Key Lessons Dropshippers Can Learn from 5 Big Retail Closures

Big retail closures make big news. As of March this year, over 4, 810 retail closures had been reported in 2019 alone. Hidden in these closures are lessons that dropshippers can learn from and apply in their dropshipping business to avoid a similar fate.

Many dropshippers fail a few months after starting their business. Of course, if multi-billion dollar brands can fail, small startups can also fail.

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There are several reasons why dropshippers fail, including:

  • poor knowledge of how dropshipping works
  • poor marketing strategy
  • selling not-in-demand products
  • using bad suppliers
  • selling damaged products
  • delayed shipping
  • ignoring customer complaints
  • poor customer support
  • not building a list
  • overpricing, etc

It is important to prepare properly before starting dropshipping business to prevent failure. Success can be achieved by learning more about dropshipping and learning from the mistakes of other retailers, which we will cover in this article, but first

What is Business Failure?

A failed business is simply one that has repeatedly failed to break even or make profit over a period of time; one that has closed down or shut down.

Also read: Important factors to consider and keep in mind about new business ventures

There are several reasons why a business may be unable to turn a profit and eventually fail.

Five Causes of Many Business Failures

According to the Small Business Association, 30% of new businesses fail within the first two years of their founding while 50% during their first five years. 66% of business fail within their first ten years.

Causes of business failure include

  1. Poor management
  2. Lack of planning
  3. Leadership failure
  4. Ignoring customer needs
  5. Lack of capital

In recent times a lot of brick and mortar retailers have endured slow economic activity, this is due in part to increased competition from online retailers.

The result: more store closures (partial and total), downsizing, rightsizing, bankruptcy, mergers, acquisitions, etc.

Dropshippers can learn a thing or two from these retailers that have had to partially or totally close shop.

5 Recent Big Retail Closures and Lessons for Dropshippers

1. Abercrombie & Fitch

Abercrombie & Fitch closed down 180 of its stores in 2015 and 54 more the following year. They announced the closure of 60 stores in 2017 due to a 9% drop in sales in 2016.

40 more stores are expected to close down in 2019. According to CNBC, 475 Abercombie and Fitch stores have closed down in the last 8 years.

In response, AnF delivered 67 new stores in 2018 including new store prototypes and remodeling. In 2019, this number is expected to rise to 85, including 40 new locations.


As a dropshipper, you need to:

  • keep track of sales activities
  • monitor sales performance across channels
  • minimize or cut your losses
  • re-strategize to reflect new trends
  • treat every single customer with utmost respect and courtesy

2. Sears

Sears has suffered a serious decline in the last couple of years. This has resulted in the closure of hundreds of stores and retail outlets. Last year Sears announced the closure of 43 more stores across the US, with liquidation sales in 33 Sears stores and 13 Kmart locations.

In October 2018, the struggling company filed for bankruptcy.

Currently, ESL Investments owned by Chairman and former CEO of Sears, Eddie Lampert is offering $4.5b to buy 500 Sears stores.


As a dropshipper,

  • multiple stores mean multiple stress, risks
  • monitoring performance across multiple stores requires extra competent hands
  • multiple stores can yield multiple income, so also running costs
  • close down stores that are taking your time and money
  • focus more on profitable stores
  • Use specialised product research tools, such as SaleSource to find winning product to sell in your store and therefore ensure the profitability of your business venture

3. JCPenney

JCPenney currently has around 800 surviving stores, most of which will shut down on July 5, 2019, and continue into 2020, as the struggling retailer tries to cut its many losses by closing even more stores.

As it approaches its 118th anniversary, analysts, investors and customers wonder how much longer the failing brand can hold out. Is this a case of old age versus new (age) technology?


Dropshippers must

  • embrace changing trends and new technologies
  • keep abreast of changing consumer behavior
  • focus on the new generation of consumers and how they prefer to be served
  • understudy big retail closures and learn the underlying reasons for failure
  • not be afraid to cut off underperforming stores or products no matter how attached they may be to them, or be dragged into debts.

4. Payless ShoeSource

At its prime, Payless was one of the most successful retail shoe outfits in the world with more than 2,100 stores in the US and Puerto Rico; all of which are being closed down.

In April 2017, with over 4, 400 stores in 30 countries, Payless filed for Chapter 11 bankruptcy protection, closing hundreds of stores.

Its other franchise operations and Latin American business remain unaffected, but its US footprint will be gone when it’s all done.


As dropshippers:

  • know that growth is good but must be managed at scale or you’ll fail
  • don’t rush growth, and learn to grow apace with your business
  • when you grow big don’t become too big to listen
  • control your financials and manage debt
  • know when to close a failing business and cut your losses

5. David’s Bridal

The drop in the marriage rate, delay by millennials to marry, baby mama/daddy culture, etc, all contributed to drop in sales of bridal apparel company, David’s Bridal.

Times would always change, and although your product may appeal to people today, it may not hold the same appeal tomorrow.


As a dropshipper:

  • understand that change is constant
  • know that some changes will be way beyond your control
  • know when to change your market or marketing approach
  • learn to focus on markets that are sustainable in the long run
  • keep your ears to the ground so you can pick up the sound of change before it takes you by surprise


Dropshipping is no get-rich-quick-scheme. Although there are many success stories and many people making a killing out of it, it is still a business, and like every other business, requires hard work, patience, dedication, and consistency.

Above all keep learning and improving.

| About the Guest Author:

Guest Author
Amos Onwukwe is an AWAI trained Business and Ecommerce Copywriter. He has featured in Huffington Post, Dumb Little Man, Self Growth, E-commerce Nation, eCommerce Insights, Understanding E-commerce, Small Biz Club, Successful Startup 101, Small Business Bonfire, among others.

Twitter: @amos_onwukwe

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