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Why dropshipping is a bad business model

Discussion in 'eCommerce' started by zmanace, Dec 30, 2018.

  1. #1
    My goal with this post is to be completely honest with you. In my opinion, there's a lot of people out there trying to tell you to start e-commerce and dropshipping, and just selling a course, which is why I wanted to clear some things up.
    So, here's me being honest. Dropshipping is a bad business model and you shouldn't start it. That's right. No BS. 99% of people who start dropshipping quit after the first 2 months because it's really hard. It's as hard as any other business model, and for some reason everyone's flocking to shopify dropshipping and ecommerce for some reason. Selling poor quality $1 products from china with $5 facebook ads is just not going to work in 2019.
    I've been doing dropshipping for over a year and a half now, so I have a lot of experience with this, and I've seen too many people fail right in front of me.
    If you are about to start your ecommerce journey, the one thing I can tell you right now, is to expirement with different things that no one is doing. For example, trying using woocommerce instead of shopify, or try using google adwords instead of facebook ads.
    My point is that you have to test different strategies and go to places no one is going.
    The reason there' so many YouTubers and guru's out there is because it's easier to sell to dropshippers then dropship yourself. There's way more money in it and it's just easier to do.
    So that's my honest opinion on the current state of Shopify dropshipping.
    My goal with this post was to start a discussion, so whether you agree with this or disagree, comment below. You can also ask me any questions you want, I'm responding to all of them.
    Cheers,
    Zain
    Video version of this post:
    SEMrush
     
    zmanace, Dec 30, 2018 IP
    Karen May Jones likes this.
    SEMrush
  2. CodyS

    CodyS Peon

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    #2
    Yup, my suspicions have been confirmed. curios as to what other people think
     
    CodyS, Dec 30, 2018 IP
  3. dcristo

    dcristo Illustrious Member

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    #3
    The margins are too small with dropshipping. Furthermore, your reputation can be affected from slow delivery times or if the product is out of stock, which you will only find out about after an order has been placed.
     
    dcristo, Dec 30, 2018 IP
  4. Spoiltdiva

    Spoiltdiva Prominent Member

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    #4
    In dropshipping customers are often neglected for profit. Dropshippers tend to sell a product to a customer only once. This can lead to a poor customer experience. This has led to a lack of trust in this business model.
     
    Spoiltdiva, Dec 30, 2018 IP
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  5. Wali Dahot

    Wali Dahot Active Member

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    #5
    Main Con of dropshipping is customer service. Most of the times you arent aware of what happened at backend, like lost shipments or customers not getting what they are ordered(slightly different or completely different) but still you are the one facing pissed off consumers. Free shipping takes atleast a month and dropshippers cant afford premium options and then there are chargebacks, refunds, returns to YOUR address. There isnt a perfect business out there, each has its own hurdles but in other atleast you know the hurdles and can deal accordingly while in this model you are blind of the backend. When you are going lucky thats a blessing not to deal with that but when problems occur, we wont be able to satisfy scores of consumers when we ourselves arent aware of what happened actually..
     
    Wali Dahot, Dec 30, 2018 IP
  6. mmerlinn

    mmerlinn Notable Member

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    #6
    Relying on others to ship products that you sell can be a gold mine, but more likely will be a land mine that will explode in your face.

    If you are going to go the dropship route, BE SURE THAT YOU ARE SELLING WHAT YOU THINK YOU ARE SELLING and be sure that your dropshipping partner is as customer oriented as you are. Anything less and you will be sorry.

    Occasionally, I will dropship something direct to a customer, but only if I know for sure that it is what the customer really wants and only if I am confident that my dropshipping partner is reliable. Usually what I do is to get the customer's money, have the dropshipping source ship to me, then IF it meets my expections reship it to the customer. Sure, that takes longer and costs more money, but there are NO hidden surprises that way.

    If you are going to sell the same thing time after time from the same dropshipping source, one would be wise to consider buying directly from the dropshipper, stocking yourself, and shipping direct to your customer. Most dropshippers will give you a discount if you buy in larger quanties as opposed to one at a time. Often you can buy one case at a time. Depending upon the item, case lots can be as low as 6 items per case. If you cannot afford to buy a case at a time, you simply cannot afford to be in business at all.
     
    mmerlinn, Dec 30, 2018 IP
  7. moonswamp

    moonswamp Well-Known Member

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    #7
    Drop shipping is a good method for starters.
    You don't need to manager your stock and don't need to worry about shipping, customer service and others ..

    But you need to test the vendors first. Buy it before you start your own shopify business. So you can get the idea hows the service the vendors on aliexpress can supply.
    Don't try to import bulk products from different vendors. CHOOSE THE RIGHT ONE, be partner with him... and choose another one after testing.
     
    moonswamp, Dec 31, 2018 IP
  8. enous

    enous Well-Known Member Premium Member

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    #8
    I think for startups drop shipping is a good option.
     
    enous, Jan 5, 2019 IP
  9. Karen May Jones

    Karen May Jones Prominent Member

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    #9
    With everyone being hooked up to the internet and being able to browse endlessly, I think they are more in tune to buying items without using third parties.

    If you could find something exclusive and useful, that the consumer will want to reorder over and over, that would be a great thing to concentrate on. example, rare berries, nuts, hygiene products. Being exclusive is an important factor, so there will be a minimum or an $$ investment.

    In Cynthiana Kentucky there is an apple orchard, run by the Reed Family. Somebody could approach them and arrange to sell their fruit through the mail. Their apples are awesome!
     
    Karen May Jones, Jan 5, 2019 IP
  10. mmerlinn

    mmerlinn Notable Member

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    #10
    If I remember correctly, the Cynthiana Post Office was moved from uptown Cynthiana to the swamp far far outside of town, possibly even in the middle of that orchard you like.
     
    mmerlinn, Jan 5, 2019 IP
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  11. Spoiltdiva

    Spoiltdiva Prominent Member

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    #11
    In Cynthiana Kentucky there is....walking dead!:eek:
     
    Spoiltdiva, Jan 5, 2019 IP
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  12. JoeSpirit

    JoeSpirit Active Member

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    #12
    I've had success with dropshipping in the past. I also had failures. The worst was a large customer order that as I went to fill it I found the dropshipping site was no longer there. Had to refund and it wasn't fun.

    I no longer dropship. Now I do much as mmerlinn does and ship the products to me first so I know I'm describing the product properly to my potential customers.

    I mostly look for products with private label opportunities.
     
    JoeSpirit, Jan 7, 2019 IP
  13. Spartan14

    Spartan14 Member

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    #13
    I cannot give my opinion as i am not in this business but i will try it to see how it works
     
    Spartan14, Jan 7, 2019 IP
  14. Sphor

    Sphor Active Member

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    #14
    I have had issues with suppliers in the past with the dropship business model which has lead to unhappy customers. I am not a fan of business models which can have problems which are out of your control.
     
    Sphor, Jan 9, 2019 IP
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  15. Shivani Shrivastav

    Shivani Shrivastav Active Member

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    #15
    If you are considering dropshipping for your current business model you might want to think again. There are plenty of reasons that this isn’t the right way to go ahead and build up your business since the right level of margins aren’t going to be there. Also, if the delivery times are slow or if you don’t have the product in stock, then you are going to see some damage to your reputation. If you want to make sure that your customers trust you and will order from you again, then this isn’t the right option for your business related needs.
     
    Shivani Shrivastav, Jan 16, 2019 IP
  16. deepak.pal

    deepak.pal Active Member

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    #16
    Zain is almost right in the post. Dropshipping can be a bad model for almost 99% of businesses. And the reason is quite obvious - jumping the gun. If you are trying to be successful overnight and carried away with youtubers and so called guru's preaching then you are not going to taste success. To become successful in dropshipping business model you need to work hard in selecting the niche. Spend some time on selecting your niche and then same applies for products. Try to do some research about the demand of those products in your targeted geography. Once you match the demand of your prospective customers with your store offering then only you can think of becoming successful in Dropshipping business. And yes Shopify is one of the best e-commerce platform when it comes to start dropshipping business.
     
    deepak.pal, Jan 17, 2019 IP
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  17. Sphor

    Sphor Active Member

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    #17
    Well said. I agree with everything you mentioned.
     
    Sphor, Jan 26, 2019 IP
  18. AlexanderA1227

    AlexanderA1227 Peon

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    #18
    The real reason why 99% of people fail in the drop-shipping world is bad marketing.

    You could be selling the same thing but get very different results (check out the story of two people selling black rave masks, one makes $10 and the other makes $100.000). The concept is that even though the product is the same, the targeting is way different and could be the difference between success and failure.
     
    AlexanderA1227, Jul 15, 2019 IP
  19. JoeSpirit

    JoeSpirit Active Member

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    #19
    This is not restricted to the dropshipping model.
     
    JoeSpirit, Jul 16, 2019 at 3:56 AM IP