As you may see in our title, we’re not totally sold on the dropshipping business model. Firstly, let’s quickly outline dropshipping in case you’re not familiar with it.
Dropshipping is a retail business method that allows the seller to not physically stock the products it sells. Instead, the seller purchases inventory as needed from a third party and then purchases as per request from their customer. This can be automated on their website with the additions of software and plug-ins or done manually.
The biggest difference between dropshipping and the standard retail model is that the seller simply acts as the middleman, they never own or even see the stock.
Now before we go through all the questionable aspects of dropshipping, let’s look at why business owners or entrepreneurs may be drawn to it…
You simply add a markup to any product you find and add it to the inventory on your website, if you’re selling on a mass scale for trending products then you can earn a lot of money.
No photoshoots necessary
You don’t have to have an aesthetic theme to your images, no organising photoshoots or styling up your pieces. You will only be able to use supplier images which will save a lot of time.
You’re not buying hundreds or thousands of units of items you’re not guaranteed to sell, you work purchase to purchase, essentially ordering from your supplier one sale at a time. No huge cash injection is needed to set things up.
Bye bye responsibility
Dropshipping ultimately takes away the responsibility from the seller to the consumer or the original supplier, any well-rehearsed drop shipper will have strict and tight T’s and C’s, so the onus is never attached to them.
Now let’s look at all the negative aspects to dropshipping…
When something goes wrong, it goes very wrong. If a customer raises a complaint with you as the seller or they require you to locate an order, the process will naturally be lengthy as you are the middleman, this often leads to incorrect, sometimes misleading information and annoyed consumers.
Low repeat customer rate
Customers receive their orders, in non-branded packaging with the original brand printed on their documents. You can bet that once their order arrives, they won’t come to you to purchase more items.
Once they’ve realised what’s happened, they will either go directly to the company you drop-shipped from (providing they are not wholesale only) or they will seek the product or similar products elsewhere.
No personal touch means no loyalty
There’s very little you can do with your branding. Your products are not sold in branded packaging or re-labelled, none of your images will have their own unique style in line with your theme and you’re unlikely to get many customer images tagging you with their purchase.
People are very unlikely to buy into you as a brand which will massively affect their reviewing and recommending you. Drop-shippers can have their own unique website but many are just Amazon, eBay and other online marketplaces.
If the dropshipping supplier has to dropshipped from a wholesaler that the customer may never have had access to then you could say they have served a purpose, however many dropshippers use Ali Express, Ali Baba, Wish and DH Gate, which are Chinese retail platforms with masses of Chinese manufacturers, that everyone has access to.
This means droppshippers are adding their own markups to products you could have ordered yourself for much cheaper, sneaky.
Too much transparency
If the supplier you drop-shipped from is not well rehearsed in dropshipping, they could send the original invoice to the customer with their order (this happens ALOT) so, the customer will be able to see the actual price of the item and how much mark-up you have added. This can leave them feeling cheated, likely to complain and leave you a bad review, they may even raise an indemnity claim with their bank for a refund.
Dropshipping return rates are HIGH
As the drop-shipper, you have no contact with the product so you can’t assess the quality, see if it’s damaged, check if the colour or size is the same as described by the supplier etc.
This means there are lots of returns. If you have a poor or zero returns policy you will find a lot of people will raise indemnity claims with their bank, if you have X amount of these flagged up against your business you will be investigated and likely shut down.
Poor T’s & C’s can land you in trouble
If you’re going to do this, you’ll need to cover your behind. People will complain, and try to claim against you if they feel they have been deceived. Your T’s & C’s need to be very transparent, airtight and written by a paid professional.
Being the solutions-focused digital agency that we are, we couldn’t wrap up this blog without offering what we feel is the best way to gain the benefits of drop shipping whilst avoiding all the major problems it causes…
Many people dropship if they have nowhere to house their stock, especially if they are selling large bulky items. The alternative is to drop ship (from a wholesaler only) for the first part of the customer’s journey but instead of having the product delivered directly to the customer have it delivered to you instead. This way you can personally be chasing items that have not arrived on time, check and test the product, picture them in your unique branded setting matching the aesthetics of your business and you can include your own packaging and branded documents in the order to your customer. You will need to set your customers’ expectations with delivery times to accommodate the extra journey the product will take.
If you need any help with your product-based business, get in touch and we’ll be happy to lend our help!