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Dropshipping Amid Global Shipping Crisis in 2022

The COVID-19 pandemic has ushered in a new normal. This new normal involves a significant change in consumer behavior. While these shifts in behavior are beneficial to e-commerce stores of all scales, the increase in demand has disrupted the logistics and supply chain industry. This article explores the global shipping crisis as the world maneuvers 2022.

March 1, 2022
5
mins read
Dropshipping Amid Global Shipping Crisis in 2022

The ongoing and rapidly increasing global shipping crises have created widespread turmoil across the global economy. Many supply chains have completely halted, and others are disrupted or slowly moving due to the global disturbances amid COVID-19.

The complications of the global supply chain remain, creating a challenging landscape for new and old dropshipping and other retail businesses. Many dropshipping sellers are trying to expedite shipping with additional payments, but it's still challenging to completely surpass these disruptions.

On the other hand, dropshipping business models are becoming popular. In 2019, the dropshipping market was valued at just USD 162 billion, but we're expecting it to grow to USD 591 billion by 2027. With substantial growth in e-commerce and online business, it's imperative to mitigate the global shipping crisis for dropshipping businesses.

What are the Challenges We're Facing?

What exactly is the challenge that dropshipping businesses face during the global shipping crisis? Are we experiencing a delay in the shipment? Or are we dealing with skyrocketing express shipping costs? This section will briefly discuss the challenges that might be potentially experienced during the global shipping crisis in 2022.

Shipping

The pandemic has disrupted the global supply chain in a manner we have almost never experienced before. From stringent government rules to outbreaks, the supply chain was barely moving at one point. COVID-19 was just one of the factors contributing to it. There were hurricanes, floods, weather disturbances, labor shortages, and container shortages.

However, even after the compounding impact of these issues, the dropshipping business model and global ecommerce market expanded.

As a result of the challenges we have experienced and are still experiencing, shipment delays, inventory issues, and costs increase. Let alone dropshipping businesses, even e-commerce retailers are finding it hard to maintain an inventory.

Delivery

Since there's an ongoing pattern of delayed shipping, we are experiencing delayed deliveries in the supply chain. Not only is there a consistent struggle to maintain an inventory, but also a lingering challenge of offering products at valuable and cheaper rates. Since the supply chains are delayed, the cost of delivering a product to the customer also increases, creating turbulence in the dropshipping industry.

Returns

Apart from shipping crises and delivery delays, dropshipping businesses need to handle returns of orders. With the increasing popularity of e-commerce, businesses are accepting more orders. But, more orders also increase returns. So, how exactly do you return the product with a slow reverse supply chain? How can we free our blocked cash flow?

How Have Customer Expectations Evolved?

After the onset of the pandemic (in 2020), digital sales crossed USD 4.2 trillion globally. During this time, more than two billion individuals purchased products online. Customer expectations have tremendously increased. We expect swift, hassle-free, and convenient deliveries of products. Customers don't understand supply chain disruptions. When they order a product, the method that goes behind sourcing and shipping this product is not really their concern.

So, what do they expect?

They expect a seamless delivery experience.

To add to this, delivery expectations of users have never been higher. From fast deliveries to streamlined tracking ability, they want orders to arrive at their doorstep in a day or two. According to this study, customers expect delivery of products the same day, next day, or in two days maximum. If there's a supply disruption and the shipping is delayed, most customers may never return to your dropshipping business.

Similar to how customer expectations of delivery and shipping have increased, return expectations are very different from a customer's perspective. When customers don't like the product, they raise a return request, which they like to be free, quick, and easy. As a dropshipping business, you need to place this request with your seller, arrange a pickup, and refund the amount. All of this requires some time.

How to Keep Products Moving During Pandemic Disruptions?

While we understand the challenges of the global shipping crisis, it's imperative to overcome these disruptions. We have outlined some innovative methods to maintain a continuous flow in the global supply chain. Explore how you can mitigate the global shipping crisis.

International Post Parcel

Almost every dropshipping business considers marketing lightweight, easy-to-deliver products in their store. This is why it's easier to express ship smaller and easy-to-care products from any country to the customer.

If you're facing issues in getting your parcels delivered on time, then you can use International Post Parcel. For example, China Post is one company that helps a multitude of dropshippers. The provider covers so many regions and countries that it is simpler for them to get customs clearance.

An important consideration, in this case, is that International Post Parcel companies have lower shipping and delivery costs, which is the reason dropshipping businesses find it easy to use the service.

However, in this case, it's necessary to consider every side of the picture. When you're getting international shipping at a lower cost, you need to patiently wait for a longer duration. The time taken to deliver or move the parcel from one country to another is usually 30-60 days.

Another imperative factor is lost orders. A lot of times, the parcel gets lost in international shipping because it is a huge network with many loose ends. There's also the challenge of tracking your order in real-time.

If you can set clear expectations for your customer, International Post Parcel is a feasible and affordable option. There are some downsides to this shipment method, but it is beneficial from the perspective of a dropshipping business.

DHL or FedEx?

Another valuable and reliable option is to use International Express companies like DHL and FedEx. These companies have created a large logistics chain across the world for express shipping from one location to another. Undoubtedly, these are high-end logistics services that you can trust.

However, with the feasibility of international express shipping, you need to pay higher freight rates. This is one of the reasons many dropshipping businesses don't utilize International Express shipping options.

If you manage the freight rates in your budget, it may be possible to achieve the following with FedEx and DHL.

  • You can get backups if there's a delay.
  • Parcel security is optimum, which means fewer lost parcels.
  • One of the fastest shipping options available.
  • Good customer experience with quick deliveries and returns.

Special Line Shipping

Special line shipping is another great supply chain option for dropshipping businesses. This shipping option works differently from other cross-border logistics.

The shipment is sent to the destination country from the air charter. Once the shipment is in the destination country, regional or local delivery service is used to deliver the product to the customer.

There are multiple benefits of using this shipment and logistics options:

  • There's a decrease in the parcel loss rate. This is because you can track the supply chain locally and know its exact movement within the country.
  • The shipment time is also reduced, as once in the country, the packet can move quickly from one location to another.

However, you need to keep in mind that a special line is designed for large quantities, which leads to lower costs. Depending on the volume of your parcel, the shipping line for the destination country is opened, and the shipment is quickly delivered to the customer at lower costs.

One of the options here for the dropshipping businesses is to create a small inventory with a special line and locally send parcels to the customer quickly with an added shipping cost.

Warehousing

Many dropshipping businesses like creating an inventory for the products that are selling more. You can order these products in bulk through any of the above shipping methods. When the customer orders one of these products, you can quickly send them the parcel from the same country. This largely shortens your supply chains, reduces delivery time, and improves customer experience.

An important consideration, in this case, is whether you wish to create a warehouse in the region for the same or not. If you receive a large request for products from one or two regions, you can use a local warehouse for the same. There are many warehousing solutions that help you maintain an inventory in the city only. This way, one, two, or same-day delivery becomes possible for dropshipping businesses.

It's hard to predict when the shipping crisis will end. However, with the third wave of COVID already in action, we should expect some more disruptions in the coming weeks. We may probably experience some relief from the situation by the next year.

However, till then, dropshipping businesses can use the above valuable methods to meet customer demands and reduce logistics complications. It's also possible to create a mix of these methods for relevant types of customers to mitigate your costs and reduce shipping delays. Since the e-commerce industry is booming, it only seems logical to find a relevant solution to increasing customer demands.

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