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The Drop Shipping "Scam"

There have been a few articles published lately discussing the “drop ship scam”.

In fact, just the other day I was browsing through some articles on Google, when I came across one that I immediately knew would be a huge topic of conversation in our drop shipping communities. This particular article had me feeling that I needed to defend drop shipping and provide a bit of clarification for those new to eCommerce.

While they didn’t use the term ‘drop shipping’ in the headline, as soon as I saw “Why Weebly’s CEO is Saying No to the Hottest Trend in E-Commerce,” I knew it had to be about dropshipping.

drop-ship-scam

The Drop Shipping ‘Scam’

First, a quick disclaimer this article is my response to the recent bad PR drop shipping has suffered. Second, I’m assuming that this CEO of Weebly doesn’t like the dropshipping business model and prefers to keep it off his platform.

In case you don’t know, Weebly is basically a platform that allows you to build websites such as WordPress or Squarespace.

In a recent article on Inc.com, the company’s CEO David Rusenko claims that drop shipping is a scam that he wants no part in. In Rusenko’s eyes, dropshippers are essentially eCommerce middlemen.

It’s hard to be fond of those who automate the process of ripping people off. Click To Tweet

And if you’ve been following me for awhile, you know how I feel about middlemen: I can’t stand them! It’s hard to be fond of those who automate the process of ripping people off.

Still, there are a few other things that stood out to me in this article that calls drop shipping “the newest scam”.

A few weeks before the Inc.com article, one of the writers at The Atlantic published an article expressing his feelings on drop ship scams. He told a story of buying a jacket he saw from retargeting ads on Instagram and feeling that he got it from a scammy dropshipper.

In the Inc.com article, Rusenko is talking about how more and more frequently dropshippers are sourcing their products from low-cost places like AliExpress. Usually these transactions take place in eCommerce stores built on Oberlo or Shopify.

Drop Shipping is a Broad Term

It’s kind of funny, even when I first started building Drop Ship Lifestyle and publishing under this brand, I knew using the term “drop ship” would be tricky.

There are many, many different models for dropshipping. The term itself is pretty broad but basically, drop shipping is a way to fulfill orders. Dropshipping could be fulfilling orders from China, it could be arbitrage, it could be selling on eBay, drop shipping on Amazon, etc.

And if you’ve seen any of our courses or information here at Drop Ship Lifestyle, you know we would never recommend dropshipping on eBay, working with suppliers direct from China, or building your eCommerce store on anything but a Shopify-hosted site.

Again as you probably know if you’re familiar with Drop Ship Lifestyle, the way that we do dropshipping is we are basically internet retailers where we sell for other brands.

What-is-drop-shipping

  • Step 1 You list the supplier’s product on your drop shipping store for customers to buy.
  • Step 2 The customer purchases something from your eCommerce site.
  • Step 3 You order that same exact item that the customer paid for from your supplier.
  • Step 4 Your drop shipping supplier ships this item directly to your customer. So your customer receives the item that they’ve ordered from you.

So yes, we are technically a middleman. BUT, there is no middleman between us and the brands we sell for. So if I was going to sell something, let’s say if I was going to sell a pen, I would sell direct for this pen company. We’re obviously not selling our own pens, and hopefully this can kind of help you understand drop shipping.

In the article, David Rusenko claims that dropshippers are ripping people off when they dropship from China. Which is crazy! I really don’t think anyone is ripping anyone off. What I do think is that drop shipping from China is not a sustainable, long-term business model.

Unfortunately, after seeing articles that appeal to the masses like The Atlantic article, and now the Inc.com article, dropshipping is getting a bad reputation.

Because of these articles when the general public thinks of the term “dropshipping”, they might associate it with being a shady or scammy business model if they’ve come across these negative headlines.

Now, here’s the thing about these drop ship ‘scams’. I mentioned this when I first started Drop Ship Lifestyle several years ago, but I hesitated putting the word drop ship in my company name. Back then people still associated dropshipping with usually shady business tactics.

And that’s often because if you Google dropshipping or dropship suppliers you find middlemen. Back in those days there were so many people who basically exist to cut themselves in as a third party, only to make some money off you. And it’s just not a long-term sustainable business model for either party.

drop-shipping-scam

My Final Thoughts on This ‘Drop Shipping Scam’

I reinforced this in the original video I made talking about drop shipping’s recent ‘bad press’, but I’ll say it again because it is key to making money online successfully drop shipping. When you’re talking with drop shipping suppliers, you should not refer to yourself as a dropshipper or tell them you wish to dropship their products.

Remember what you are, and that is an internet retailer wishing to distribute a company’s products.

I can also understand why dropshipping might be getting some bad press right now. But I don’t believe that people dropshipping from China or AliExpress are outright scamming people. I just think that’s ridiculous.

Honestly, I wonder if the Weebly CEO behind this article might be jealous because Shopify is exploding and has been doing so for years now!

You know, forget about what Weebly’s CEO thinks and just remember that when you are doing business and when you’re talking to your suppliers, you are doing so as an internet retailer.

Even though there’s technically nothing wrong with it, I don’t want you to use the term dropshipper because it now has a negative association.

So that’s what I think about this whole, “is drop shipping a scam” business. Again, here are the links to the two articles I talked about in this post. I want you to read through them yourselves when you have time and let me know what you think below in the comments.

  • Inc. Why Weebly’s CEO Is Saying No to the Hottest Trend in E-Commerce
  • The Atlantic The Strange Brands in Your Instagram Feed

This topic was also covered in a previously recorded video on my YouTube channel.
► Subscribe to my channel here: https://www.youtube.com/user/dropshiplifestyle/videos?sub_confirmation=1

 

Anton Kraly
 

Anton is a the Founder & CEO of Drop Ship Lifestyle - an online coaching program for eCommerce entrepreneurs. He began selling online in 2007 and has built and sold multiple seven-figure businesses while leveraging the power of drop shipping.

  • Dan says:

    Hi, whats confusing is you say not to use the term drop shipping, but your website uses it?

    • Anton Kraly says:

      Hi Dan,

      We use that term so that people can find us.

      When I say do not use it, I mean when you’re speaking to suppliers 🙂

  • Keith says:

    Thank you very much for clearing the air. The Dropshipping business model is not a scam and can never be a scam.

  • Yemi says:

    Hi Anton, thank you very much for diffusing this thought from Weebly’s CEO about dropshiping.
    If I order for bulk products from Aliexpress today and begin to sell them in my shop and via my website, will he also call it rip off? The difference between that method and dropshiping is that I don’t have to stock items in dropshiping.
    Someone might need to educate him.
    I enjoyed your clarification on it, great job.

  • Anton Kraly says:

    Hey Everyone,
    As many of you already know I created Drop Ship Lifestyle after selling a network of eCommerce stores and then trying to find a community of other store owners to network with… What I found was a bunch of scammers who promised newbies they would get rich quick by following their push button systems!
    This lead me create a new community along with online training that shares how to build a REAL online business.
    I’d love to hear what you think… it’s 10 video training modules designed to help you drop ship profitably… all for free.
    Be sure to click here to check it out and send me your feedback ?
    If you go through the “What Is Drop Shipping?” mini-course and still have questions just contact me and I will help you out.

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