The United States has increased the shipping rates for packages arriving from other countries, including China. The good news is that the changes are likely to be less severe than initially thought when the US government announced it was leaving the Universal Postal Union (UPU).
BUT, that doesn’t mean that dropshipping as a business model is dead.
Far from it. In fact, these changes might open up more opportunities for dropshippers in the United States. But at a special meeting in September, the UPU voted to allow member countries to effectively set their own foreign postal rates. This move has been viewed as a compromise to keep the US happy and keep them in the UPU.
So you can expect that shipping packages from China to the US is going to increase. But as we know, Dropshipping will continue to be a viable business model, despite the likely increased cost of shipping from China.
Even if you’re using Chinese suppliers, there are things you can do to prepare your dropshipping business for the changes.
Here are 5 strategies you can use to prepare your dropshipping business for higher shipping costs from China to the US.
1. Use Chinese suppliers that have US warehouses
Here’s a little known fact. You don’t have to ship products from China to work with Chinese suppliers. Many Chinese dropshipping suppliers and manufacturers have warehouses in the US now. Companies like AliExpress are stocking up warehouses in the US with bulk products and setting up a fulfillment service to compete with Amazon FBA. This was done so that Chinese suppliers could offer US customers faster shipping. So it’s definitely possible to dropship products within the US using Chinese suppliers. However, not all Chinese suppliers have inventory and order fulfillment in the US, so you’ll have to do some digging. I expect this will become more common, especially if shipping from China becomes more expensive. If you do decide to dropship from a US warehouse, don’t expect prices to be quite as cheap as you’re used to.
You’ll be absorbing the cost of shipping products to the US and storing them in warehouses. But prices will still be competitive, and you’ll have the benefit of offering your customers faster shipping. You can start by simply searching “USA warehouse” or “US warehouse” on AliExpress and making contact with suppliers in your niche. Or when you search for a product you can choose to filter products by where they are shipped from.
2. Renegotiate deals with Chinese suppliers
If cheap shipping from China really is over, but you’re still set on using Chinese suppliers, you should try and negotiate a better deal for yourself.
Chinese suppliers will be keen to hold on to valuable customers and may be open to dropping prices to account for higher shipping costs. Here are some tips for negotiation with suppliers. Basically, you want to try and get the per unit price down so the increased shipping costs don’t eat into your profits too much. This might be tough to pull off for low-cost items, but you may be able to cover shipping costs entirely by negotiating better rates for high-ticket products.
Being in business is all about being adaptable and responding to change.
Dropshipping is here to stay. Visit Chinadivision, find out more.