Dropshipping is an e-commerce model, where you can sell the physical products without dealing with the inventory. Your supplier handles the entire product fulfillment.
If you are interested in starting your dropshipping business and want to know is dropshipping legit in 2021.
You are at the right place. This article is going to provide you the necessary information regarding dropshipping.
- How Does Dropshipping Work?
- Reasons That Dropshipping Is Illegal Illusion
- How Is Dropshipping Legal?
- Dropship Scams
- Risks Of Dropshipping
- Is Dropshipping Worth It?
- What Are The Biggest Problems That Dropshippers Face In 2020?
- Frequently Asked Questions
- How Leelinesourcing Help You Find The Best Dropshipping Products In China
- Final Thoughts on Is dropshipping legit
How Does Dropshipping Work?
Dropshipping means you are selling the supplier’s products on your e-commerce store. After creating a store, you will have to fill it with different products that you want to sell.
The manufacturers not only allow you to sell their products but also deliver them to your customers. So, you are free of storing and managing the inventories.
When the customer receives the products, the package looks as though it was packed and delivered by you, not your supplier.
Well, you did not touch even a single product that you sell. You pay the supplier once your customers place the orders and pay you.
Dropshipping is an attractive business model, as there is no need for warehouses. And even no physical business location is required.
Reasons That Dropshipping Is Illegal Illusion
Dropshipping is considered illegal by most of the people. According to them, it is not possible to sell the products without holding or owing to the inventory.
Well, as dropshipping is a retail fulfillment strategy, therefore online stores deliver the products directly to the consumers.
· Unscrupulous Sellers
The ethical behavior of sellers can attract buyers from all over the products. But in many cases, dropshipper did not deal with the customers properly, and their behavior forces the customers to leave the store. Customers can find another option, but it can decrease your sale.
· Product Quality Is Too Low
When it comes to making your products, regulating the quality of products is quite more effortless. The dropshippers overlooked the quality of products, and it is so obvious why.
The products which a dropshipper is selling from an online store go directly from the supplier to the customer.
So, the store owner can never check the quality products. It is an attractive and appealing feature of dropshipping.
No need to keep the stock of products that you are selling is one of the many upsides to the dropshipping. But it does pose a significant problem.
Your great convenience of not seeing the products can be a problem for your customers. Unknowingly, you are sacrificing the quality of the products.
By providing low-quality products, you are not meeting the expectations of customers. Secondly, by vending subpar merchandise, you will get negative reviews.
Your good behavior and high quality of products can make the customers happy.
They may refer you to their friend, family member, or colleagues. But inferior quality products may not let the customers shop again.
· Difficult To Return Or Replace Goods
The consumer can return the purchased item. There can be countless reasons for a return. For example, consumers have ordered the wrong product.
It is widespread in dropshipping. The consumers cannot try the products in online shopping like clothes and shoes.
Secondly, maybe the quality of the product is low; it did not match the description.
Lastly, the items can be defective or damaged. In such situations, consumers will either want to return or replace the purchased items.
Returns are not fun for any party and can cause severe issues for everyone, especially for the consumer. To return the products, the consumer will try to contact the dropshipper without knowing that he is not the manufacturer. On the other hand, dropshipper will also not be willing to disclose his reality.
The store owner (dropshipper) may not accept returns. And the reason is that the supplier and dropshipper both have different return policies.
Due to which dropshipper did not know that supplier is going to accept the item or not. Therefore, the shop owner will refuse to bear the loss, and consumers suffer a lot in this process.
Handling the returns is a crucial part of an e-commerce business. If you can control the returns properly, it may give you lifelong customers. Otherwise, you will have to face an angry customer who may bash your company.
· Long Shipping Time
The minimum shipping time is about 20 days, which is a foremost issue to be faced.
Dropshipping is usually from China; that’s why it takes too long to deliver the products. And, people can’t afford this long to get their orders.
Dropshippers try to avail of the cheat shipping services, which costs less but increase the delivery time. One more thing, dropshippers do not use ePacket to order the products.
That’s why buyers fail to get the tracking number. It makes them mad, and they lose their trust in the store.
· The High Cost Of Goods
Store owners get the products at a meager price from the manufacturers. But for a high-profit margin, dropshipper tries to sell the goods at a high cost. Well, it may decrease traffic, and you did not earn much.
The consumers are now well aware, and they know that every store sells the same products. They can get the same product somewhere else at low prices. So, they will leave your store. Therefore, keep the price as low as possible.
· Lack Of Customer Support
The lack of customer support is another reason for the failure of dropshippers. It does not end up with the delivery of products, and you need to maintain a good relationship with the buyer.
You have to answer their queries and stay there until they are not fully satisfied with your products.Lack of communication between dropshipper and consumer is very crucial. In several cases, a high return rate was noted.
And the most common reason was the failure of the store owner to cope up with the quality of the product. Furthermore, he failed to convince the buyers and lost his business.
· Refunds Take A Lot Of Time
A refund is a good option for the buyer but not for dropshipper; therefore, it takes a long time. There are many reasons for this delay.
Many dropshippers did not mention the option of refunds on their website. It does not mean that supplier will never refund, but if the buyer accepts to wait for a replacement, it can be a better option for them.
The dropshipper has two options; either return the product to the supplier or force the customer to keep the product. By keeping the defective piece, the buyer can get a new product.
Well, it depends on the dropshipper, who will choose the most profitable option. That’s why the customer waits too long to get a refund.
How Is Dropshipping Legal?
Yes, dropshipping is legal. Mostly big box stores do some dropshipping to fulfill their online stores by providing low-cost products, and it is legal. Well, a dropshipper has to deal with taxation, buyers, and other legal procedures.
· Product Should Be Reliable
To get repute as a reliable seller, you will need to supply high-quality products. It is the only key feature that will help you to build trust and develop a friendly relation with the customer.
Just remember one thing to make your dropshipping business successful in 2020, good quality of products is very crucial. Dropshippers rely on manufacturers for the supply of goods.
As already mentioned, products dropshipped directly to the customers from suppliers; therefore, dropshippers are unaware of the product quality.
Only the reliable dropshipping suppliers can assure the better quality of products and consistent traffic at your store.
· Be Aware Of The Laws Of The Country Where You Market
Every country has its regulations, restrictions, and clearances for the packages coming from other countries. Try to understand the importation laws and regulations of every state to which you will ship your products.
According to TechinAsia, whenever you plan to export the products valued over $2,5000 to other countries except for Canada, try to follow U.S. Foreign Trade Regulations (FTR).
You will need to file your export information electronically through an Automated Export System (AES). Otherwise, they may seize your shipment.
You can find a countless number of dropship scams in this industry. They may introduce themselves as free dropshipping suppliers and offer you free services for two or three months. All of them will direct you towards their websites. Try to avoid them at the early stages.
· Middlemen Vs. True Wholesalers
A middleman stands between a manufacturer of products and consumers. A middleman does not have any warehouse to store the products. Furthermore, middlemen did not deliver the products they are representing.
They are passing the orders to the real company, which will dropship directly to the consumer. So, they are intermediaries and act as a directory.
The wholesaler is like a third party between seller and buyer too. But he used to store and manages the inventor, unlike middleman.
Furthermore, to increase the profit margin, wholesalers used to improve the cost of products. At the same time, you can buy the same products at a low price from a middleman.
Suggested reading:Best 10 China Wholesale Websites – Buy Wholesale From China
· Lack Of Dropship Program Contact Information
Dropshipping has changed the concept of online business, and it is now quite different from traditional B2B marketing.
The buyer is unaware of the real manufacturer as he is getting the products through dropshipper. The store owner may not provide his details or information on the store website. Or dropshipper may use the contact information of other suppliers or manufacturers.
So, a lack of contact information may cause problems for the buyer. It can be a severe problem for the consumers if he may not get the required product.
As when they try to connect the supplier, it may lead them to the wrong persons. So, the chance of scams increases.
· Big Money Promises And Quick Business Profits
Selling relatively cheap products through dropshipping and sourcing them at lower prices, can result in a high-profit margin while expensive products offer low-profit margins.
So, in short, dropshipping offers you a high-profit margin at cheap products, and it is the crucial factor for the success of dropshipping.
And this factor helps the dropshippers to sell high volumes of products, unlike expensive products. Customers also prefer cheap products over costly items. Furthermore, you can sell affordable products, either daily or many times per day. So, heavy traffic at your store ensures a high profit.
But it takes time. You cannot get the profit overnight. According to a study, it may take up to two years to get the six-digit profit.
Many scammers attract the drop shippers by offering high-profit margins within days. But the reality is different. That’s why big money or quick profit is considered one of the biggest dropship scams.
· Choose A Reliable Trusted Option
Inventory sourcing is reviewing the supplier’s programs and trying to help the members in avoiding the dropship scams for at least the next fifteen years.
It is difficult to provide some simple steps to prevent all the dropship scams. Try to follow the guideline mentioned above to avoid dropship scams.
Risks Of Dropshipping
Some people will have told you that dropshipping is a get rich quick scheme. But in reality, you can get unemployed so quickly if dropshipping risks overshadow the benefits.
So, get a considerable profit margin to avoid the risks involved in dropshipping.
· Getting Swindled By Suppliers
Dropshipping merchants and suppliers are tied together, and if they are equal partners in business to business services. And you know it is true.
Both of them are responsible for business success, shipments, timeline, maintain the product quality. If the dropshipper is doing everything correctly, the business cannot be successful without the efforts of the supplier.
You can find many fake dropshipping suppliers who have been preyed on the inexperienced vendors. So, it is one of the earliest gatekeepers to break the dropshipping and one of the most significant risks that dropshipping involves.
To avoid this kind of dropship scams, you need to find an authentic supplier. Remember that suppliers seem to be suspicious; try to avoid them.
You can find many others and work with a reliable supplier. Your success is mutual, and communication can help you a lot. Besides, you can also sign a dropshipping agreement contract to keep yourself safe legally.
· Thin Profit Margins
Dropshipping vendors may work less, resulting in lower profit margins. Most of the dropshippers are working with many merchants at the same time.
There will be many other stores in the market besides yours, who will be selling the same product as you are selling.
Besides the marketing and branding, the only way to stand out from the rest is to offer the items at possibly lower prices. But it will give you less commission or profit.
To avoid these kinds of dropshipping disadvantages or risks, sell the products with a minimum advertised price. It will facilitate both the supplier and merchant.
Beside it, you can also make an additional online store. You will need to focus on specific niches to get high-profit margins.
· Expensive Fulfillment Errors
Leading fulfillment logistics is one of the most attractive parts of the dropshipping business and one less thing for the merchants to worry about. You do not have any control over the supply chain, and it is the foremost drawback.
When different fulfillment errors occur, such as overselling or old stocks, the merchant suffers the most, even when the supplier is at fault.
Product tracking software works with the dropshippers just as you have a warehouse. The software can manage all your marketplace channels. If you sell the products, it will be updated automatically for you.
· Arbitrage Bans
Retail arbitrage is a perfect e-commerce model. The seller buys the retail items from the store at a discount and resells them online at the market price, pocketing the profit for themselves.
Merchants have started this model for the dropshipping, and they order the products from other online stores to fulfill orders made in their stores. But this practice is raising the alarm on some significant marketplaces.
The well-known worldwide sites Amazon and eBay have banned the dropshipping arbitrage. Both of these marketplaces stipulate in the user agreements that reselling their products is not allowed.
· Getting Overwhelmed
Dropshipping is not as easy as it looks. You are free from the stress of storing and managing the inventory. But it does not mean that you are a successful businessman.
The success of dropshipping depends on your strategy, marketing, branding, pricing, product quality, and advertisements on social media.
Monitoring and staying on top requires consistent hard work, especially considering that we will have to sell more to earn high profits.
With the help of product tracking software, you can manage all your sales channels from one dashboard. You can track the individual shipments, update the stock levels on your channels, and autoroute the sales orders to the right suppliers.
Is Dropshipping Worth It?
Dropshipping is still a successful business in 2020. If the company is saturated and it can reach a point where it cannot make much money for you.
In reality, you can earn money as much as you want by tackling the fundamental issues like product quality, etc.
· The World Has Embraced E-Commerce
E-commerce is emerging day by day as one of the most successful businesses. Online business offers you the ease of starting your own business at a meager starting cost and high-profit margins.
Beside it, you can advertise your products very quickly through social media.
Besides, there is no need to store the inventory, which makes dropshipping more appealing as an online trade. Therefore, most of the merchants try to start an e-commerce business.
· More People Are Buying Online Than Ever Before
Online shopping is thriving, and it is the latest craze among people now. It is not just a craze; instead, it signals a complete shift in the behavior of the consumers. Consumers visit the websites and try to find the products they want.
Online shopping stores, e-stores, online shopping malls, and internet shops help people to choose products from a wide variety. Visitors can get the images and necessary details of the required outcomes. Now they have more choices, including more products to purchase.
Online shopping is getting popular, and increased consumer demand is due to the availability of a wide variety of products.
The storage demands of the consumers and increasing numbers and types of goods available are the reasons behind the stupendous growth of online shopping.
Increased demand results in increased spending. These days people are doing more online shopping and spending a considerable amount.
According to a report, the number of online shoppers has been increased by up to 20 million.
Beside it, the total amount spent by consumers for online shopping has been increased to $68 billion. Well, online transactions have been raised by 115 million.
· Merchants Understand The Concept Of Dropshipping And Are Willing To Work With Them
There are many benefits the dropshipping business offers. The merchants are well aware of dropshipping and its profit margins; therefore, they are willing to work with them.
Dropshipping allows the merchants to offer many more products for sale than if he has to handle the inventory of all products.
Merchants know very well that an online store can give them more options than a physical store. For example, a coffee seller can offer more types on his online store rather than on the physical store because of space issues.
So, merchants know the same difference. They can offer a wide variety of products, low online prices, and can earn profits. Therefore, now they want to start a dropshipping business rather than any other traditional trade.
· Sending Online Payments Is Easy
It is clear and understood that a good product catalog could not assure you the success of your business. No doubt, dropshipping systems allow you to start the trade with little or no investment. Still, in addition to it, the payment is more attractive for investors.
Either you are a seller or supplier, the broadest payment system surely satisfies the significant number of customers.
The dropshipping offers you several ways to transfer money like PayPal, Credit card, Bank Transfer, Moneybox, and cash on delivery. All these methods are not only safe but also easy to use for both sellers and buyers.
· Can Help With Online Paid Marketing Campaigns
For the success of the business, online marketing is playing a vital role. You can also take help from online paid marketing to make your dropshipping business successful.
Nowadays, website owners are always trying to use more and more platforms for advertising their products.
Online paid advertising states to external marketing efforts, and it involves a paid placement. Online advertisements help the sellers to get massive traffic for their stores. So, these paid marketing campaigns can help you in making your business more successful.
You can use many platforms for the advertisement like social media, display ads, local ads, mobile ads, Facebook, YouTube, and Email marketing.
From all of these, social media can be a better option for the advertisements, as it has become the most powerful medium. You need to add images or videos of your products to capture the attention of viewers.
· The Upfront Cost Is Almost Zero
Starting a dropshipping business is easy but getting the success is not easy at all. Working and growing the online store is very hard.
The upfront cost varies depending upon the products you are dealing with. You can start an online store with a free trial of 14 days with Shopify. Well, later on, you will have to pay 29 dollars per month.
And to get a domain, you will need to spend 2-20 dollars. Well, this is a minimal amount you are paying at the start of your business; later on, you are going to earn a lot.
What Are The Biggest Problems That Dropshippers Face In 2020?
The supplier challenge is establishing a reliable network of suppliers. The supplier will represent the brand at the same high standards as the brand its self is.
· Shipping Delays Can Reduce The Number Of Online Customers Visiting Your Stores
In online business, you are competing against some world-renowned companies like Amazon eBay.
So, try to provide excellent customer support. Your good services will force the customers to shop again from your store.
Make sure your order process and checkout pages are user friendly and simple.
You need to give the accurate shipping time to your customers, instead of overpromising and failing to deliver the products on time.
You will have to update your email templates so that your order advertisements and confirmations can be personalized and friendly.
You need to choose fast shipping services so that the consumer can get the product on time. Furthermore, if the consumer is facing a problem with their order, resolve it as early as possible.
If the customer prefers the phone over email, try to schedule a call so the issue can be resolve soon. All these acts will make the customer happy and assure you of great business growth.
· Quality Of The Product Can Differ From What Was Actually Marketed By The Merchant
Quality is a crucial factor in any business. The excellent quality of products will give you a considerable number of customers.
In contrast, low-quality products may become a reason for failure in your industry.
Quality control is essential, and this is your responsibility towards the consumer as a supplier. So, try to provide the same product to your clients what it p[promises from the product description.
In dropshipping, the supplier is unaware of the product quality. The customers can get a different or defecated piece. In this situation, being the shop owner, you will be responsible.
So, try to get a reliable merchant who can assure you a consistent supply of the right products. Otherwise, you can be a failure.
· Your Customers May Get Something Else Than What They Ordered
Well, it is prevalent in online shopping. Both suppliers and consumers can be responsible for it. It happened most frequently when you are dealing with clothes or shoes.
In these cases, size issue, color, design, or many issues makes the customer unhappy.
So, as a dropshipper, you need to resolve the issue as early as possible You can either refund the money or exchange the product.
It’s all up to you. Choose that option that will not cut your profit. Otherwise, it may decrease your commission, as the merchant will not accept it, as he has his return policies.
· More Refunds And Returns Can Damage Your Credibility Against Payment Gateways
The consumer will not compromise on product quality and will ask for an alternative if you are supplying the worst products.
It will not only affect your store’s reputation, but it will also damage your credibility against payment gateways.
A considerable number of refunds will show that you are not a trustworthy person to deal with. As most of the transactions are online, you will not be able to defend yourself. It can harm you more.
· If Your Suppliers Use A Trademarked Logo On The Products, You Will Be Held Liable For It
In dropshipping, the supplier dropship direct to the consumer; you are not able to touch the products. So, you depend on the supplier for the quality.
For the consumer, you are the real supplier or manufacturer. He is unaware of your reality. So, if even by mistake, your consumers get the products with the trademarked logo of your supplier, they can get mad.
It will make your position questionable. Therefore, it is essential to put your trademark logo on the products before shipment.
· Difficult To Turn Your Dropshipping Store Into A Brand.
Branding your business is super important, primarily when you are dropshipping with Shopify or Oberlo.
To convert your dropshipping store into a brand is quite tricky at the same time. In dropshipping, you order products when you get the sales.
You are not much concerned about the quality of the products.
But when it comes to branding, you are going to represent your company at an international level. A little fault in your product will make you ashamed globally.
Branding offers you a high-profit margin, which is not easy to get. You will need to create a business name, logo, and a lot of hard words to get the brand.
Frequently Asked Questions
· How Profitable Is Dropshipping?
After purchasing a product of $15, you can sell it for $30. After deducing all the shipment and advertisement charges, your actual profit will be $10. In this way, you can earn $100,000 per year by making just 34 orders per day.
· Where Can I Find Dropshipping Suppliers?
You can find dropshipping supplier online. All the dropshipping companies are available on the internet with all their policies.
You can find them through Google. AliExpress, SaleHoo, Doba, and Wholesale2B are some of the best dropshipping suppliers.
· What Are The Pros And Cons Of Dropshipping?
- Low startup cost
- Low cost of inventory
- Low order fulfillment cost
- Low level of risk
- Less control over order fulfillment
- Reliance on other people’s stock
- Less profit
- Poorer customers services
· How Do I Become A Dropshipper?
You will need an online store to start your dropshipping store. After getting the store, try to fill it with the products you are going to sell. To make your store attractive, you can choose different types of themes. Contact the supplier and start to fulfill your orders.
Suggested reading:Dropshipping In 2020: How to Start a Dropshipping Business?
· Where Can I Dropship For Free?
AliExpress is a wholesale and dropshipping company. It can provide you a platform for free dropshipping.
How Leelinesourcing Help You Find The Best Dropshipping Products In China
Leeline sourcing helps you through the following ways.
- Find the best dropshipping suppliers for your business.
- Find trending products.
- Can also do dropshipping factory audit for you in China.
- Helps in transporting the products.
- And it will definitely help you to build your brand.
Suggested reading: The Profitable Products To Import From China
Final Thoughts on Is dropshipping legit
Is dropshipping legit in 2020, it is a crucial question for every person who is going to start an online store.
Dropshipping is a highly useful tactic if applied correctly.
The profit margin is high, and the stat up cost is very low.
Beside it, no need to hold the inventory. All of these make dropshipping the best option as an online business in 2020.
Well, it is a fact too that dropshipping is ill-suited for the new brands.
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