Is Dropshipping A Scam?

Let’s face it: the internet is a sketchy place. Its anonymous nature makes it easier for dishonest people to take advantage of those looking for a way to improve their lives. With dropshipping’s rise to one of the most popular business opportunities on the internet, it generates the same fear.

Therefore, it’s common for aspiring dropshippers to question whether or not it’s a legitimate business opportunity or even a safe venture for them.

Now, its recent fame doesn’t mean dropshipping it’s new. It’s been around for many years, and there are different ways to make your way into the industry. Therefore, it might be confusing for many, feeding their fear of scams.

That’s why we’re going to answer that question today: is it a scam or not? We’ll take a look at the model itself as well as the most popular misconceptions about dropshipping. Finally, I’ll give you some tips on how you can ensure you run an honest business on your own.

Dropshipping: what exactly is it?

Dropshipping is a business model in which you sell different products that you don’t really own or even handle personally. You simply market products from a supplier (often the manufacturer or a distributor) and forward your orders for them to handle packaging and shipping.

In many ways, this has been done by people since before the dawn of the internet. Door-to-door salesmen followed pretty much the same structure.

Today, dropshipping involves running a website listing products directly from a supplier. Once a customer orders, you order from the supplier using their information and they’ll ship it directly to them.

Regarding the different types of dropshipping, we have high ticket dropshipping (selling expensive products for larger margins), using Chinese or local suppliers, and selling through platforms like Amazon or running your own store with Shopify or WooCommerce.

Each one has its own pros and cons, and you always need to learn how to dropship in general before learning one of these approaches.

However, all forms of dropshipping follow the same process:

  1. Finding products to offer on your store and contacting the supplier.
  2. Advertise these products on different platforms.
  3. Receive an order.
  4. Forward the order to your supplier.

The rest is taken care of by your dropshipping supplier.

If you still have doubts about its legitimacy, consider that Amazon started with dropshipping, and it still does it – even though their model has spread to other areas. This is what sparked interest in the model, and the industry itself has grown a lot, and it’s predicted to grow even further in future years.

Why people think it’s a scam

Now that you know how it works, you probably can see how it’s a legitimate business model. However, let’s dissect the more popular concerns people often have about the industry.

We’ll go into both the dropshipper and customer perspective to understand how these concerns were born and why they aren’t real reasons to deem dropshipping a scam.

They think they’re defrauding other people

Lots of people think that profiting several times above a product’s production costs isn’t ethically correct. They tend to see it as tricking customers into paying more than the product is worth, inflating the price of items they could obtain for a lot less.

The first issue with thinking this way is that sourcing these products and researching takes time and increases this value. A dropshipper needs to learn about the business as well as every product and supplier they rely on before offering something.

Customers don’t have to go through the entire process themselves, and that’s a service that can’t be offered for free, and it makes their lives easier, so dropshippers have a right to benefit from this task.

The other problem is that most businesses do this anyways, and they aren’t considered scammers just because of how long they’ve been around. You can grab any product in your home and inspect it; you’ll soon find a “made in China/Taiwan/etc” label on them.

I’m not saying it’s OK just because larger brand do it, but it’s OK because that’s basically how business in general works.

Finally, marketing (making your offers reach your audience) takes work and money. Building a website, researching products/suppliers, advertisement, and other features you add to make your customer’s life easier costs money. Furthermore, if dropshippers don’t do it, lots of people wouldn’t have access to these promotions, and suppliers wouldn’t have a reason to manufacture them.

They fear their suppliers can steal your money and run away

This is actually a logical fear since there are scammers trying to take advantage of others in any industry, and dropshipping isn’t really the exception.

However, it’s not a staple of the business model. It mostly occurs because a dropshipper didn’t research properly and ended up dealing with bad suppliers out of sheer ignorance. You always want to go for reputable sources.

Overcoming this issue isn’t as hard as you might think. You need standards for your business, and this includes filtering out overhyped claims and conduct proper research on whom you’re dealing with and establish strong communications with them.

It’s even easier thanks to platforms like AliExpress, which reward suppliers based on their customers’ satisfaction. You’ll always have access to reviews and ratings when using these marketplaces as well as the amount of orders fulfilled successfully by each vendor.

They think it’s too expensive to generate any profits

This is another logical problem, but it’s similar to our previous qualm because of how it’s the result of improper practice.

Dropshippers who fail to run the necessary calculations and keep an eye on their budget are the ones prone to falling for this. Any entrepreneur needs to consider the costs associated with their business before even starting, and dropshipping isn’t different.

Remember, you need to pay for your website, marketing, integrations, taxes, and products. If you want to make any profit, you need to be aware of these expenses and how you can price your products to cover for these while still yielding healthy profits.

They think a $1,000 or more course is mandatory

Finally, the sheer amount of self-proclaimed “experts” have made dropshipping look sketchy.

They often watch several videos on YouTube and read online articles just to rephrase them into courses. They then release these courses, market them heavily on social media, and charge hundreds or even thousands for access.

Some even rehash other courses just to profit from the hype.

Falling for this is also a result of not conducting proper research: investigating the author, finding reviews and testimonies (outside of the sales page) and establishing criteria to judge this courses.

Shelling out thousands for training is far from necessary. In fact, my favorite course, filled with all the content you need, is eCom Elites, and it’s just $197.

How can you ensure your dropshipping store is successful and honest?

If you decide you do want to start dropshipping and want to keep it as ethical as possible, I have some simple guidelines.

First, make sure that both your product and supplier are well-rated and offer good quality. You don’t want to offer garbage to your customers. This also means keeping a useful and demanded product.

You then need to take all expenses into your account and price your products so that they’re still affordable but can cover all of these costs. To market them, use a legitimate platform like Shopify: with protection measures for both customers and dropshippers.

Grab a course from a verified author with good reputation like Franklin Hatchett, the creator of eCom Elites. Even then, read enough reviews and compare the content to your needs to ensure you’re not overpaying for it.

Finally, don’t see dropshipping as a quick buck. It’s a serious business that requires the same dedication as any other venture. You need to plan for the long term, reinvest, improve your business, and keep your customers happy so that you can grow a successful business that can support you as you need.

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