What is dropshipping? If you spend time on social media, you might have seen ads or posts talking about how you can make thousands of dollars a month with nothing more than a website. It sounds too good to be true, but is it?
Is Dropshipping A Scam?
Someone who uses the dropshipping model is a middleman between the consumer and the manufacturer. The middleman or merchant takes a cut of the cost but never handles the product themselves. Overall, this is a legitimate way to do business. Companies have implemented it for decades to lower costs on storing expensive inventory.
The issue is this form of business has been adopted by the online get rich quick community. Their ads claim all you need is a website and some social media advertising and open up an online retailer. For example, a factory in China might make a product for $5 each. The dropshipper will create an online ad featuring this amazing product for $20. When an order arrives on the website, the drop shipper will purchase the product from the manufacturer for $5 and send it directly to you.
Check The Source
Unlike other ads that post ads with knock offs, these ads will be high quality and claim the product is coming from a boutique. The ad will take you to a professional-looking website that will reinforce the quality of the seller. Some will offer an SSL certificate for legitimacy. The price is a steal, so you place an order and wait. Eventually, the package will arrive, but after you open it, disappointment sets in. For example, the color might be wrong, stitching low quality, or the overall quality of the materials is bad.
This example is a common occurrence in the online selling world. Since you are not able to see the product before you buy it, you won’t know the quality until it arrives. In most cases, the sellers never even see the product.
The Scam Component
The dropshippers you see on social media who promise wealth with very little effort on your part is where the practice also gets a bad name. They will flout the ability to generate passive income, and while it’s true for some, they are the exception, not the rule. For instance, there are more costs then they let on. Even a daily marketing budget of $10 equates to over $3,650 over the course of a year. Other unexpected costs include chargebacks or returns when a customer is unsatisfied with the product.
As with most things in life, if it’s too good to be true, it likely is. Always check online reviews before purchasing anything from an online retailer. If you found this article interesting or helpful, check out our other posts!