Many entrepreneurs are attracted to the dropshipping business model because you can outsource inventory holding and shipping to a fulfillment company and focus all your time and effort on marketing.
There’s no denying this business model can be less stressful than traditional retail, but it has a dark side. Not all dropshipping businesses are legitimate, and many are in the industry just to scam unsuspecting business owners. If you’re getting ready to try dropshipping for yourself, familiarize yourself with the following scams. You should then be better positioned to avoid them.
The Ghost Move
When you’re new to the dropshipping world, you might be taken under the wing of a product supplier who assures you everything will work out fine. However, that’s not always the case.
When you choose to partner with suppliers who don’t have escrow services, there’s always a risk that they’ll take your money but fail to supply the goods in return. Sometimes, they don’t even offer excuses – they simply disappear.
To avoid this scam, always work with suppliers offering a trade assurance. This means money is held by a third party and is only released when the goods arrive at their destination.
Selling authentic luxury goods is big business, and when you work with verified suppliers, there’s significant profit potential. However, not all luxury suppliers you come across are authentic. In fact, many are in the business of selling low-priced knockoffs.
Not only will you end up with unsatisfied customers, but you might also encounter legal problems relating to copyright infringement if you sell knockoffs. So you must always research suppliers, read reviews, and contact big brands to check whether they have an official affiliation with any merchants you’re considering. You can then be sure that you’re providing your customers with the goods they deserve.
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High-Quality Samples, Low-Quality Goods
When you start working with suppliers, you often receive samples to ensure products are suitable for your needs before selling them on your eCommerce website. Seeing those samples can lead you to believe your customers will receive the same high-quality goods. However, that doesn’t always happen.
Some dropshipping companies will create low-quality products to increase their profit margin. Sometimes, you’re only made aware of this when your customers start complaining. Alongside doing your research before working with specific suppliers, it also doesn’t hurt to hire a third-party quality assurance agency to inspect products before they’re shipped.
Unusually Competitive Pricing
Competitive pricing isn’t always indicative of a scam, but be wary of product pricing that’s far below the market rate for similar products. If you do go ahead with a company offering significantly lower rates compared to their competition, you run the risk of your customers not receiving the products or receiving a much lower-quality version of what they looked like online.
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In this situation, the adage, ‘if it seems too good to be true, it probably is,’ tends to ring true.
No Customer Service
The best dropshipping companies will go above and beyond to ensure customer satisfaction. They’ll provide multiple contact options and be prompt with their communication. Scammers are the complete opposite. Most will be unresponsive to even the most basic questions, and any replies you do receive can be vague.
Before signing on the dotted line with a new dropshipping company, read reviews, talk to other people in the dropshipping business, and request business registration information.
Not all dropshipping companies are in the business of scamming, but some are. By being aware of these common scams, you should have more luck finding a company you can trust to maintain your business’s reputation.