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The CEO Views > Blog > Industry > E-commerce > Managing Risk in the Dropship Game
E-commerce

Managing Risk in the Dropship Game

The CEO Views
Last updated: 2025/07/08 at 12:30 PM
The CEO Views
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Managing Risk in the Dropship Game

Dropshipping is a highly competitive business model at the moment, and it is very easy to fail if you don’t manage all the risks in this type of business. Here are a few of the best ways to get around the plethora of risks involved in dropshipping. 

Choose Reliable Suppliers

Suppliers can make or break a business, and therefore, it is important to build close relationships with trustworthy and efficient suppliers. This can take some time, and will require trial and error, but it is a crucial step to get right. 

This is right at the top of importance, along with enterprise risk management software, a solid marketing strategy, and of course, a great product. 

Diversify Suppliers

Another step to take is to diversify your suppliers. One major risk you could face is a product shortage, and if you don’t have a backup, you will lose a lot of business, and potentially even have to close your business completely if the shortage goes on for too long. 

Having a backup supplier allows you to quickly pivot and get the stock flow rolling again. While there may be a slight delay, it will almost never be as long as the delay caused by waiting for one supplier to restock again. 

Shipping Times

Another risk that needs to be managed is assessing your shipping times. If you have ever done online shopping before, seeing a product that promises to get to you in three days, but you’re still waiting for it two weeks later, is more than enough for you to never shop with the business again. 

To manage this, understand the shipping process and every step the product has to take to get from your supplier to your customer. When you do this, you are able to manage customer expectations, and delays will become far less frequent. 

Legal Troubles

Dropshipping can open you up to some legal troubles if you aren’t careful. Considering the product is often not something you own, you run the risk of selling copyrighted products, which could land you in a lot of legal trouble. 

Instead, fully research the product and be sure it is not something that requires a license to sell. Additionally, check the import and export laws associated with the product to ensure you aren’t selling something that needs additional clearance or is outright illegal in certain countries. 

Returns & Refunds

Never underestimate the power of having an easy and efficient returns and refund system. Customers never want to feel like they have been tricked, and this often happens if a product is easy to buy, but nearly impossible to return. 

Instead, have a clear and fair return and refund policy. Amazon, for instance, allows customers to return products with a couple of clicks and no questions asked. Never forget that customers don’t always need you to go above and beyond, they just want their money back, and a process that makes that as easy as possible. 

Managing Risk in the Dropship Game 2

Traffic Sources

One mistake many dropshippers make is finding success with one traffic source, but then not diversifying. The risk here is that this source can dry up or become oversaturated, and you have a target audience that has either bought your product or is no longer interested. 

To overcome this, spread your marketing around, such as running Facebook ads, having an Instagram profile, an email marketing list for repeat customers, etc. This means your business is always in front of new eyes, and your target audience is constantly growing. 

Market Trends

Never become complacent when it comes to the popularity of your product. In this day and age, trends are changing constantly, meaning you can very easily go from selling a popular product to selling something that nobody wants anymore in a matter of days. 

Instead, always keep up to date with the current market trends and be prepared to pivot if and when necessary. This also applies to adding products to your line that work in conjunction with a product you already have, such as selling body scrubbers if you already sell body wash. 

Platform Risks

There is always the risk that your online store or website can crash, be banned, etc. This is especially true if you use a third-party platform such as Shopify, which can suspend or ban your store if you break their terms and conditions, whether you do it knowingly or not. 

Therefore, it is best to diversify your platforms and keep your business practices clean. Stay up to date with the platform policies and any changes it makes. Doing something that can harm your platform hurts nobody but you; therefore, stick to best practices no matter what.

Platform Risks

Brand Image

Finally, always ensure your brand image stays intact. A risk that you could face is one or two bad reviews, a stretch of late deliveries, or replacing high-quality products with cheaper alternatives, all of which could ruin your brand image. 

Your brand image is vital when it comes to retaining customers, bringing in new ones, and becoming the go-to choice when someone wants the product you sell. 

The CEO Views July 8, 2025
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