What I Learned From My Failed Dropshipping Business

Don’t start a business unless you understand the market

This was 2020, the year that everything went down.

For me, it was the perfect opportunity. I had just completed my (virtual) summer internship, and I was waiting to start the final year of my undergrad education.

I didn’t have any business experiences at the time, but how hard could it be to start an online store?

Maybe it could become one of those successful businesses that launched during the pandemic. Wouldn’t that be a great story?

Going down the rabbit hole…

Youtube is one of those great educational resources you can get for absolutely free, and you bet I took advantage of it. As a broke college student, all I wanted was a low commitment business idea to jumpstart my entrepreneurial career.

Lo and behold, the dropshipping gurus had come to my aid.

You’re telling me that I need ZERO experience and ZERO funding? Sign me up please!

Now I all I needed was a market, someone to sell to. It didn’t take very long for me to settle on that either.

See, I had recently gotten a pandemic puppy, so all I could think about was dog food, dog toys, and dog clothes that’ll look cute on Instagram. I would be one of my own target audiences, and since I knew myself pretty well, it seemed like an obvious choice.

There were plenty of red flags already, but I was seeing my business venture through rose-colored glasses. I thought I had struck gold.

What I did wrong (and what I should’ve done)

It was needless to say that in hindsight, I should’ve done a lot more research before diving into this project. Here were all the rookie mistakes I made:

1. I didn’t understand the business model.

It was easy enough to understand how dropshipping works: you’re responsible for bringing the customers and taking orders. You then pass the orders to third-party suppliers, who ships the products your customers.

There are several benefits to this order fulfillment method:

• you didn’t have to keep inventory,
• you didn’t have to deal with shipping, and
• it was a very hands-off business

What I didn’t understand (or think about, really) was the profit margin I would receive.

With a traditional business, you buy products at wholesale prices. You’d be selling at a much greater profit margins.

On the other hand, if I were to make the same profit margins with dropshipping, I’d have to set my retail prices much higher. That’s not very competitive, so what’s to stop my customers from going to Amazon or Petco?

To compete with existing pet supply giants, I’d have to market the heck out of my business.

2. I picked an oversaturated market with an unspecified niche.

I picked a market without doing much (if any) research. I was a pet owner, so I must know the market pretty well, right?

The pet supply market is extremely oversaturated. Even on sites like Instagram or Tiktok, the small business tag is swarmed with homemade dog treats, handmade bandanas, etc. While it’s not impossible to break into the space, I found myself out of my depths when it came to differentiating myself from other sellers.

And to top it all off, I decided not to go with a niche because I didn’t want to limit myself with the products I could sell.

If I had chosen a specialized segment, such as accessories for small dogs, I wouldn’t have had such a hard time selling my products.

3. My catalogue was all over the place.

Because I didn’t have a niche, my catalogue was an absolute mess.

I started off with a few selections of dog bandanas and an automatic water feeder. Why? Because I thought they the bandanas were cute and the water feeder was unique.

When I saw that I wasn’t making any sales, I added trendy dog leashes and clothings to my catalogue. I thought that if I had more products, then there was a higher the chance that site visitors would actually purchase something they like.

In hindsight, I did have a few customers that were interested in the automatic water feeder. Instead of diversifying my catalogue, I should’ve stuck with the water feeder, maybe white labeled it, and concentrated my marketing purposes to that one very strong product.

4. I didn’t have a marketing budget.

I focused my marketing on Facebook ads and Instagram influencer marketing.

In terms of Facebook ads, I had no experience. I was basically throwing my money into it without having any strategies. If there were any semblance of a conversion pipeline, that effort was clouded by the fact that I had no budget. I spent some money on ads, but as soon as I saw they weren’t making any sales, I dropped them.

While I had more successes with Instagram, I still lost. There were plenty of dog accounts with sizable followings, so I collaborated with a few influencers to get my products out there.

My mistake? I was too quick to send free products without considering my potential profits. How many sales did I get from influencer marketing? Zero.

5. I didn’t create a project timeline.

My mindset going into this was: let’s see how far this goes!

This was a bad idea for many reasons.

First of all, if dropshipping really didn’t cost anything, then theoretically, I could’ve kept going.

But even so, I had no estimation of when I was going to see success. The Facebook ads were draining my wallet, so I had to pull the plug before it was too late.

Instead, I should’ve set milestones for myself. By day ___, I should see ___. If not, then go back, investigate what went wrong, and try again.

6. Low risk, low reward.

One of the main reasons I was attracted to the dropshipping business model is its low risk. I had no money, and I thought I could circumvent the need for a hefty upfront investment.

Turns out, there is a reason why not everyone is doing dropshipping. It seemed too good to be true. Sure, there are plenty of successful dropshippers, but it’s not at all what the “gurus” claim.

You do require a budget, and you do need to commit, whether it’s time, money, or something else.

An alternative business model may be harder, but the rewards you reap is potentially higher. I should’ve considered the pros and cons before jumping into the dropshipping rabbit hole.

Looking back at the experience, it was almost laughable how unprepared I was.

At the same time, I was glad to have gone through this experience and made the beginner mistakes early on.

Would I ever try dropshipping again? Most likely not.

Dropshipping is definitely not an easy side business, and it’s not for everyone. I learned it the hard way, but I’m glad to say I’ve tried it, failed, and ready to move on.

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