Ultimate Dropshipping Guide
Chapter 6: Dropship Scams
How to Avoid Dropship Scams
Adding dropship suppliers as an additional source of products to an existing ecommerce catalog is a growing trend in ecommerce. As store owners look for ways to expand their product line without needing to run up their debt for funding inventory, the model has become very popular. From the small “work-from-home sellers” on a Shopify website, to the large global chains like Walmart, many ecommerce websites are taking advantage of the hyper efficient, low risk model that is dropship.
However, like all areas of growth, there is often a growth in unscrupulous scam artists that are more than happy to relieve you of your hard-earned cash without offering anything of value in return. Dropship scams can fool even the savvy retailer and both new and experienced sellers need to stay vigilant when choosing new dropshipping companies. We have compiled a list of a few of the more common characteristics to look out for so you can avoid dropshipping scams and protect your ecommerce business.
“Dropship Programs” and Middlemen vs True Wholesalers
Why do so many users start off in the dropship business getting fooled by dropship scams? The talent of middlemen and scam programs is not finding products and providing great catalogs, prices and shipping times, but rather in SEO and marketing themselves. If you search some term or phrase and they come up on the first page, this does not automatically validate the website and the company’s legitimacy. A middleman hides the source and pretends to be the supplier directly.
What is interesting is most true supplier programs do not usually list “dropship” in their title or URL, or even the majority of their keywords. They are often a bulk wholesale supplier first for their dealers and simply offer the dropship program as another option to use on its own or to combine with your light wholesale purchases for your site. Find a “wholesale supplier” first, and not a supplier where dropship is their sole program focus or even a large focus for their program. Middleman programs tend to rank higher in dropship searches above the top suppliers.
Lack of Dropship Program Contact Information
When you check into a dropshipper’s website, it is important to find plenty of contact information available. In addition to a website address, the company should also provide a street address, phone number and email address. Not all smaller stores will list a physical address if they are using an online-only sales model, but a wholesale supplier has a physical location. It is important this location is clearly listed, after all, unlike most online only websites, the physical location is important. This is where your items will be shipped from, so there is no reason for the wholesale distributor to keep this information hidden or hard to find on their site. You can even search the address details on a directory site, Google maps, Yellow Pages, etc. to make sure the address details match the supplier name for this location.
The largest supplier programs will have all points of contact clearly listed, and some may even have region specific contacts or live-chat. Smaller programs might focus on a contact form, but they should have a phone number for new questions or post-application support. Contact details should be a good sign, but it is not evidence on its own of a trusted source. It is easy for any program, even a scam program, to simply post points of contact. But, when reviewing your supplier, it is better to see clearly listed contact details and a physical address which can easily be verified on their own as well.
Note: When working with most large distributors, they have the warehouse location listed. Clearly a warehouse is going to be in an industrial park or commercial district, so if you search an address found on their site and it’s a PO Box or residential neighborhood, your alarm should go off in your head that you have found some middleman or scam type program.
If you found a dropship supplier website and there is no clear or easy way to find contact details or physical ship-from address (which can be verified with an address lookup), or it’s listed as a PO Box or in a residential area, you might have found a dropship scam.
Big Money Promises and Quick Business Profits
Like any industry, any company that promises big money quickly is probably not legitimate. Beware of any company (dropship or not) that tells you profits will come with little work involved. The scams and middleman programs make big promises to hook you in and pay their up front fee or monthly costs, or often pay for their “expert coaching”, all while showing shiny pictures of iPads and Xboxes.
Dropshipping is a great way to make money, and we have been helping thousands of users get started or expand for the past 10 years, but you will have to subscribe to the age-old tradition of hard work to grow your business. Even when you find wholesalers in a supplier directory like Inventory Source’s where they have been vetted, you still need to work marketing your site and developing your product listings to generate your initial traffic and optimize sales conversions. Dropshipping is a fulfillment model, not a business model. Just because anyone can do it doesn’t mean that everyone will be successful with it. Dropship products often have thin margins and high competition, so unless you are able to build a business and repeatable customer acquisition processes, the model may not be profitable to you. By starting your own business, you will need to build a unique value proposition to the market. There are many pure dropshippers that are profitable and successful, not because of the promises the middleman programs make, but because they did their research to build a brand and establish unique and competitive supplier relationships.
Real wholesale suppliers do not blast their front page with promises of get rich quick deals or “look at what our customers have made” with graphics for eBay listings and cost screenshots showing the revenue made. After all, a large bulk distributor’s primary focus is on large bulk orders and wholesale dealers. Their largest clients and target wholesale dealers are buying pallets and truckloads of items for their retail showroom floor.
Now, the good bulk supplier programs still know how to target their smaller dropship dealers and offer amazing deals and single-item service, but if you were a large distributor, think about how you would pitch the main page of your site. You would promote the variety of your catalog, the knowledge of your sales staff, the speed of your shipping times, the ease of your order process and the reputation of your distributor brand in the industry. If you find a “supplier” website and do not see these wholesale details, but rather see “Look, how much you can make on eBay!” or “Get products for your website sales today!!”, you likely do not have a wholesale supplier.
Choose a Reliable Trusted Option
Inventory Source has been reviewing supplier programs and helping our members avoid dropship scams for over 15 years. It is difficult to give you some simple steps to avoid all dropship scams and wholesale middleman programs that are not worth your time in one simple guide, but the points above should help you avoid the most obvious traps.