2020-02-27

Effects of Coronavirus on Dropshipping Business

Coronavirus, also known as COVID19, is a virus that belongs to a large family of viruses which causes severe illness that starts from a common cold and eventually leads to death. Coronavirus is a new strain that has previously never been identified in humans. The common symptoms include infection in respiratory parts such a cough, shortness of breath, difficulty in breathing, and fever. In severe cases, it can cause pneumonia, severe acute respiratory syndrome (SARS), kidney failure and even death. The virus can spread very fast by having close contact with an infected person. The standard precautions recommended to the general population are regular hand washing, covering mouth and nose with masks, avoiding contact with infected places or people, eating properly cooked meat and eggs.

Effects of Coronavirus on Your AliExpress Dropshipping Business

It is not just AliExpress but many companies around the world have been hit due to the massive outbreak of the virus that started in Wuhan. One of the leading international courier service provider “ParcelHero” states that shoppers around the world are increasingly concerned about the parcels as factories and most of the offices are under lockdown until the spread of the disease is controlled and eliminated. AliExpress has headquarters at Hangzhou, Zhejiang which is located almost 1000 KMs away from Hubei province where the outbreak took place. Perhaps this might bring some relief for the dropshippers as the infection has fewer chances of impacting the daily operations of the AliExpress website.

Impact of the virus on Dropshipping

As most businesses depend on Chinese manufactures because of the cheap labor available, that helps them trade in the competitive marketplace, has been halted by the coronavirus epidemic. The factories, offices, even some cities are under lockdown. Most of the Airline services have been suspended in mainland China and a few have reduced their services by half. It is evident that there will be a further reduction and suspension of flights as the country is combating the epidemic.

What is being affected and How as a Dropshipper you can manage it?

  • Freight is halted - As discussed above the reduction in freight and suspension of flights is disrupting the supply chain that is causing delays in shipping, reduced freight capacity, and inflation in shipping costs. Although, as a dropshipper, it is your duty to inform your customers about the delay but under these circumstances it out of your control. The delays should not be affecting for a long time. However, you still need to instill confidence in your customers and ask them to wait a little longer. The best you can do is issue a refund to them and wait for the situation to become normal.

  • Global Mail Slowdown - The Chinese leading mail service, China Post, said that it is disinfecting the postal offices, processing centers, and delivery vehicles to make sure the virus does not infect their staff or the parcels. The company also made a statement that “The virus does not survive for long on objects. It is therefore safe to receive postal items from China”. This is a piece of good news for dropshippers who are worried whether their customers can get infected on receiving parcels.

  • Courier Capacity - The capacity for carrying couriers has been compromised after the lockdown. However, services are resuming at a slow pace and should return to its normal operations in the upcoming weeks. It is in the best interest of dropshippers to avoid standard shipping and instead use the express shipping methods which have remained functional despite the outbreak.

  • Quarantined Ships - Fears of the virus were expressed when the news of infection spreading between passengers traveling on “Diamond Princess” broke out. The immediate quarantine of the ship was ordered by the authorities while people were evacuated to their appropriate countries after being scanned. As a dropshipper, you don’t need to worry about the delay in ships sailing because it only carries heavyweight and bulk cargo such as automobiles, natural gas, and other non-perishable goods.

  • Production and Manufacturing - The Chinese government took stringent measures in combating the virus and extended the Lunar New Year Holiday to 9th February in some of its cities. Business have directed their employees to work from home and this has brought the production and manufacturing in factories to a standstill. This might cause a shortage in supply which could affect your dropshipping business’s inventory. The temporary solution is to notify your customers about the unavoidable delays if stock runs out.

  • US Customs - US is not planning to hold the air and ocean freight already en route from China. This is a good sign for the dropshippers, if you have already ordered items for your customers then there won’t be any delays.

Five tips to manage your Dropshipping business during the epidemic

  1. Inform your customers that there might be upcoming delays in the shipment of their orders. You can send a newsletter to your customers and let them know about the possible issues beforehand, this will help you in retaining their trust and loyalty.

  2. Remove fear from the customer’s mind by letting them know that coronavirus does not survive for long on a surface. The postal services are using disinfectants and taking extra precautionary measures to ensure the safety of their staff and packaging.

  3. Providing regular tracking updates to your customers is crucial and you may also need to send emails to your supplier yourself to confirm if the delivery is being affected.

  4. Avoid selecting standard shipping and choose a faster shipping method until the outbreak is controlled. We recommend that you use only the express shipping method during this time.

  5. Retain your existing customers by offering discounts and use high volume and low margin approach. Do not increase the price for your products but compromise the margin with better shipping times. According to the Harvard Business Review gaining a new customer can cost 25% more than retaining an existing one. A study conducted by Bain & company found out that a 5% increase in retention rate can lead to a 25% to 95% increase in profits.

These are the five tips that you can use for managing your dropshipping business effectively during the epidemic. Applying these tips will ensure that your customers feel safe while making a purchase and protecting their trust is in your best interest for achieving more sales.