistent, and, you know, make sure you have all the fundamentals in place, all the
foundational elements. From there, persistence is what’s going to
make sure your business never fails. If things start to feel a little bit weird,
or things start to dip, persistence is what will make you adjust and be able to bounce
right back and breakthrough any previous barriers you’ve been at. So, if you found this useful guys, please
do let me know in the comment section. Be sure to give the video a thumbs up, and
hit the subscribe button if you’re not subscribed yet. If you’re watching this and you’re not part
of Dropship Lifestyle yet, go to DropShipLifestyle.com/webinar. Again, it’s DropShipLifestyle.com/webinar. I’ll put a link up in the description, and
I have about a two and a half hour training there, where I take you through my seven step
process for building highly-profitable, semi-automated stores. So, check that out, and I will see you there. Thank you.

19 thoughts on “Top 5 Reasons Dropshipping Businesses Fail

  1. But what if you specify that CBD is only sold in the legal states and you have the disclaimer on the product? It's not my niche, but it was something I was considering at some point.

    Also your #5 resonated strongly with me, I was cruising at 10k and it eventually did crumble on me. I am kind of glad I failed, because it taught me the growth mindset. Setbacks are real and I really appreciate #6.

  2. Thanks Bossman. Great video. This video pumps me up to go dig into the modules and my homework overtime. I am bound and determined. I've spent extra time in module 1 and choose to take my time with my niche selection even though I can't help but to peek ahead in further modules but I don't cheat myself and mark complete until I feel I truly completed it. Thanks again.

  3. Great Video as always Anton I started ecommerce in 2016 and didn't make a sale until 2019 of this year and that was after I joined Drop Ship Lifestyle in Late 2018 and you gave me the Blueprint of How to Actually do this the Right Way because before when I started in 2016 I didn't know what I was really doing until I joined your program so I was finding out the Hard way on how to do online retailing but I'm still Learning and Hopefully still Growing to Maintain My Business in the Future to come

  4. ok I came across this whole drop shipping thing a couple of days ago and Im only wondering; why would people buy these products from a drop shipper who is selling it for 4 times more than listed on aliexpress when they can just go directly to aliexpress and order it themselves for 4 times less? maybe Im missing something?

  5. It's always about the proper mindset and accurate knowledge of doing this line of business. Thanks for reminding us with these Anton. Super 👍

  6. Now that's how you speak with a realistic emotion. I'd following since few days ago … and I'm getting pumping to start again Drop Shipping. I didn't have the time to attend your last free webinar because I got stuck on a few compromises that got me busy, but hopefully we will meet in a future one.

    Thank you for honest tips on this video.

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