The website is built, the template blanks are filled in and bar a couple of blog posts my Shopify/Oberlo drop shipping website is ready to go (you can view it here). Or is it?
On the outside, it's a great looking site put together in just a couple of days using the free Shopify templates. The Oberlo App works fantastically well and utilising the Chrome add-on, it's a breeze to add new products to the store.
The images are automatically imported along with all the product details, and the whole routine is very slick. So why then won't I be spending any more time on this?
Despite the hype and frenzy surrounding drop shipping as a business model, on the inside something doesn't feel right and that typically spells trouble ahead.
If you can find valid reasons to counter my arguments then, by all means, fill your boots, you may be able to build yourself an excellent drop shipping business in no time at all. But for me? I'm out. For the following reasons:
To build this site out big style would mean managing around 1000+ products all at a low price point (sub £10). To organise this correctly, you'll need to find suppliers who offer the broadest range of products so that you can consolidate your shipping costs.
The good news is that using Shopify/Oberlo; you can add thousands of products to your store meaning you are bound to gain some traction with Google. The bad news is that managing this many products is going to be exhaustively time-consuming. A full-time job for a junior product manager.
The solution would be to choose a niche where you are dealing with around fifty or so core products to begin with, and you can weave these into an existing blog to monetise it. Creating a drop shipping business that hosts hundreds if not thousands of products is creating a monster that you can't manage. Products that are no longer available, price increases and image changes (don't get caught for misrepresentation) will all eat up your valuable time.
As a method for testing out new products or beefing up an existing product range, yes, drop shipping is the ideal way to test the waters. But for managing hundreds of products across many suppliers – this is asking for trouble.
Click Here To Read My Shopify Review
Delivery Lead Times
Oberlo claims that if you make it clear on your website that delivery is going to be 7-30 days, then people will happily wait for their items for the cost saving. But I don't see this as being a viable business strategy. People may purchase as a one-off and be happy to wait, but I wouldn't expect a great deal of repeat business.
By the time people come to do their Christmas shopping, it will be too late for you when they realise goods won't arrive until the New Year.
Did I mention products may come from many different suppliers in the same order? Packets will arrive at the destination spread over several days. You are bound to get many complaints from customers who think they are missing items when they get the first delivery.
The ability to set up an automatic price multiplier makes it easy to adjust your margins but in an ever-shrinking marketplace, buying at retail and then applying a multiplier does not make business sense.
You'll be relying on people returning to your website to purchase because of the low cost. But you are already selling at premium prices. Buyers are becoming savvier by the day, and they can quickly copy your product descriptions and paste them into Amazon, eBay or even Alibaba Express itself with a couple of mouse clicks.
With products delivered in plain packaging and no brand loyalty to speak of it's going to be an uphill task.
Reliance On Oberlo App
It's Oberlo that makes the whole thing tick, that and Shopify. Which means that if you ever wanted to move to another eCommerce platform for whatever reason, you can't.
No Value Added Proposition
No VAP is the main reason for my decision. Building a drop shipping website is easy. I've proved it. But with no value added proposition any gains you make in the short term will be wiped out in the long run by superior marketing techniques.
If you are going to build an internet business, then do it for the right reasons: A better product or service designed with better value for money. You can't use drop shipping to build anything with exclusivity because there won't be any. The best you can hope to do is to group your products into a tight niche and support them with better blogging and product information.
Without a solid base from which to work (your website) it's going to be incredibly difficult to make a difference in the world.
If you can see past my arguments or you have a better niche, then you still might make it. But essentially you'll be making yourself a glorified middleman at the mercy of suppliers and the amount of business they can handle and customers that you'll find it challenging to placate when you don't control any product distribution.
As an addition to an existing business model or to test the waters with a new product line, drop shipping with Oberlo is the ideal tool. Other than that you'll be building on shifting sands.