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 description below.