Why Drop Shipping Isn’t As Easy And Simple As You Think

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Many of the questions that I receive in my inbox at MyWifeQuitHerJob.com are related to opening a dropshipping store and I can definitely see the appeal.

When you run an online store that only offers dropshipped products, you don’t have to worry about inventory and you don’t have to worry about product fulfillment.

All you have to do is sell the product, take orders and make a decent profit. Easy right?

Unfortunately, it’s not that simple and with anything that sounds too good to be true, there are always gotchas.

Why Dropshipping Isn’t As Easy And Simple As You Think

In theory, dropshipping sounds like a great idea because it’s inherently scalable without you having to do a lot of work up front. But when you dig down a bit further, it becomes obvious why dropshipping isn’t so great.

Most people try to open up a dropshipped shop expecting it to be easy, but in reality it’s much harder to operate a dropshipped shop than a traditional online store and I will explain the reasons why below.

You Won’t Be Getting The Lowest Price

price

Most people open up a dropshipped online store with the misconception that they will be receiving the same wholesale pricing as everyone else for their products.

In reality however, dropship distributors often charge extra fees and/or tack these fees onto the quoted wholesale price.

Put yourself in your distributor’s shoes for a moment.

Would you prefer to sell a large bulk quantity of products all at once to a store or would you rather sell onesy, twosy amounts to individual customers and be forced to individually ship and pack each item?

The distributor is doing all of the work here and this will be certainly be reflected in your wholesale price.

To throw out some numbers, most dropship stores get between 10-30% gross margins whereas most traditional shops that carry inventory have 50% gross margins. It’s a huge difference!

Because your wholesale prices are higher than a traditional store, you will not be able to compete as effectively on price unless you take a good sized profit hit.

In addition, lower margins will inhibit your ability to advertise on sites like Facebook and Google. Not only that, but less profit per sale also makes customer service problematic.

For example with our online store, our margins are between 70-90%. As a result whenever we get an angry customer, we simply give them a refund AND let them keep the product.

Because our margins are so high, we can afford to take the hit. With dropshipping, the convenience of not having to fulfill orders comes at a cost.

You Will Need To Charge Higher Shipping Costs

shipping

Often times, you will require the use of several dropship distributors to fully flesh out the product selection for your store.

Using 2 or more different dropshippers means that 2 or more companies will be making separate shipments to your customers, which means that 2 or more companies will be charging you their own separate shipping costs.

If I’m a customer and I buy products from your store across 3 different distributors, you will have to charge me a much higher shipping cost just so you can break even.

The only way around this is to only use one dropship distributor which may not carry the breadth of products that you need. The result is that you will have to pass these extra costs onto the consumer which reduces your price competitiveness.

Dropshipping Can Be A Logistical Nightmare

nightmare

You might think that since the dropship distributor is doing all the work that you can sit back and relax. Unfortunately, you have to deal with your customer base.

You have to be the one that answers all of the questions. You have to be the one to apologize when an order doesn’t arrive on time.

The main problem is that when you use several different dropship distributors, getting the entire order to the end customer can be a logistical nightmare.

All distributors will have different shipping times and will be shipping from completely different locations.

If a customer orders products across 3 different distributors, they will end up receiving 3 different packages at varying times.

If an order is particularly time sensitive and needs to be rushed, you will have to make sure that all of your distributors can deliver the product on time.

In effect, you are staking the reputation of your online store and linking yourself to all of your dropship distributors in a single chain. If even a single distributor is unreliable, then it will reflect negatively on your online store.

Your Customer Service Will Be Out Of Your Hands

phone

Customer service and your online reputation can make or break your business. With the world wide web, social media and Twitter, news of a botched transaction can spread extremely fast so it is absolutely crucial that you maintain a great image for your online store.

Whenever I receive a call for our online wedding linens store, I always take the time to ask how they found us. And the majority of the time, the people who find us do so because they were referred to us by one of their friends.

Word travels fast.

Our customer service is one of the main reasons why we have grown over 3x in the past 3 years.

With dropshipping, you unfortunately have very little control over your customer service. Since you are not in charge of product fulfillment, you can’t control when a customer will receive their product.

If a customer wants to make a return, it’s a major pain because you have to make sure that you get your money back before you can provide a refund.

Sure, there are always ways to mitigate these problems but the solution inevitably involves either raising prices or taking a profit hit at the expense of customer satisfaction.

Amazon Makes Dropshipping Even Less Attractive

amazon

Prior to Amazon, it was much harder for companies to sell their goods to the masses. As a result, distributors had to rely on traditional retailers and dropshippers to help them move product.

Today, Amazon controls such a large piece of the ecommerce pie that most companies can get by with just selling on Amazon as a 3rd party seller.

Amazon handles your sales, your product fulfillment, your customer service…basically everything that a traditional retailer would typically take care of. But the difference is that the distributor gets to keep all of the extra profit!

If you are a dropshipped store selling the exact same products that can be found on Amazon, it will be impossible to compete on price. As a result, you will have very little leverage.

After all, would you rather buy from Amazon at a lower price or pay more to buy from an unknown shop?

Editor’s Note: If you are interested in selling on Amazon, check out my article on How To Sell Private Label Products On Amazon – The Definitive Guide

When Dropshipping Makes Sense

While I would never start a pure dropshipped store today, there are many ways to use dropshipping to your advantage.

Because you don’t have to carry inventory, you can instantly throw up an online store with hundreds of products in a short period of time.

Then, you can use this shop to conduct market research. Based on which products sell well, you can pick and choose the most successful products to buy inventory for and enjoy higher margins.

Dropshipping is best used as a vehicle for product validation or for fleshing out an online store that is sparse in certain categories.

Editor’s Note: If you are interested in learning how to start your own online store, click here to take my FREE 6 day mini course on ecommerce.

Is Dropshipping Really Less Work?

It really depends. Arguably, the time that you save in not having to deal with inventory and fulfillment will be spent dealing with customers unless you have a reliable core of dropship distributors.

One thing that I forgot to mention is that many drop shippers don’t use automated supply chain technology with a real time API. What this means is that you may not be alerted in real time whether a particular product is available for sale or not.

Therefore if an item is out of stock, you will have to interface with the customer to let them know when they can have their items. Unless your shopping cart is closely tied with your dropshipper’s database, it will be difficult to maintain an accurate inventory count.

With dropshipping, you are trading off not having to deal with fulfillment logistics with having to deal with more customer headaches. And depending on your personality, this may or may not be a wise tradeoff.

While the tone of this article has been anti-dropshipping in general, don’t get me wrong. Many people have been successful with dropshipping as it works very well with small niche stores but my personal opinion is to avoid it if you can.

However if you insist on going the dropshipping route, I suggest that you give Worldwide Brands a try.

WWB vets and pre-verifies dropship vendors so you don’t get scammed or ripped off. Good luck with your shop!

Ready To Get Serious About Starting An Online Business?


If you are really considering starting your own online business, then you have to check out my free mini course on How To Create A Niche Online Store In 5 Easy Steps.

In this 6 day mini course, I reveal the steps that my wife and I took to earn 100 thousand dollars in the span of just a year. Best of all, it's free and you'll receive weekly ecommerce tips and strategies!

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116 thoughts on “Why Drop Shipping Isn’t As Easy And Simple As You Think”

  1. Pingback: What is Dropshipping? – Go To Reviews.net
  2. sam says:

    Dropshipping is clearly more easy than buying wholasale and going to post office for shipping order everyday, so never listen to any negative thinker. You will lose faith and give up.

    1. pikss says:

      Agreed. here only the negatives have been outlined, the writer has clearly only stated WHY it won’t work. Like with everything else there will be problems that need to be solved, we need to think HOW to make it work. Good luck to everyone in their pursuit

      1. Wrath says:

        The internet is full of overblown claims about the glories of drop shipping, but there are far fewer sites exposing any of the downsides. I already know the upsides of the business. That’s why I’m investigating it in the first place. What I REALLY need is to know the pitfalls before I invest my first dime. This site helps immensely with that.

    2. Kenneth Grubba says:

      Obviously this guy has drop shipped before – he is not being negative he is giving us the nitty gritty details. Great referral plug there towards the end buddy! You gave us a strategy and then immediately used it yourself. Thanks for that.

  3. shoptruck says:

    hi

    i have question i want to build website to sell affiliate products which website you recommend? but i want to add button not a link and when my customers press the button will take the products to shipping cart and pay money through me
    i do not want the button move the customers to the affiliate company i want them to stay on my website how i do that ?

    1. tyler smith says:

      Make your own product and brand. Do you really think you can get rich selling somthing that’s easily and redly available online ? First find your market THEN make your product.

    2. Jo says:

      You want to advertise affiliate product in your website and want customer to pay you money at your website? Let me ask you this question. How about the seller that you are affiliating their product? They ship out product without getting any money? You doesn’t make any sense dude!

  4. roger says:

    hi Steve. a good app for dropshipping from ali to ebay is the Dropshipping eBay Lister (black lister).Have 100 supported suppliers and list the items on eBay only with few clicks. Connect more than one Repricer. Edit your images with Photo Editor . SEO Templates with shortcodes meta-tags. Fast & Auto Listings.

  5. Pingback: The True Cost of Drop Shipping: 16 Top Questions Answered! - Done Deal Wholesale
  6. Therlo says:

    I’m just starting out with drop shipping …..
    It can be something of a headache but as the saying goes you never know once you try it yourself .

  7. Prateek says:

    Realtime inventory updates is the biggest challenge I have seen so far

  8. Linda Holland says:

    I thought this very interesting. Things to know. I am 73 wanting to work and make Xtra money. I don’t have money to give any one thank you

  9. International Shipping says:

    This was by far the BEST and clearest advice i have seen, thankyou so much 🙂

  10. James Quinn says:

    Hi Steve. Good explanation of Drop shipping. The key points are very well understandable. I will agree on your points of drop shipping and thus it solves the problem of OUT OF STOCK.
    Can you add best companies for drop shipping? So that it will be easy for sellers to find out best companies. I have found out this link http://mobilityecommerce.com/ over Google while searching.
    Do you think it is a good company to start off with drop shipping?

  11. Vince Millican says:

    I’m just now thinking about trying dropshipping for my business dont even have a website yet but, I’m not sure I want to even try this now! But ive got to do something. Im a very disabled Vet because of chronic arthritis and, I can’t do much physical Labor. So I’m needing to try something online. Anyone have really good advice?

    1. frankwilliams says:

      Yes, I would highly recommend affiliate marketing for 1 as well as selling your own products that you own to sell on Shopify, that way you have all control over your products and business.

      unfortunately, running a successful drop shipping business is very expensive and stressful, it does work for some people who has the money for it if you don’t have the money for it forget it!!!

      also, some of these distributors can be from china it would take over 3 months before your customers get the products which means you would have to deal with that.

      Ps. I know plenty of people who makes a good living just by doing affiliate marketing without a website.

      1. Donald Zwack says:

        can you send me a link or 2 to point me in the right direction to start affiliate marketing

    2. Wendy says:

      Stay Away from China! It is a nightmare. Aliexpress, DHgate, all of those can take a month to two months for orders to arrive to your customer. Just don’t do it. And besides, it’s time we took back our Country! Made IN USA!!!

  12. Pingback: A Playbook For Driving Business To Your Dropship Business
  13. Ed Harris says:

    Steve, I want to get started in ecommerce . I have been reading your posts and I feel like I am going around in circles . I really like your posts, but in one post you say to avoid Drop shipping and then I read one where you you say if you were to start an online business now, you would go with drop shipping because the ramp-up to a quicker profit is not what you need at this point in life. Either way you will still have to deal with customer relations . I have no idea where to start, please help .

  14. MIraj says:

    I Will Find Killing Product 4 Dropshipping Aliexpress, Shopify, Amazon, eBay, Moreover, I Will Start Drop Shipping, Store Creating, Products Sourcing, Marketing
    Please checkout my gig on Fiverr here https://www.fiverr.com/mirajsujonbd

  15. Suyash says:

    Kinda funny because you don’t even have a mindset of doing dropshipping. Like literally author of this article don’t know how to rule dropshipping business. Like literally supreme is selling without any advertisement and you can’t even make your suppliers handle in low costs for real??…..well literally don’t run an article if you don’t know how to run the world son…!!

    1. Debra Washington says:

      So since you know how please forward info on how to dropship successful.

  16. Juno says:

    Starting and running any business has its ups and downs. For my dropshipping business, I use DSMTool.com and it is really helpful.

  17. Amy says:

    Write an article about our dropshipping company, we will pay you 10% on all sales as our affiliate.

    Let me know.

    Amy
    MentalBunny.com

  18. Pingback: Warning: Don't Start a Dropshipping Business Without Reading This
  19. samwel dollah says:

    Great article about dropshipping much appreciated.Learning a lot on your blog buddy.I will look into shopify dropshipping.

  20. samwel dollah says:

    Thanks for the info very useful

  21. Paul says:

    With the negative view of dropshipping it’s seems it will probably be difficult to do a niche store as well. You have persuaded me to not start. I will look at other avenues.

  22. Mohamed Shykh says:

    That was a great article, had a good read.

  23. emmy says:

    This is the best dropship solution ever
    you can find trusted suppliers of brand name products which you can sell on Amazon, eBay, and your own store without having to buy, store, pack, and ship stock. Over 1,000 trusted dropship suppliers check it out
    http://infoguid.pro/dropshipbusiness

  24. Elaine Smith says:

    Hello All,

    Can do guest postings on sites like Huffington post, DailyKos, Business.com, Forbes, Inc, Devsaran, Buzzfeed.com, and many more.

    Very low-cost price

    Best regards!
    Elaine

  25. Danial says:

    Hello Amazing Article. I have one question. I saw a lot of people drop ships and gets a customers complain about the products quality. how to handle this situation?

    1. Fallon Sartin says:

      I’ve had this problem some. They usually have mixed reviews, so unless it’s constant negativity toward the product and/or returns, I leave it online. If it is a constant issue, I discontinue the product. I would love to know how others handle it as well. Of course there is good and bad with every business, and this is one of those factors that is hard to control as the middle man. Also, damages can be an issue, and since it’s not coming directly from you, it’s difficult to have the supplier to improve packing. SOME suppliers care and are good to take into consideration problems like this and will help, but unfortunately not all. I have a 50/50 mixture of what I would consider good suppliers who will communicate with me and some act like they don’t give a crap to be quite honest. I don’t really understand that since it is technically their customer too. Lol

  26. Yeshua Chuck says:

    hello nice article, do you have any other articles related to drop shipping from ali express?

  27. Angel says:

    Thank you very much for this post it´s really instructive, I personally started the online selling business and it was very difficult to find trustable suppliers until I found this amazing web with more than 1000, I personally have done business with a few and the products are very good, I truly recommend it for everybody in this area.
    For the economic freedom!!

  28. John says:

    Hey that web it´s really good thanks for sharing

  29. Lucinda says:

    Thanks Angel, your tip was very helpful

  30. Pingback: Useful Tips to Maximize Your Earnings by Dropshipping Products on Shopify - Entrepreneurship Life
  31. Rolands says:

    Great article. I have had dropshipping business before and it was closed due to inventory problems in partner company. I got orders, but the stock was zero, so I had to refund the money and apologize the customer.

    It was not profitable experience, but I gained some knowledge about marketing and sales which I use in other projects.

  32. moulay says:

    Hi There ,
    If any one is looking for a US Based dropshipping company , we are located at the hearth of the fashion district in New york , we are wholesalers since 2000 and we started dropshipping since 2014 , and we dropship clothing women’s clothing
    to be more precise 🙂
    http://www.smainyc.com

  33. Jacklas says:

    Very informative article about dropshipping. But another side still it’s full-fledged business where you only get profit. Many giants across the world are using this approach to deliver the product to its customer without any involvement. Thanks for sharing such an article. I would recommend you write about Affiliate marketing.

  34. Sam Reid says:

    It’s true that competition in drop shipping is high and fierce, but it doesn’t mean that it won’t work and won’t gain any profit. If you love the business and work hard on and for it, you will surely reap what you have sowed. Drop shipping tools like DSM Tool are esential and of great help when doing drop shipping.

  35. Pingback: Why Buying Wholesale Can Be Misleading - Your Topstore Finest E-commerce solutions
  36. Srinivas Boreda says:

    i was started ecommerce business intialy facing problem with wholesalers
    Finally i got solution with salehoo for easy finding best products and brands https://bit.ly/2LHOvtb

  37. Won says:

    cool tips man! will need to find an influencers niche. Despite I’m busy working in sales sector, I had an idea of starting drop-shipping like a year ago. Finally i did! Good I found Bitdegree free secret formula dropshipping courses. Good lecturer and well explained, I made everything by myself and already in the stage of driving sales.

  38. Peter says:

    Poor branding possibilities were not mentioned. Going down the road you may want to differentiate from all the dropshippers that are selling the same product.

  39. Pingback: Ecommerce Dropshipping: Is it Still Profitable in 2018? – EBANX : EBANX LABS English

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