Dropshipping is a kind of business model that lets you away from the inventory stress, which is becoming more and more popular in the field of e-commerce. In the meantime, many new businessmen will have such questions: is dropshipping a scam? What kind of scams I will encounter in dropshipping? etc.
In today’s post, you will find answers to the above questions. Besides, I will share some practical tips with you to avoid these scams.
1. Is dropshipping a scam?
Definitely, it is not a scam. It is the same as the other business models essentially. The only difference is that dropshippers needn’t stock a lot of inventory. They just get orders from customers and then purchase from suppliers. Suppliers will ship the goods to end customers directly. Dropshippers are just like middlemen.
Actually, many sellers on some e-commerce platforms like Amazon are also operating a dropshipping business. Hence, dropshipping is a legal and real business model.
2. Why people think dropshipping a scam?(2 reasons)
I receive many complaints about dropshipping from many of my friends who operate dropshipping business. Some of them think dropshipping is a scam, and there are 2 main reasons as follows,
As dropshippers, you can’t touch the goods directly or control the quality of products. So you may receive many bad comments from customers, and they claim that the products they receive have bad quality. Gradually, your business sales are impacted greatly by such bad comments. In the end, you may fail in the business.
Because of this, you will think products for dropshipping are usually not with good quality. Therefore, you will regard dropshipping as a scam.
Over-hype of high profit margin
There are many advertisements telling you that you can make a big profit through dropshipping business, for example, you can buy a stainless steel cup at $4 from your supplier, then you can sell it on your dropshipping store at $15. You can make a $11profit. But after you sign up, you will find that other store sells it at $6, then you should adjust your selling price to $6 or $5 to get sales volume. But you can’t make a profit as you expected. Therefore, you may think dropshipping is a scam.
In essence, dropshipping is not a business model with high profit. The advertisement is attracting you to do the business by exaggerating the profit margin. But it doesn’t mean that dropshipping is not a kind of real business.
3. Four dropshipping scams, how to avoid them?
Although the dropshipping business is a kind of real business model, there are also some fraudulent things in the process of doing this business.
Scam 1: Good quality products with low price
As a dropshipper, you may encounter such a problem that the supplier provide the product at a low price, and you cooperate with them directly to get a higher profit margin. But you receive bad feedback or refund application from your customers in the end, the customers state that the product they receive not the same as the description. And such feedback is bad for your business. So how to avoid such problems, there are 4 solutions:
① Attend trade show
It will take suppliers thousands of dollars to rent a booth at trade shows, which can indicate that the supplier is legitimate. Hence, you can attend the trade shows about the products you have interests. For example, if you want to dropship toys, you can attend the toy trade shows. You can have a face-to-face talk with the suppliers and touch the products directly, which is beneficial to your business later.
② Browsing the supplier’s website
If you can’t talk to suppliers face to face, you can browse the supplier’s website to check if there is some necessary information, like contact information, physical address, etc.
③ Sample test
For those products with slight differences, if the supplier sets the same image as the product photo. Or the photo image is very vague. You can ask the supplier to send a sample to you for tests in advance, which is beneficial to your product quality control.
④ Choose suppliers with many good comments
Before you decide to cooperate with a supplier, you can browse the supplier’s store and look through the comments. Through the evaluation, then you decide to place an order or not. Usually, if good comments account for a large proportion of all comments of the store, the supplier will be reliable.
Scam 2: Phishing emails
You may get an email from the so-called platform’s staff like shopify, and the sender states in the email that they will update your account and need you to click the link. If you click the link, there will be many troubles for you. For example, they will reset your account information or change the disbursement account. Hence, it will bring great harm to your business.
You shouldn’t click the link directly, but you can contact the platform staff you are cooperating with to consult the question.
Scam 3: Agencies that guarantee you good results in advance
There are many agencies telling you that they can help you increase organic traffic by 10% or even higher in just one month directly without doing any analysis of your store’s relevant data. Or if you pay them $1000 a month, they can help you achieve a high profit.
You shouldn’t trust any agencies that give you such promises. Only after they calculate your store’s data and give you a detailed analysis report, then give you some practical tips or advice about how to optimize your store, you can choose to trust them.
Scam 4: Fraudulent orders
Among all orders you receive, there must be some real orders and some fraudulent orders, which is common in e-commerce business. As a new e-commerce businessman, you must be very happy about receiving an order, but what you need to do is to identify whether it is a real order first. There are 2 tips for dealing with such a scam:
① Using Shopify or some third-party apps
Shopify has built in risk prevention tools, which can tell you the risk grade of the order, low risk, medium risk or high risk. There are some third-party apps with the same function, like Clear Sale. You will be informed if the order is probably a fraudulent order. Then you should be careful about the order and do thorough research about the customer before you decide to fulfill the order.
② Be careful about some red flags of the fraud
- The country in which the order is placed and shipped to is not the same. For example, the order is placed in America but needs to be shipped to the UK.
- The same customer has used different credit cards to place multiple orders.
You can ask the customers to provide a photo of the last 4 digits of their card numbers by email to conduct the confirmation. If the customer is indeed the owner of the credit card, they can provide the information you need quickly. On the contrary, if the customer can’t provide the information or close the communication with you, you had better give a full refund to the customer. That is most likely a fraud.
Now it’s your turn
It is common to encounter various scams in the process of dropshipping business, but dropshipping itself is not a scam. It is a kind of real and legal business model.
I hope you can benefit from my post. If you have any questions about the dropshipping business, want to find reliable dropshipping suppliers, or source products from China, feel free to contact us. Or if you have ever encountered some dropshipping scams, you can share your precious experience and advice by leaving comments.