Covid-19 And Its Effect On Your Dropshipping Business

May 08, 2020

A reputable dropshipping merchant account and strategic decisions can mitigate loss during pandemic. 

Covid-19 continues to spread worldwide, and countries continue to enforce strict regulations to limit movement and therefore exposure. Some of these precautions have included countries going into total lockdown, travel restrictions, and the closure of countless factories. 

One particular type of business that is feeling the impact is the Dropshipping business. Dropshipping is a type of business model that enables entrepreneurs to start an online business by selling directly to their customers, without having any inventory. 

During the coronavirus outbreak, this otherwise popular business model has experienced a massive disturbance. Because dropshipping is entirely dependent on the efficient production and transportation of goods, and almost a third of worldwide production happens in China, there is reason to worry.

How COVID-19 Impacts Dropshipping Businesses

With rampant and abrupt closures of factories worldwide, manufacturers, suppliers, and logistics will also be impacted. 

In China, factory shutdowns took place as early as January and February of this year.  Even if Chinese factories begin to slowly open up their doors, logistic companies have greatly diminished or out right stopped all operations. This has led to cargo terminals closing due to low volume.

All air transportation has been suspended. Shipping services have also experienced cancellation. A reduction in passenger services also means impacting those that carry cargo. 

For you, the dropshipper, all the aforementioned events mean that your products will experience longer than normal delays to reach your customers. 

What Can A Dropshipping Business Do To Mitigate Loss?

Mike Michelini, a Director of Business Development at Alpha Rock Capital and Brian Miller, founder of Easy China Warehouse, both recognize the need to cut marketing costs and increase revenue. Cutting marketing costs can include stopping ad campaigns in order to save money and cut down on the number of orders.

Miller also recommends increasing the prices, “to slow the sales velocity, keep items in stock, and improve their margin while (you) are waiting on the new stock from factories.”

Another good crisis-prevention strategy given by Miller was to keep a small quantity of your own stock to bring in revenue during these difficult times.

Here are more quick tips to keep you afloat and mitigate further loss:

  • Communicate with your customers – Customers like to be kept in the loop, even though the information is bad news. Let them know that their order will be experiencing a longer than usual delay, but will be kept informed of any updates as you receive them.
  • Request for referrals to other suppliers – It’s never a good idea to rely on one supplier for your dropshipping business. Reach out to your current supplier and get referrals to other suppliers with comparable products.
  • Get Educated – There is a plethora of information about the dropshipping business and all that is entailed to running one. Learn more about dropshipping, paid advertising, store design, branding, and beef up your social media channels. When this blows over, you will be in a stronger position to draw in new customers. 

There’s A Lot You Can Do

Despite the overwhelming restriction on your life, your business, etc., you still have the freedom to stay informed and educate yourself on how to best position your dropshipping business moving forward. Ensure you have a reputable dropshipping merchant account and stay in contact with your merchant account provider to explore more options.

Let us help you get a high risk merchant account today!

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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