Drop-shipping has recently been blowing up on the internet about its features. It is quite difficult to understand in the start how it works and other questionable debates about its processes. You might be trying to find the answer to these frequently asked question :
“Is it unethical to use? Why did it become popular and started blowing up on the internet? Will the users make a profit out of this arrangement? If you want the answers to these questions, this is the right blog for you.
Is drop-shipping unethical?
Well, it depends. It has been told that drop-shipping is a real, legal, and ethical business model. If a store is honest with the customers it serves and is transparent with operating and managing the system properly, then this type of business model is the first thing you should upgrade to.
Refunds and the product arrival and departure shipping time have to be taken into consideration as both of that information are very interchangeable as per the situation of the store and the merchant it has been dropped shipped from.
As long as the expectation and the need of the customer are met with the product ordered, drop-shipping can be the best business model that benefits every kind of features you have in your store and the drop-shipping process makes it a bit easier to transport the products from the store owners to the manufactures and suppliers and finally to the customers.
In this blog, I will answer your questions and doubts and will provide all the information you need.
What is drop-shipping?
Before knowing how drop-shipping works, it is a must to start with the basics and understand what this model of business is about.
Drop-shipping is the method where the product ordered by the customer is stocked by the owner of the store but rather the ordered products are delivered from the merchant who stocks the products. The merchant ships the product directly to the customers and the user can pay the merchant immediately after the shipment. It is just a simple fulfilling method that does not require the store to purchase and keep the products in stock.
The reason why drop-shipping can be accused of being unethical is that the users and the customers are suspicious and cautious about the idea behind this model.
Let’s see how drop-shipping works behind the shipment of the products to the customers from the store.
The store first has to have a collaboration with a merchant neglecting the position they stand for. The merchant can be a small merchant as well as a big corporation.
The store has to give the details of the customers’ address and their house location for the shipment of the product. Here the suspicion builds and the customers become cautious about their house address being disclosed. Since the store usually asks for the contact number and the address of the customer at the time of placing the order, these details in the wrong hands can cause havoc. Hence, the users of the particular platform have to be sure about the merchant and build some kind of contract to bind him/her by the rules so this cannot happen.
Mostly the products are supplied by third-party vendors that are established in every country to help the shipment process be faster and reliable. In this type of system, the merchant has to abide by a single rule which is that he/she cannot see, pack, or handle the products they have to ship. This way it makes it legal and ethical to use.
Merchants are more like the middle man. They give their products to meet the expectations of the customers. The job of the seller is to market the products that are manufactured elsewhere. the cell will purchase the product at a cheaper price and Markets needs products either on social media platforms or on their websites. mobile marketing the product a markup amount is added to the original price, which forms the final selling price of the product.
The customer purchases the product at the final selling price. Once the order is placed with you another back to backorder is placed on the merchant as well. Since the customer details are shared with the merchant against every order, the merchant himself ships the product to the customer without mentioning the origin point of the product.
While marking up the price against our particular product, the store owner on the market has to make sure that he considered elements like managing the online store and placing social media ads, which comes with a price.
However, some marketers hype the otherwise ordinary products and sell this product at an exorbitant rate to the customers. This is not a very ethical way of doing business as the market is selling low-quality products at a much higher price and the customer is duped of his money.
The market may even ok for selling a good quality product which might have managed to purchase at a cheaper rate and adding some profit to it. this is the ideal way of managing the drop-shipping business model as the customers are deserving and getting what they are paying for.
Even the customers today have become clever as mostly they compare the prices of similar products over various platforms and websites. So the success of your drop-shipping model completely depends upon how good a price you get for purchase, so that you can sell the product at a competitive price in the market and still manage to get some profit.
Another model of drop-shipping is called the high ticket drop-shipping. In this case, instead of buying products from the local merchant, the marketer purchases the products from the USA and other overseas places. This type of model basically includes expensive and high-end products. In this case, the marketer charges a markup which includes the difference in the currencies, shipping cost, and transportation cost.
A popular way of marketing the product is called query-based marketing this means that the ads are usually flashed on social media platforms and come up in the field of a customer who is searching for any product. This makes sure there is no push sale and the customer is really in need of the product.
In addition to product sales, you need to ensure that no patents are breached and the mode of selling is acceptable as per the norms and policies for the E-Commerce platform that is been used. Some of the common product-related legal issues can arise from-
- Selling products that otherwise have copyrights or trademarks
- selling products that are not allowed or restricted
- selling false and replica product
Till the time the store is running a dropship model of business in a proper and structured way, the business model can be successful and bring in profits for the store owner. Many E-Commerce platforms actively advocate dropping business.
Let us discuss some features of drop-shipping that need to be taken care of as part of the due diligence on the suppliers, products, and marketplaces.
Before starting a drop-shipping business the marketer has to make sure that the business is properly registered, taxes are paid o time and full insurance coverage is availed. Some small sellers might not feel the need of registering the business legally and paying taxes, however, this is considered a good practice because once you are through all the duty due diligence, then you can start working with big manufacturers and dealers.
Here are some policies that you should have in place
Since you might be selling a physical product to a customer, there is no guarantee that the product that the customer receives will be just as per the ordered product. Sometimes knowingly or unknowingly a different product might get shipped to the customer. It might also happen that the product that reaches the customer is in a damaged condition. Under such circumstances, it is ethical to offer a refund policy to the customers.
Therefore a refund policy forms an important aspect of creating an online store meant for drop-shipping as this will make sure that the customers are not deprived of their money, and any damaged or and unfulfilled orders are refunded to the customer.
This will ensure creating a happy customer base and positive reviews for your products.
At the time of the purchase of the product, the customers are made aware of the shipping details. Customers usually expect to get the products delivered as per the details mentioned at the time of purchase of the order. Most of the products come from different places covering different distances, and some products may take longer to reach customers than others.
To avoid this discrepancy and to make sure that the customers receive the orders for the shipping dates, a shipping policy for a drop-shipping model has to be firmly set in place. This includes a formal contract with the merchant who ships the orders to the customers. You as a marketer have to make sure that all the orders are being shipped from the merchant site on time and via a trustworthy courier service, that is capable to deliver the product to the customers on time.
Some common disclaimers that a foot into place while creating a drop-shipping site are-
- Terms and conditions
- product safety warnings
- use of external links
- infringement of copyright
- diverging customers data
Disclaimers are specifically required so that the customers are aware of the different aspects of placing an order with your site. Divulging this information is important events since the customer can take an informed decision for placing an order with their website, and thereby reduces the risk of dispute.
Drop-shipping is a fully legitimate business and there are different ways to approach this model. Some considerations need to be taken into account while setting up this business model so that you do not bring in any illegal or Immoral practice.
Drop-shipping works perfectly well till the time the customer is unhappy and quality products are being sold at a deserving price. Provide the best services to the customers by selling authentic products at the correct prices to see your business grow by leaps and bounds.