3 Emerging Threats of Dropshipping: How to Respond and Boost Your Business

As an online business model, dropshipping is an excellent opportunity for people who want to earn money, particularly during COVID-19.

Based on the current situations around the world and the expert’s analogy from multiple data, it’s clear that the epidemic will not end in the foreseeable future. And that goes to imply that online shopping is going to be the leading lifestyle for a long time. It’s not surprising that dropshipping is a profitable business model and its stores will continue to grow.

However, not only profits are hidden in the opportunity, but also threats. So, let’s talk about what they are.

3 Emerging Threats in Dropshipping Businesses

If you’re running a dropshipping online store, you may find making money is getting more and more difficult. It is a sign of the dilemma – an ever-increasing ad cost and disappearing price advantage.

1) Ad Costs Increase

Ad is an efficient tool to boost sales. However, it is becoming a headache among store owners. The bidding rule of ad campaigns increases the operating costs. It further cuts the profits you can make. 

Let’s look at an example. Facebook is the social network with the most active users. 

According to CNBC, Facebook has reported its revenue of $26.17 billion for Q1 in 2021. The increased revenue is attributed to ads. There is “a 30% year-over-year increase in the average price per ad and a 12% increase in the number of ads delivered.” (source: https://www.cnbc.com/2021/04/28/facebook-fb-earnings-q1-2021.html)

If you are spending more on Facebook ads than before, you are not alone. Some sellers complain that their ad costs have tripled. And what’s even more frustrating is that the conversion is not much than expected.

2) Price Advantage Disappears

Price is a powerful weapon in eCommerce businesses. But due to the influx of competitors, customers enjoy more choices than ever. That’s when you see the companies selling their products at a lower price, benefitting the most and edging over their counterparts. Now, of course, a price war is obviously not the way to win profits. Because your suppliers have already set the product costs and you wouldn’t be able to sell those products at a floor price without a baseline. This is another threat that most businesses face online at some point or the other.

3) Customer Requirements Change

Besides the challenges mentioned above, the changes in customer requirements are also worth noting. As the industry develops, customers have higher expectations from sellers. Product quality is one of them. It connects a reliable image with a store brand. Considering the fierce competition, it seems hopeless that a shop without a good brand reputation can survive or even grow. 

So what should a store owner do to tackle such threats? You may find the answer below.

How to respond and grow business?

It’s a question most business owners ask. But just worrying about it won’t change anything until you find a way. So here’s a solution. The best way to respond to challenging circumstances is through branding. 

How does branding help?

A good brand stands for multiple impressions – competitive products, stable quality, and good customer services. It brings invisible values, like recognition and reputation. But the most direct benefits are as follows:

Ÿ Cuts Down Ad Expenses

Expenses on ads are indispensable. This makes “how to reduce ad costs” a concern. So, how does branding save you money?

The answer is if you do not have a brand, the product ad cost you pay each time can only bring you one-off sales. It means that people buy without remembering your store. Because there is no added value, likely, those people will not buy from you again. As a result, you end up placing more ads, thereby paying more to attract audiences. Worse still, the sales you get out of it may not even satisfy you or help you reach your business goals.

But if you had strong brand awareness, the situation could be completely different. Ads are not only meant for increasing product exposure but also deepening the impression of your brand. It’s easy to form customer loyalty. And your repeated customers will bring continuous sales. Even if you don’t add expenses, orders won’t drop. Moreover, repeated customers will recommend you to their friends and family spontaneously. The whole process commences a cascading effect that charges you nothing and brings you sales.

Ÿ Possess Pricing Right

Once your brand gets enough recognition, you can easily set a price that reflects your position in the market. And that adds a distinctive advantage to your store. People choose you for trust, not for lower prices. That is to say, if you set a higher price than your competitors, it will not scare away your customers. They would think your product is worth it and wouldn’t mind paying a little extra. Then you can price your items without worrying about losing the price advantage.

How to build your brand?

Branding covers varied aspects and requires a seller to make preparations. Such as: 

1) Ability to Discard

To build a brand, sellers need to know what they want. It is unrealistic to sell all products. The reason is that the seller may not have enough expertise to manage such supply. Thus, it’s essential to know which products or services to focus on and what to discard. One can always add more products to their portfolio later when they have built a successful business model. But sellers should always start with a selective few categories and give it their best. This ability brings efficient work.

2) Content for Marketing

Your brand messaging is significant when it comes to standing out from your competitors. In other words, what do you want your consumers to think when they see your brand? A clear position helps to generate perfect content and make an effective marketing plan. 

3) Material for Long Run

It’s never to be easy to build a successful dropshipping brand from scratch.

Choosing an experienced and trustworthy dropshipping supplier is necessary.

EPROLO has obtained trust from over 30,000 users. What’s more, it has helped hundreds of dropshippers create their brands. Services cover products sourcing, branded products, print on demand, customizing packaging material, order fulfillment, etc.  Don’t hesitate and click here to join EPROLO Branding Project now!

Adam Hansen