6 Routine Mistakes People Make When Setting Up a Dropshipping Online Store

Are you new to dropshipping? Even for those with experience, these six mistakes are extremely commonplace.

learn more about Steve Tan

By Steve Tan

ijeab | Getty Images

Opinions expressed by Entrepreneur contributors are their own.

During my time as an ecommerce entrepreneur, I've seen plenty of online stores open with great fanfare, only to fall apart a short time later. I've even experienced a few of these failures firsthand. While there are several potential factors that can contribute to a store's downfall, I've found that many store owners are failing in the same key area: dropshipping.

Related: 3 Ways to Grow a Multimillion-Dollar Drop Shipping Business

When done right, dropshipping can be extremely beneficial for an ecommerce store. Rather than having to worry about storing inventory yourself, dropshipping allows you to set up a system where purchased goods are sent directly from your manufacturer to the customer.

While this can reduce overhead and streamline your shipping, many entrepreneurs fail to capture these benefits due to a few routine mistakes. Here's a closer look at the errors you need to avoid when setting up dropshipping for your store:

1. Picking the wrong supplier

Aside from picking the right niche for your store, few business decisions are more vital than picking the right supplier. Your supplier will impact everything from product quality to delivery times, so it is essential that you select someone who will deliver the results you need.

In addition to checking out reviews and testimonials for your potential suppliers, consider placing a test order. This will give you firsthand experience with the shipping process and allow you to see whether the products meet your expectations.

Related: 6 Steps to Building a Successful Online Drop Shipping Business

2. Becoming dependent on a single vendor

Though picking a quality supplier is a crucial first step, don't allow yourself to become complacent. What happens if your supplier runs out of stock of one of your top-selling items? Worse yet, what if it goes out of business entirely?

If you've put all your eggs in one basket, such problems could put your store in jeopardy.

Always have a backup supplier ready so if anything happens to your primary vendor, you'll still be able to make sales and fulfill customer orders. Be careful that your contract with your primary vendor doesn't prohibit you from ordering from others.

3. Surprise shipping fees

When listing product prices on your website, are you upfront with your shipping fees?

Though high shipping costs are often cited as the top reason why shoppers abandon their carts, even worse are the "surprise" shipping costs that don't appear until the end of the checkout.

To keep your customers happy, you need to make your shipping costs clear from the get-go. Many retailers find it best to use a consistent flat rate, or to add a "shipping calculator" tool to their orders page.

Don't underestimate the power of free shipping -- as long as it doesn't hurt your margins. Surveys have found that as many as 90 percent of shoppers pick free shipping as "the No. one incentive when asked what would make them shop online more often."

Related: Why It's Nearly Impossible to Stop This Amazon and eBay Scheme

4. No after-purchase tracking

Customers want to know when they'll receive their order after purchasing from an online store. Yet, far too many new dropshipping businesses assume that their interactions with the customer end the moment they click the "checkout" button.

A lack of communication will hardly reassure your customers about the quality of your business -- instead, they might think your store was a scam!

To provide your customers with peace of mind and avoid complaints, be sure to provide an easy-to-use order tracking system with the assistance of your vendor.

Send email updates when an order is confirmed or shipped. Consistent communication is especially important when a shipping delay occurs or if an item is temporarily out of stock. Providing quality service in this regard is key for maintaining customer satisfaction.

5. Lackluster returns

One hundred percent customer satisfaction may be the goal, but it's rarely the reality.

In fact, online retail return rates often exceed 30 percent, especially in the clothing industry. If you don't have a streamlined return policy in place, you'll find yourself facing a lot of angry customers.

When selecting a vendor, make sure you set up a streamlined system for handling returns and refunds. Clear instructions and timely responses to customer inquiries (especially in providing a refund or replacement item) will allow you to maintain goodwill with your customers, even when things don't go as planned.

Related: 3 Types of Ecommerce Business Models

6. Only running a single store

Does running a single dropshipping store seem like a lot of work?

Well, I've got news for you -- if you want to last long in this competitive marketplace, you're probably better off running two or three stores. This is a strategy my brother and I continue to use today, and it helps us earn eight figures in total annual revenue.

The thing is, even if you've done your research and found what seems like a good niche, you never know if your business idea is going to take off until you actually launch your store.

By starting one or two additional stores that are different from your initial niche, you'll be even more invested in your ecommerce career and have a backup in place in case one store flops. Diversifying your risk will protect you from unexpected economic changes and other potential setbacks.

When done right, dropshipping can be a cornerstone of your business model, helping you get orders to your customers in a timely and efficient manner. As you take steps to eliminate routine mistakes from your business model, you'll be able to provide the quality service your customers expect and deserve.

Steve Tan

CEO of LeapVista

A serial entrepreneur with over 14 years of ecommerce experience, Steve Tan has founded several startups. Tan is also the CEO of LeapVista, an education company that offers transformative mentoring and world-class ecommerce education.

Related Topics

Editor's Pick

Have More Responsibilities at Work, But No Pay Bump? Use This Script to Get the Raise You Deserve.
Black and Asian Founders Face Opposition at All Levels — Here's Why That Has to Change
Business News

'This Made Me Physically Recoil From My Phone': Lingerie Brand Apologizes For 'Creepy' Ad Referencing Ryan Reynolds and Bras

Online lingerie retailer Harper Wilde is under fire for a bizarre sponsored post it has since pulled from Instagram.

Business News

'Harvard Should Be Ashamed': Kim Kardashian Slammed For Giving Lecture at Harvard Business School

Kardashian visited Boston on Friday with Skims co-founder Jens Grede to talk to students about the shapewear company.

Thought Leaders

5 Small Daily Habits Self-Made Millionaires Use to Grow Their Wealth

We've all seen what self-made millionaires look like on TV, but it's a lot more subtle than that. Brian Tracy researched what small daily habits these successful entrepreneurs adopted on their journey from rags to riches.

Business News

The 90-Year-Old Owner of Ray's Candy Store Was Brutally Attacked Outside His Shop

Ray Alvarez was attacked in front of his iconic NYC candy store around 3 a.m. on Tuesday.