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5 pitfalls with dropshipping and marketplaces

Bart Vintcent
May 15, 2019 10:27:06 AM

Dropshipping is often regarded as the holy grail for online sales. No stock, no risk. Simply shifting orders. However, is this possible when you are selling via larger marketplaces such as bol.com or Amazon?

As a merchant, being active on marketplaces such as bol.com or Amazon you probably have noticed that the products being sold on their differ from the ones you are selling in your own webshop or physical store. This makes it a challenge to keep all the products available and up-to-date in your inventory. This is a key argument for merchants to outsource the delivery of orders to the supplier, better known as dropshipping.

 

Dropshipping and expansion of assortment

With dropshipping the merchants make sure that the orders are being redirected to the suppliers, who will take care of the delivery to the consumer. The retailer often does not even see which order is being made. Dropshippers often offer ready made streams of data with product- and stockinformation. If you want to start utilizing dropshipping, then be aware of these five pitfalls!

 

The pitfalls

 

#1 EVERYBODY SELLS FROM THE SAME STOCK

The advantage of selling from the same stock as your supplier is that you will have direct access to a large assortment and do not need to keep track of your the long-tail products in your own inventory. A big disadvantage is that you are not the only merchant selling from this stock. If you want to avoid having to sell a ‘no’ to your customer, then make sure you do a frequent synchronisation of your stock and have set up a stockmargin.

 

#2 THE SUPPLIER HAS A DIFFERENT DELIVERY POLICY THAN THE MERCHANT

When you are active on salesplatforms such as bol.com, Amazon or Ebay you are probably familiar with the term ‘delivery promise’ or ‘delivery policy’. As a merchant you have to make sure you live up to the promises you make regarding delivery. If you fail to do this, this will result in a drop in your marketplace ranking and eventually a decrease in sales.

 

Arrangements on joint delivery promise:

  • What is the cut-off time of the supplier
  • Can an order be automatically imported? (At EffectConnect we have plugins to do this)
  • How often is your inventory status updated? (Once per day is the bare minimum)

 

#3 NO CONTROL OVER THE DELIVERY OF YOUR PRODUCT

Handling the shipping of the package to the customer yourself, allows you to check whether the product is in mint condition and if the packaging is not damaged. When the shipping is handled by the supplier, you have to trust that they will take care of this process. Therefore make sure you know whether and how your supplier checks the products for damages or inconsistencies and discuss how you will be handling possible returns together. Remember that you will be held responsible by the customer, not the supplier.

 

#4 STEEP PRICES

Dropshipping can sometimes be more expensive than handling the delivery of the product yourself. A product with a minimal price and margin can therefore be less interesting to be sold via dropshipping, because in doing so you are pricing yourself out of the market. Given that pricing is one of the most important aspects of selling via marketplaces, it is crucial that you do your math right and determine whether dropshipping is a lucrative solution for your assortment. After all, the marketplaces also calculate a fee based on your sales, often by 15%.

 

#5 GIVING AWAY CUSTOMERS

The general consensus is that you are not allowed to use the information you have gathered through orders placed via marketplaces, for marketing purposes (e.g. e-mail addresses and other data). Your supplier is not allowed to do this either, so make sure you have made proper agreements regarding this subject. When sending orders from your own clients to your supplier, make sure they do not hijack your clients from right under your nose.

 

Checklist dropshipping on marketplaces

Making sales on marketplaces via dropshipping is possible, but there are a few things to keep in mind:

  • Make sure your stock is automatically updated on the marketplaces by means of an up-to-date inventory of your supplier.
  • Make sure that the orders are automatically redirected to your supplier, to avoid mistakes and wasting everybody’s time.
  • Make sure that the promised delivery times are upheld by the supplier.
  • Do not price yourself out of the market due to the steep dropshipping costs.
  • Make sure that you have clear agreements regarding the customer information being sent to the supplier.

 

Because a lot of merchants are selling from the same stock, you will have to assess your surplus value. Are you for instance an expert in the field of that specific assortment, show it! Are you probably very flexible in accepting returns? These are things you might want to keep in mind…

 

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