10 Key Success Strategies and Pitfalls to Avoid

Clients I have worked with have had both successes and failures. The harsh reality is that less than 20% of them have been able to fully sustain themselves solely through dropshipping. Therefore, I advise caution before entering this industry, or at least consider doing it as a side business. Here are my suggestions, and feel free to ask me if anything is unclear:

1. It is best to choose a field, industry, or product that you are familiar with. Avoid unfamiliar industries and products with long sales and negotiation cycles. Also, avoid companies with an overly broad product range, as this can lead to confusion in marketing and customer development, ultimately making it difficult to excel in any single product.

2. Ideally, choose products that are sourced from factories or suppliers in your city or nearby areas. This makes communication with manufacturers, product inspection, shipping, and client visits more convenient.

3. The product should have international appeal rather than being specific to the domestic market. Some products sell well in China but are not suitable for international markets, such as tobacco, alcohol, tea, and local specialties. Additionally, some trendy domestic products may seem globally applicable but might not be popular among foreign buyers. For example, eco-wood decorative panels are widely used for interior decoration in China, but Western clients generally prefer simpler designs, making them difficult to market internationally.

4. Consider trade restrictions. Some products have export limitations in China, especially non-renewable resources. Many countries impose import restrictions on products related to child safety, public health, and security. Some nations also implement anti-dumping measures, subsidies, or safeguard duties to protect local industries. It’s best to avoid these types of products.

5. If your trading company is in its early stages, avoid products with complex specifications and customization requirements unless you are highly knowledgeable about them. Otherwise, both client and factory communication will be time-consuming, and prolonged negotiations without successful orders will put financial pressure on a startup.

6. Avoid overly niche products. At the startup stage, you likely have limited customer resources. Selling niche products means a longer period for customer acquisition and market penetration. While niche markets tend to have higher customer loyalty, the initial challenge of finding clients can be daunting and mentally exhausting.

7. Some products may seem niche in daily life but have widespread industrial or specialized applications. Examples include pipelines, petroleum-related products, electronic components, and scientific instruments. These industrial products can be excellent choices due to their broad usage.

8. Don’t blindly follow trends. Just because a product is doing well for others doesn’t mean you will succeed with it. Their success may be due to long-term accumulation or hitting a market boom at the right time. Jumping in without prior experience, customer base, or market timing could lead to significant losses. For example, during the 2019 pandemic, masks were highly profitable initially, attracting many new manufacturers. However, late entrants who invested heavily in machinery and materials ended up facing poor selling prices and heavy financial losses.

9. Consider the product’s repurchase rate. For traditional foreign trade businesses, high repurchase rates help accumulate long-term clients. Low-value, low-margin products with low repurchase rates require constant new customer acquisition, leading to persistent pressure year after year, which is unsustainable for long-term growth.

10. Bulk trade products often require substantial capital investment, such as steel, resources, grain, and vegetables. Some products even require stockpiling, increasing financial pressure. For a startup company, investing heavily in such products can lead to serious cash flow challenges.