Hey, guys.
It's me, Sarah, the video editor here at Wholesale Ted.
And today, we're gonna be talking about something that no one likes, and that is losing money.
And I've got something to admit.
In the past, I've given some lazy advice when it comes to one of these things and there
is a good chance that it's cost some of our subscribers here at Wholesale Ted some money.
And for that, I am sorry.
So let's actually have an honest discussion about these things and talk about ways that
you can avoid doing these things yourself.
So here are the three ways that I've noticed that dropshippers are losing money, especially
newbies.
One, through handling refunds wrong.
Two, by picking the wrong suppliers.
Three, by being careless with scarcity timers.
So I'm gonna start out by looking at the one that I've given lazy advice about in the past
and that is refunds.
So let's just go and jump straight into it.
How to not lose money to refunds.
Okay, so as I've said, in the past, I've given some advice on this issue, which if you have
followed, you have potentially lost unnecessary money.
You know, call me idealistic but I like to think that in this world, 99% of people are
good and have great intentions.
Unfortunately, for every 99 awesome people in the world, there is 1 jerk.
And you know what those jerks like to do?
They like to try to get their items for free by claiming a false refund.
It's the worst nightmare for anyone selling things online.
These sorts of people come and they buy this awesome mug from you and, of course, because
you were smart and you picked the right supplier, it came in perfect condition.
So you know what they do?
They go and they get their computer and they type out a little sob story about how the
item arrived damaged and now, they want a refund.
And sometimes, these people can even be quite nasty and they'll try to intimidate you by
threatening things like chargebacks or doing a PayPal dispute.
Because, you see, these jerks are quite smart.
They know that if they went and claimed that an item was damaged at a brick and mortar
store, then they would actually have to go into the store and give the item back in person
and it would be instantly clear that they were lying and they would be laughed and shamed
out of the store.
I'll tell you what though.
Some of these jerks are so bad that they'll still try their luck and try to falsely refund
items to brick and mortar stores.
And I'm sure if anyone here watching this video has worked in retail, that you can comment
and let us know your horror stories.
But hey, you're 1,000 miles away so they can't come in with their item and return it in person
so what can you do?
How can you protect yourself from false refunds from the 1% of people in this world who are
jerks?
Well, the answer is actually really simple.
One, only allow refunds for products that are faulty.
Two, require that customers mail the faulty products back to you and require that they
do this at their own expense.
Believe it or not, this is actually industry standard for the online retail industry.
It is not shady to require this at all.
In fact, if you go to Shopify and do their auto-generate a refund policy, they will include
this by default.
You will be responsible for paying your own shipping costs for returning your item.
Shipping costs are non-refundable.
If you receive a refund, the cost of return shipping will be deducted from your refund.
If you require customers to not only have to go to the effort of shipping the item back
to you but also having to pay the return shipping costs themselves, then the false refunders
are going to run away, especially since as part of the refund policy, you should be including
a section about how refunds will only be given once products are inspected and shown to be
faulty, just like Shopify does in their default return policy.
Now here's where I've been guilty of giving bad advice.
In the past, I've told people that I am personally inclined to just give out refunds to people
who ask for them after buying things from me online.
Why?
Well, it's for three reasons.
The first is that I am probably too trusting.
I think that most people in this world are good so I assume that they have good intentions
so when they ask for a refund, I usually assume it's for a good reason.
Secondly, it's because of the fact that I can personally afford to absorb the cost of
the refund because I am very lucky and have a lot of money coming in but I understand
that not everybody is in the same position.
For those of you getting started out there with a limited budget, you need to be careful
with your money when you're getting started.
And thirdly, I live in New Zealand which means that I am well aware that as someone that
lives internationally, that doing this as a dropshipper is a bit of a pain.
On this channel, I have recommended multiple times that people that are just getting started
in dropshipping focus upon the USA market no matter where in the world that you live.
But the downside to this is that it is entirely unreasonable and not industry standard to
require that a customer returns an item to someone in another country.
Luckily, there is a chance that you have a free workaround at your disposal and no, this
is not going to be a long-term solution but it's something that beginners can use in the
beginning to safeguard themselves.
The solution is to sign up for an account with a service like Shipito.
These are redirection services that allow international residents to have packages shipped
to their USA-based warehouse.
You can then get the items shipped on to you.
Now yes, using these redirection services are expensive if you want to get the items
shipped on to you so you probably don't want to do that.
But what you can do is that you can get the packages shipped to their warehouse, not claim
them, and then after about 28 days, the packages will expire and the Shipito warehouse will
claim the item.
So if a customer asks for a refund return address, you give them your Shipito address.
And if the customer actually bothers to return the item, then even though you can't inspect
it, you can probably assume that the item is legitimately faulty so you can then issue
them a refund.
Again, this isn't a long-term solution because this is not the intended purpose of Shipito
but it is a free hack that you can use if you're just getting started to help safeguard
yourself from false refunds in the beginning if you are not based in the USA.
And of course, in the future, once you start making more money, you can then get a more
permanent solution such as setting up a P.O.
Box and then getting the mail redirected to charity.
Of course, for you USA-based citizens out there, you've got more options because of
the fact that the items are gonna be returned to your actual address.
And if the items are in reasonable condition, you can then list them on eBay to help recoup
your costs or you can even take them to a secondhand shop and sell them there.
And I do not suggest that you use the AliExpress return options because usually the refund
policies are very similar.
You can return the items at your own cost to claim a refund.
So no, it is not worth it.
How to not lose money by picking the wrong suppliers.
I've said it before and I'll say it again.
Most dropshippers become fixated on the initial sale even though the true money is not made
there.
If you have a Facebook ad for a product and it's breaking even, then that's an awesome
position to be in.
Why?
Because now you've got the fantastic opportunity to upsell those customers to other items.
"Hey, I see that you really like these cat coffee spoons.
I think you'll also like this mug that turns your face into a cat."
Right?
And so now the customer is like, "Oh yes, I love the look of that mug.
I'll get that, too."
Awesome, except for one thing.
A lot of dropshippers don't think about the fact that because you're often working with
multiple suppliers, that if a customer comes and buys more than one item from you, that
those different items are going to come in different packages.
Now, this isn't the end of the world.
Amazon has actually done a lot of good here for us by normalizing this.
They have an option where they will send items out in different packages if it means that
they will arrive faster.
So if you warn the customer in advance and tell them that items are gonna arrive in different
packages to help expedite the shipping process, then usually, you will be absolutely fine.
But you know what is even better than having to do this?
Getting the items shipped together in a single package.
Yes, you can get away with having items shipped in different packages but it isn't the ideal.
Customers do prefer to get their items in a single package.
And the better the customer service that you provide, the greater the chance that they
will come back in the future and buy more things from you.
So how do you not lose out on these repeat buyers and sales?
Well, the answer is simple.
When you're considering whether or not to use a supplier, take a look at the different
items that they sell.
You want to sell these cat coffee spoons?
Then check to see if the supplier that you're considering is also selling other items related
to cats.
Maybe you'll discover that that specific supplier isn't but a little bit of research reveals
that there is another supplier selling them for a higher price but they are also selling
other cat-related items that you can easily upsell the customer on.
Try to cut back on the number of suppliers that you work with so that you have a greater
chance of being able to do combined shipping for your customer and make it a super priority
for items that you are selling as upsells.
Find a supplier that is selling item both the front end product and the upsell product.
How to not lose money with scarcity timers.
When you're dropshipping with Facebook ads, an important way to get people to buy items
from you then and there without price checking them against Amazon is to use scarcity.
Scarcity is saying things like, "Oh, this item is 50% but only for the next 11 orders.
Get in now."
Now yes, this is false scarcity but as I've said before, everyone does it, including large
retailers.
One effective way to continue the illusion of scarcity is to add what is called a scarcity
timer to your product page, like the one here so that the customer believes that you've
only got 11 in stock and it encourages them to buy now.
So if this is an effective way to make you sales, how on Earth can scarcity timer lose
you money?
Well, because new dropshippers all the time abuse them and use them in very careless ways.
They will go ahead and add a scarcity timer to all of their pages and so what happens
is a customer comes to their store and sees an item they like but thinks, "Oh, I'll go
look around at the other pages on the store to make sure that it's legitimate."
And then they click on a product and lo and behold, what do they see?
Another timer.
And they think, "Huh."
And so then when they go and they click on another product page and what do they see?
They see another timer and they think, "Wow, does every product page have one of these?"
And as they click on more products, they quickly discover that yes, every one does and so they
lose all their trust with you and you just lost that sale.
I see new dropshippers make this mistake a lot and I know that it will be causing them
lost money from lost sales.
So don't be stupid.
When it comes to scarcity timers, do one of two things.
One, strictly limit which product pages you have your scarcity timers on.
Two, put scarcity timers on product pages that are not normally accessible by customers.
So if you do wannna test a lot of products with scarcity timers, what you can do is you
can make a copy of each of your product pages and put the timer on there.
You can then put those product pages in a separate collection that you do not add to
your store menu.
That way you can directly link customers to product pages with scarcity timers but they
cannot see them themselves when they're just browsing around your store.
So those are the three ways that I see new sellers lose money when it comes to AliExpress
dropshipping and my tips on how to avoid making them for yourself.
If you appreciated the honest advice in this video, then I'd appreciate it if you gave
it a thumbs up and subscribe to us here at Wholesale Ted for more great videos like this.
And if you would like to start your own dropshipping business but you don't know how, then you
should be sure to download our free eBook, "How to Make $10,000 a Month Online with Dropshipping."
You'll find a link on how to download this incredible, life-changing eBook in the video
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