Is Dropshipping Dead? 2020 Update

We know due to the pandemic situation created by the COVID-19 forced many counties including India to move to lock down by giving priority to public health and safety to reduce and control this pandemic.

Lockdown pressured many industries to shut or minimize the production had caused a huge negative impact on the economy and many types of jobs and businesses are at risk by various restrictions due to ongoing pandemic.

This pandemic also leads to uncertainty in the global economy and many such consequences are noticed in dropshipping in this article we will discuss how this ongoing pandemic affected dropshipping in detail.

About Dropshipping –Introduction

Dropshipping is a supply chain management in which goods are directly shipped to the customers from the third party it can be a vendor or a supplier without storing goods physically. It can occur on a large scale or with small retailers.

At first drop shipping is mostly based in the USA and after 2006 it expanded into various other countries especially in China and emerged as a global hub of dropshipping by offering wholesale services to small scale and large scale businesses.

Most of the dropshipping is an internet-based business thus many E-commerce platforms provide dropshipping entrepreneurs with a plug-and-play style option for selling goods and services online.

There are many benefits of dropshipping that it is a lucrative business and the traders can eliminate the physical costs of manufacturing, labor, and maintenance, etc.

in addition to all this can reduce problems in logistics to far extend.

Even though it is a lucrative business there are many drawbacks and pitfalls related to this such as facing heavy competitions, internet business scams, etc.

These are the major Dropshipping companies in the world:

  1. Ali Express.
  2. Sale Hoo.
  3. Doba.
  4. Wholesale2B.
  5. Worldwide Brands.
  6. Wholesale Central.
  7. Sunrise Wholesale.
  8. Mega Goods.
  9. Inventory Source.
  10. National Dropshippers.
  13. Spocket.

How COVID-19 Impacted on Dropshipping?

Many reports state that dropshipping supply chains are facing major risks and challenges due to the COVID-19 pandemic and its restrictions.

In addition to this, they also mentioned that this is at the point of death.

But many other economists evaluated that the reports are not true or they revel the information based on biased observation and can tackle this problem easily.

However many suppliers, warehouses, and delivery companies do not operate with full capacity and caused delays in some orders.

As we know that China is the major global shipping hub and due to travel restrictions and other barriers also contributes to the collapse of dropshipping at a global level.

In addition to all this pandemic has created an increase in shipping fees up to 40-60 percent with additional expenditure due to the cancelation of commercial flights to many countries.

The Reality about the Misconceptions of Dropshipping

The dropshipping model of business has witnessed a huge rise and the world has become a global village. For a person who shows interest, it’s no a big challenge to start a business.

And since dropshipping has been all the rage for many years now, too many people have jumped the ship (pun intended) in the past couple of years.

And that, without a doubt, has made dropshipping competitive to sustain on a small scale.

This is one of the major reasons why people don’t consider drop shipping as one of the great business models to start with and claiming that the Dropshipping business is not in good condition due to the COVID-19 pandemic.

Successfully drop shipping in 2020 needs a few adjustments that can be made by selecting the dropshipping companies that the traders decide to use.

Drastically improving the old model by focusing on US and European suppliers provides many advantages such as faster shipping, higher quality goods, faster return processing, and consistency since the suppliers are held to a high standard.

How to Manage the Situation?

Even though drop shipping face many challenges and impacts, but these problems have many solutions thus able to manage and withstand it by adapting the changes by following tips

  • Contacting the manufactures

Frequently contact the most important suppliers and get a good understanding of their location and purse the supply chain if the situations are under control.

  • Ration the sales

Minimize the price or charges to the goods and services to ensure the service and trust of customers.

  • Search for alternative providers  

As we know that china is the global hub of dropshipping supply chain and ongoing restrictions and traders should look for alternative providers.

  • Concentrate on core business

Traders must concentrate on business which is more lucrative for them

  • Order goods in stock

Use alternative paths such as marketplaces for residual items but it can’t able to apply in dropshipping to the major extent.

  • E-mail marketing campaigns

It is the best way to sell products, provide information to customers, and build loyalty.

Especially in e-commerce, email marketing is an effective tool for sending transactional, promotional, and lifecycle messages.

Email is not subjected to the rules of centralized platforms, where unplanned tweaks to algorithms can completely derail a distribution strategy.

It is a great tool when your marketing strategy on other platforms is limited.

  • Optimize product line

Optimizing or focusing on single product sales or service can also be the best way to survive the business in such a pandemic situation.

  • Reduce the budget for ad campaigns

Decreasing the amount of paid advertising can be done in such circumstances to avoid over expenditure and try to focus on basic necessities.

  • Contact the clients who have pending orders

Make a communication link between the customers to establish the trust and if it necessary refund the amount for delayed orders or which cannot be delivered.

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