Dropshipping, as a business model, relies on effective production, reliable warehousing, and consistent logistical support. Covid-19 now threatens to wreak havoc across the entire dropshipping ecosystem. Several dropshippers anticipate that the virus will threaten the very viability of the business. 

The ground reality is that the supply chains are riddled with new health and safety requirements, making them difficult to manage. The pandemonium surrounding the virus has created consequential raw material and labour shortages. Until the situation deescalates and the world attains a semblance of normalcy, the sale of products that are ‘Made in China’ will drop significantly. This is bound to affect SMEs, Chinese production facilities, factories, and logistics companies. 

One obvious result from the coronavirus-affected economy is that warehousing and logistical services will become vastly costlier. Shipping costs have increased by over 60%, and margins have fallen primarily because

• The frequency of flights has reduced
• Dropshippers have a limited capacity for shipping — far less than the spike in their orders
• The inventory with suppliers during the quarantine will last for weeks. 

The CDC in the USA has released a statement saying that COVID-19 does not survive for a long time on parcels. This time generally elapses in the delivery schedule alone. 

However, any product manufactured in, shipped from, or made in China is causing mass hysteria among the buyers. The Sun, in its editorial piece, so eloquently put it about the English buyers, “Post Apocalypse Brits Shun Amazon and E-bay Products from China Over Coronavirus Fears and Consider Bleaching Products.” The irony is not lost there.

However, the situation is not as dire as it seems. Due to the lockdowns effected in different countries, e-commerce shopping has increased. It spiked by 93% just in May 2020. According to a survey by Statista, during the lockdown period of 2020, shopping increased, on average, by 40%. If this virus has taught us anything, it is that agile dropshippers will emerge the victors.

What Can Dropshippers Do During This Crisis

Run Ad Campaigns

Many dropshippers are dropping from the race. This means that you will have limited competition for bidding on Google Adwords. Although this could seem counter-intuitive, advertising right now will help bring your brand to customers’ notice. With low CPCs and CPMs, now might be a good time to jump on the advertising bandwagon. 

The suggestion definitely isn’t aggressive marketing because the returns just don’t justify the advertisement budget. If you have collected a bunch of email addresses, now is a good time to send out marketing campaigns through those email addresses.

This crisis means people don’t have sufficient resources to convert into customers. Therefore, the appreciation rate for those campaigns can be low. Hence, dropshipping businesses should segment these campaigns based on a grouping most relevant to the business and as personalized as possible. 

Before running any ad campaigns, dropshippers need to accommodate for the delays in the delivery schedule. It doesn’t make sense to promise the usual delivery timelines and miss them. AliExpress customers on Reddit have been complaining about the long delivery timelines.

Diversify Your Portfolio

A dropshipper’s value addition comes from exposing their customers to products that they otherwise would not have seen. This connect is what drives the dropshipper’s margins. For example, a dropshipper would sell products obtained from Amazon or e-bay and charge a higher rate for the products. 

In times of crisis, people don’t have enough resources to purchase luxury goods. Instagram brands that existed for about two weeks, called burner brands, can’t afford to sell nice-to-have products during such turbulent times. Those products are the first ones that have to go. Dropshippers must optimize the entire product line. Thanks to the lockdown and social distancing measures, the demand for home fitness equipment has risen by 535% compared to 70% during the same time in 2019. 

The nature of the dropshipping business allows businesspersons the flexibility to shift niches. Dropshippers don’t have warehouses or inventory to push in a crisis. However, this advantage is simultaneously a bane. When customers place orders, and the logistics are in a bit of a rut, you don’t have an inventory to fall back on. The only thing dropshippers can do is to coordinate associated logistics to hamster goods quickly before the full effect of a crisis takes over.

To control the onslaught of sales, dropshippers need to ration their sales. They could temporarily increase the prices of goods to reduce the sales volume and improve their margins in a waning economy. Another option is to search for local alternatives. This would not only reduce the burden of uncertain supply chains but beat long delivery timelines. The quicker the products are delivered, the sooner dropshippers can make money. 

This would reduce the number of refunds they would have to issue — something they would have to be prepared for when operating during the crisis. 

Improve Communication

If there is one thing we can be sure of in this crisis, the entire supply chain management will go for a toss. Dropshippers should be prepared to communicate the delays in the delivery with the customers. 

Six-figure dropshipper Beast of Ecom and Seven-figure dropshipper Emma Reid have notified their customers about possible delays, and they have received positive responses. Most dropshippers have continued contracts with suppliers for a certain number of goods every period, which Coronavirus threatens to disrupt. 

Dropshippers need to communicate with both suppliers and customers. They need to stay in touch to identify what can be done with the contracts that are currently in place. A measure of goodwill is important too. 

Dropshippers also need to talk to their suppliers and customers beyond professional capacity. Understand how they are doing and how they are coping with the crisis, and how dropshippers can contribute to their better-being.

Improve Web Presence

More people are reading than before the lockdown. With the world coming to a standstill, people shift their attention to written pieces on the internet. Upskilling, information accumulation, and faux positive aura have taken over the generation that can afford to do nothing. Dropshippers need to capitalize on this. 

The dropshipping website needs to be spruced up and optimized. It is a great time to work on the blog, improve the SEO, check the website metrics, check the website banners, overhaul the product pages to see which products are still relevant. For products that are still longer relevant, add more detailed information to make them look attractive. Add new sections to your products to make shopping simpler.

Dropshipping businesses should improve their web presence throughout their social media channels. More people are reading, and dropshippers must make sure their products and their businesses are part of the information consumed. A simple survey of the consumption habits should reveal what the consumers are looking for when shopping. This is a good time to capitalize on that. 

Dropshipping businesses could also utilize their social media channels to tell people how the business is faring. There is a fine line between being present and being over-present. Dropshipping businesses must understand what that line is and make sure they are competing for the line and are on the right side of the line. 

Conclusion

There will always be people who don’t trust dropshipping business. Several reputable media outlets claim dropshipping is dead in 2020. Like heralds, they claim that this is the end of dropshipping business too. There is evidence galore to say that dropshipping can thrive during the crisis and come out stronger post-pandemic. It is important to realize that, like all businesses, some strategic changes have to be made to suit the current economic climate.