Dropshipping Failure Case Study

Today I am going to talk about a case study involving a real-life dropshipping business venture.

Phase 1: How it happened

Back in 2017, I was just about learning the ropes of the dropshipping business model that I’ve eventually fine-tuned. I was contacted by a client asking me to help them source some products for their new dropshipping business.

One of those products, an 8x-zoom lens, had tremendous sales volume. At that time, I didn’t have the faintest idea that this is what is known as a ‘winning product’.

I started meeting suppliers and comparing samples from more than 30 of them.

Two samples, in particular caught my interest for the quality was top notch. The rest though, were nothing to write home about. The lenses were made of acrylic. Not optical glass and the image produced on the phone was nothing but a blur. Talk about the importance of comparing samples.

Anyway, the client jumped the gun and already ordered 20000 units of the lens from Alibaba before they even talked to me.

So, they asked me to inspect the quality at the fulfilment center.

Phase 2: The conundrum

I believed that the client should be sourcing the best quality product since they were scaling their business heavily.

But much to my dismay, the products that they had sourced from Alibaba was absolute junk.

  • The lens was dirty and scratched. In most of them, glue was visible on the surface.
  • The image was just a blurred mess. There were black dots on the pictures which indicated that the lens didn’t have a dedicated cleaning mechanism.
  •  I had to inspect each and every lot.
  •  And I would keep rejecting it because it was junk. But the client insisted on releasing the products that ‘looked good’, since they had thousands of pending backorders. Rookie mistake.

Phase 3: Results

As expected, the poor quality products produced dismal results.

  • There were tons and tons of complaints.
  • There were loads of chargebacks from irate customers.
  • The client’s bank account got banned.

Why did they fail?

So, why did they fail despite having a winning product and doing pretty much the same thing that almost every drop shipper is doing these days?

There are three main reasons.

  • They didn’t spend time in finding the right supplier. Or they simply believed that the magnitude of the problem was so small that they could or they would fix it.
  • The searched for the lowest prices on the market, which was around $1.89 whereas I had found a much better product for just $2.86.
  • They had zero control over product quality.

Final thoughts

Having a product with huge sales volume is one thing.

And having a good quality product that meets customer expectations is another thing altogether.

At the end of the day, you’ve got to run it like any other business. If you source junk, your business will get derailed a lot sooner than you expect it to.

Spend the extra buck, hire someone who knows the ropes of the business to meet suppliers and compare product quality and reap the rewards. Simple, isn’t it?

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