We wanted to take a moment to share how we see COVID-19 affecting dropshipping stores.
This will not be an article about COVID-19 itself, we are not medical professionals and there is plenty of information about the virus from reputable experts. This article will share our knowledge on how this virus affects Dropshipping, both in China and the rest of the world, and how you can modify and restructure your online store accordingly.
The effect of the coronavirus on Chinese factories
The coronavirus epidemic has massively affected China. Chinese factories have been closed since the beginning of the Chinese New Year (January 25). If you depend on deliveries from China, you are used to these long delays. Usually, these factories close for a few weeks and then reopen.
Many sellers don’t even stop selling during this period.
They continue to advertise and take orders as usual. The factories reopen and start shipping again. Everyone gets their orders and everyone gets paid. Unfortunately, this year, the coronavirus hit China during this time and factories were unable to reopen. As a result, companies sourcing from China were financially penalized, both in the short and long term.
What does this mean for dropshipping businesses that rely on China?
In addition to gaps in your supply chain, if your business relies on dropshipping from China, you face other issues that can negatively impact your business.
Wasted advertising expenses
If you are a store that has invested in advertising while waiting for future deliveries from Chinese factories, this is a big problem. These future deliveries could not be shipped yet, and the advertising expenses without return can put you in a difficult financial situation.
Potential negative reviews
If you’ve been continuing to take orders under the impression that everything was business as usual, you now have the difficult task of deciding what to do with this backlog of orders. Platforms with built-in customer reviews can be especially problematic. For example, if Facebook knows you run ads and you’re an e-commerce store, it will automatically send your customers a quick survey to evaluate their experience. If your customers aren’t happy with the shipping time because you’re dropshipping from China or how you handled the situation, they can and probably will give you a bad grade.
The longer you go without refunding your customers, the more likely you are to receive chargebacks. When this happens, your merchant account provider may close your account. Especially with Paypal and Stripe. In our opinion, it’s not worth risking chargebacks and losing merchant accounts.
Refund every order the second the customer tells you they want to cancel their order.
Be honest with your customers and let them know that you are not in control, that you appreciate their feedback, and that you are doing everything you can to resolve these concerns. This way, you won’t risk a high number of chargebacks, cancellation of your merchant account, or being blacklisted when you try to open new merchant accounts with different banks.
Customer Service Options for Shippers in China
If you have been advertising to your customers and can no longer fulfill those orders because Chinese factories are closed, you need to let your customers know.
Be honest (recommended)
The best thing you can do in this situation is, again, to be honest with your customers. Make sure they understand that the factory in China is closed and that you hope it will open on a certain date, but you can’t guarantee it. Explain to them that the product they purchased may ship in a few weeks or months, but we can’t be sure.
Give them the option to request a refund. Unfortunately, most customers will probably accept this offer.
This will obviously take away from your profits and the potential return on investment (ROI) of your advertising spend. However, you may be able to retain customers who will shop with you in the future because you are upfront with them instead of expecting them to accept a long shipping time.
hedge your bets
Another response we’ve seen (which seems a little less honest) gives customers a specific shipping time with the caveat, “since you know there is a delay in shipments due to the Coronavirus, products will start shipping again in X amount of time.” The problem with this response is that no one really knows when the Chinese factories will be able to reopen and start shipping again.
Some factories have reopened, but most have not.
So there is no way to guarantee a real time frame for shipping new products from factories in China. If you choose to use this second type of response, you risk frustrating your customers, which can lead to a high refund rate.
How to effectively restructure your stores
Now is the time to think outside the box. Look at what your best-selling products have been, no matter how long you’ve been in business. See what items are most likely to sell or are already out of stock and start looking for alternatives. You may already have alternatives on your website, or you may need to start looking for new suppliers to offer your customers alternatives now.
Let’s say you sell a standing desk that is one of your best-selling products.
If you see a drop in inventory, start looking for any other brand that offers the most comparable product in terms of style and quality. Also, look for alternative products that have a large inventory in their domestic warehouses. Once your product’s stock is at zero, edit your store’s product page.
Make these sales pages truly unique to grab your customers’ attention and offer them a valuable alternative.
If you put time and effort into these pages by adding questions and answers, reviews, videos, and photos, these products could become your new bestsellers. When you make these changes, be sure to update all of your site links on your homepage, Shopify storefront, and social media accounts.
Keep track of your changes
Keep in mind that this won’t last forever. No one can say how long the effects of the coronavirus outbreak will last for our economy, but they will end. Your suppliers will start to be supplied and ready to ship again. So when you make these changes to your website and social accounts, be sure to keep track of what you are changing! You know you’ll eventually need to change content and product listings to get back to your original bestsellers, so make it easy to track your changes. We recommend using a simple Google Doc or Google Sheet and writing down every change you make, along with the date.
Stay calm and confident
Take a deep breath and don’t panic. Things have already changed and will likely continue to change, so we wanted to share this information with you. Everything we recommend you do in this blog post is actions that we at https://biganalytiks.com are taking ourselves.
By making the changes described above, you can better prepare your dropshipping store to adapt to the effects of the coronavirus outbreak and keep your customers, and potential customers, happy.