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Drop-shipping is defined as a “supply chain management technique in which the retailer does not keep goods in stock, but instead transfers customer orders and shipment details to either the manufacture or a wholesaler, who then ships the goods directly to the customer”. In recent years, the drop-shipping business has increased in popularity particularly due to the spread of the Internet. It is now easier for manufacturers or wholesalers to communicate with retailers and vice-versa.
Whilst more people consider becoming drop-shippers, many are afraid of fallen victim to fake wholesalers, and rightly so. Unfortunately, like other thriving businesses, drop-shipping is also targeted by scammers who pretend either to be genuine wholesalers. However, the good news is that with careful observation one can actually spot the pretenders.
Spot the difference!
A fake wholesaler will usually ask for money at the first opportunity. When this happens, you should immediately know that he is more likely to be a middleman or scammer because genuine wholesalers should not ask for money to promote their own business. Furthermore, many scammers use bogus Websites to lure unsuspecting drop-shippers to so-called “work from home business opportunities” with service charges that leave little or no profit margins for their victims.
There are however some benefits to be enjoyed from drop-shipping, as in affiliate marketing, if the right manufacturer or wholesaler is chosen with care. A future article will discuss some of the major benefits of becoming a drop-shipper.
Talking Point
Share your drop-shipping experiences and suggestions with our readers.
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Odurinde Finance & Business
May 17, 2010 at 7:31 am
Retailers should be very careful when doing Drop-shipping business, there is lots of scammer and middleman in the Drop-shipping business. Apart from the point above, a retailer should contact the manufacturer or the company of the product directly for Drop-shipping and if the manufacturer can not deal with the retailers directly, their can give the retailers the list of there wholesalers for the retailers to choose from. I think is a better way for the retailers to be save guide.
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Perth Mortgage Broker
May 17, 2010 at 1:18 pm
A lot of people get sucked into the world of dropshipping because it sounds so easy – the trick is to find genuine suppliers, which is WAY easier said than done.
murano glass beads
June 18, 2010 at 6:13 pm
First, consider the benefits of drop shipping:
* Drop ship setup fees are minimal.
* You pay your supplier after your customer pays you.
* Your supplier stores and manages the inventory – you do not have to purchase or manage inventory
* Your suppliers pack and ship products for you.
* You don’t have to hire additional personnel to handle packing and shipping.
* You can test the market on a shoestring budget by selling one or two items.
UK Dropshipping
June 24, 2010 at 7:12 am
Great information! Dropshipping is a very popular method of selling products online. It is a process of selling products without having to stock or store any items. It is a wonderful way to start a home based or small wholesale business. It is the biggest boom business going and sales are now hitting $400 billion a year.
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June 24, 2010 at 10:30 am
I started dropshopping when I was a teenager but I very quickly got burned. I sold something on ebay that I had paid for, something that the buyer then told me he could have got free. I had to apologise and give him his money back. It’s important to know what you’re selling and if in doubt, receive it first.
Chris
July 20, 2010 at 12:53 pm
Dropshipping is like anything else; if you don’t do your research, you’re probably going to end up out of pocket. You wouldn’t buy from a dodgy looking website, so why would you deal with a dodgy wholesale outlet?
I suppose the key is being able to recognise danger signs. It’s amazing how many people don’t though.
wholesalers
October 10, 2010 at 2:17 pm
yes i agree with “etailers should be very careful when doing Drop-shipping business”
FHA
February 21, 2011 at 10:16 pm
This type of business model is becoming more and more popular.. and not just amount ‘work from home’ people. You see big companies that are choosing to do this with their suppliers to reduce the amount of warehouse/shortage space as well as shipping costs.
But like every business, there is always a risk of being taken. The best thing, as this article points out, is to do your homework and make sure that you look out for certain signs that will be a red flag.
Sofia
May 12, 2011 at 12:14 pm
I don’t deal with wholesalers. It is because I am not an online businessman. Maybe people should take extra caution when dealing with some people online because fake wholesalers could take a lot of risks.
Roy
July 1, 2011 at 10:57 am
A real wholesale distributor doesn’t need to flood search engines to get business. They get tons of business already and have tons of regular customers. They are all well established and have probably been around for 10-50 years. Most of these well established companies have a huge customer base already. They are not hard up for more business.
Darin Cunningham
August 7, 2011 at 7:11 pm
I find dropshipping very simple and cost effective provided you can find a safe wholesaler list. I would recommended purchasing one for your peace of mind. Try to start small and avoid buying in large amounts. Do this until you get comfortable with the process and actually know what you are doing.
Chris
April 9, 2013 at 2:53 pm
Drop shopping and wholesale buying do carry risks, particularly when you are purchasing from abroad, where the risk of substandard products is greater and the buyer’s ability for legal or other recourse is limited, but there are plenty of good wholesalers out there. Sadly, with UK based wholesalers the margins that are possible tend to be narrower than when buying from abroad, but the piece of mind that comes with dealing with English speaking sellers, and knowing you have recourse under the law is worth a narrower margin to some. That said, if you can get trusted suppliers in the Far East then this can be very profitable indeed…