First off, let me start by saying that I do not drop ship. However, I have researched the whole concept heavily over the past three years. I’ve even ordered a few products via China and India suppliers, to better understand the process. And I’ll let you know how those orders worked out later in the article.
For those who don’t know what drop shipping is:
- The Seller (you), opens an online store with zero stock.
- The Buyer makes a purchase via the online store. For the purposes of this article, we’ll say it’s a watch.
- The Seller then goes to their Supplier and purchases the watch at wholesale pricing, selling the watch to the Buyer at a retail price.
- The Supplier ships the product directly to the Buyer.
- The Supplier gets the money for the item and the Seller keeps the difference as a profit.
Essentially, the Supplier produces the goods and the Seller is the advertiser . And basically, that’s what a physical store is. They buy stuff at wholesale and sell it to you at retail. They spend endless hours and big bucks on the advertising process. How many times in a two hour period, in the middle of December…do you see a Target commercial? That’s how they make a profit. The store does the leg work for the supplier or manufacturer.
Online shopping is a fast growing marketing giant. So much so, that many stores have chosen to close their doors and only deal in online shopping. For instance K-Mart closed their doors in my location, however they still have an online store. They found their drop in sales (do to online competition), wasn’t worth keeping the lights on.
And honestly….I’m an online shopper junkie! Especially around the holidays. I hate fighting for traffic spots and finding a scratch on my car because someone just tossed their cart. I’m sick of going to stores that have twenty-six lanes but only two cashiers. Add the frustration of buying one item and getting stuck behind someone stocking up for the apocalypse with 5000 coupons in hand…..ugh.
But what does all this mean? Is the Buyer getting shafted?
Short Answer: Not Really.
Long Answer: It’s a society driven market. The consumers are running the show based on supply and demand. If you’ve ever bought a pair of LeBrons for your kid’s feet….you already know you’re paying for a label, but believe it or not the quality is decent too. LeBron doesn’t physically sit down and craft all of those shoes, but his name sells product. He’s a basketball player…not a factory worker. And he’s not gonna slap his name on junk.
Virtually every name brand item that you purchase, is the purchase of a label….a name. But name brand items tend to be made better because more people are buying those items allowing for better quality ingredients or materials, to go into the item’s production. And then the cycle repeats. The difference in the comfort level, fit and design of a pair of Walmart sneakers verses a pair of LeBrons is hands down not even a comparison. Walmart’s sneakers suck. And have you ever tried their dress shoes?
True story. My daughter had less then an hour to get to a band concert. The requirement for her concerts always include a pair of slip on black dress shoes. So I ran into Walmart and grabbed a pair of size 8 women’s slip on dress shoes. Huge mistake. They fell off her feet the whole night. And not because of size, but because of how they were made. The heel was too wide and the toe too narrow. The shoddy seams within the shoes, wore at her skin throughout the four hour concert. She was miserable and bleeding the whole night. Never…again.
So how is it worth it for the buyer to pay more for the product, then it’s actual wholesale value?
Well, technically it’s that cycle I mentioned. They pay for someone else to do the research and ensure the quality. The more buyers that purchase any one product equals more revenue. This means better quality materials to go into the making of said products thus ensuring decent products. This often happens with huge brands. The buyer is counting on the store and the brand, to provide quality. If they bought directly from Aliexpress for all their needs, often they’d get junk that’s not worth returning for the refund. That’s where knowing your supplier comes in to play. Keep in mind, due to overseas suppliers not having the same safety standards, that shampoo they ordered direct from alibaba, may include banned toxic chemicals.
Dropshipping comes in to play, when the supplier wants to move their goods, and needs someone to advertise their product. The manufacturer/supplier cuts out the cost of advertising, buy selling at wholesale to a dropshipping seller. The seller’s job is to advertise the product. That’s how they make money. If they can’t get anyone to buy the item, they don’t make a dime. The difference is…a physical store has to buy the item up front. A seller using dropshipping, does not.
Social Media has fast become the best way to advertise a product…free of charge. And it’s simple to do. I worked for a company a few years back. I spent most of my day running multiple social media accounts, mail subscription lists and print ads. I also designed their website. The beauty part was, I was able to do it all via my cell phone while hanging out with my kids. The down side was…constantly being on my phone! I wasn’t ‘present’ in the moment. I could be sitting on a cruise ship trying to enjoy the sun on the deck, but stuck staring at my phone screen. But that’s a whole other article.
The pitfalls of dropshipping are vast. So you have to know your supplier. That is crucial. One of the most common mistakes I have seen, are new sellers who are using an overseas supplier via alibaba, aliexpress or some other overseas company. What they don’t take into account when they are just beginning, is quality and shipping times. Those two things can utterly destroy a newly made Amazon account before it even gets off the ground. They also don’t realize that most of the suppliers on those sites, are running their own Amazon accounts and sending out the better quality products from the line… for cheaper prices. Essentially, the seller is being undercut by their own supplier.
Have you ever purchased from an online store, only to receive the item a month or more down the road? Odds are your seller was dropshipping from China. They didn’t physically have the item. It probably wasn’t even in the country. If the listed shipping time is twelve to thirty days, the item is somewhere overseas.
The other problem is packaging. I’ve ordered a few items from aliexpress over the past year. But I didn’t mind the wait for most of them. I knew up front. The problem I had, was with the packaging . Some stuff showed up broken, some things didn’t arrive and some things went well past that thirty days. However…keep in mind, the items are coming from across the globe.
I ordered a cat purse for my daughter. She’s into SteamPunk stuff. I also ordered SteamPunk sunglasses. The glasses came quickly, but the purse overshot her birthday by two months. So imagine you are running an Amazon store and your buyer gets their product two months late? Yeah…that won’t fly. Plus Amazon will eventually shut you down. They are running their own brand after all. It’s not good for business to have sellers who can’t get items to their buyers quickly.
For the purposes of this article, I’m going to show you my recent Aliexpress purchases and their wait times.
This my dashboard. It shows the amount of items ordered, the amount shipped and the amount waiting to be shipped….
All of the items were ordered on the same day. Only 9 have been shipped. 1 is awaiting shipment. That item was ordered last Wednesday. So that would be 6 days ago. But they’re processing time still allows for another 2 days. That means it doesn’t even have to leave the factory for another 2 days.
In the past, I’ve dealt with purchases where the supplier had 59 days to process (meaning before the order even gets filled. And it doesn’t even leave the factory until after that) . It just depends.
Now once it’s shipped, you’ll find it can be a month or more before it even makes it to the buyer.
I ordered 9 pairs of Nike earbuds.
Here’s a close up…..
Now look at where my items are…
They haven’t even left the country of origin. To be clear…I’m on the north/east coast of the USA. They’re coming from China. Yep…it’ll be a while. On the other hand, sometimes the tracking numbers aren’t actually accurate. They could be at my door and the number will state the earbuds are still in China.
Now here’s another annoying yet true fact to dropshipping overseas. Shipping costs and customs. OH BOY!
So those Nike earbuds actually have 60 days for the delivery to be considered on time. I know right? Ok…I hope I’m not boring you guys, because this part could take a while.
Here’s the suppliers ad. Notice the shipping time for the free shipping option. It says 20-39 days as an estimation time, but then below under the ‘Seller Guarantees: On-Time Delivery- 60 days.
Well, if you’re selling on Amazon….that flat out won’t work. So as a seller, you check the options for a quicker ship time. And here’s the result….
Yeah…I laughed too. 57-72$ ??? Nike earbuds aren’t worth it…especially knock-offs. So you’re probably thinking at those prices, you’ll just buy up front, wait a few months and put them on Amazon with the USA as the country of origin. You could…but the problem is, Amazon is saturated with items like this and the China supplier is more then likely selling the items on Amazon at a much lower price then you could. As for the Nike earbuds, it’s forbidden on Amazon unless you have permission from Nike. And again…the sets on Aliexpress aren’t legit. Nike would never allow it.
Another option sellers look at, is a niche market . One that isn’t saturating Amazon or Ebay. Like fishing gear….it’s hobby orientated. Hobby oriented items make sense because: Not everyone fishes, but everyone who fishes needs a fishing pole.
Problem is the mainland at this point. Let’s say you buy that $90 reel. The second the buyer makes that purchase, they become an importer that is liable for duty and VAT payments.
What that means is, different countries have different tax rates etc… Big Bro always gets their cut…no matter the country. For some countries, it’s $50 purchase or more. For others it’s weight and even others, it’s just because the government…is a dick. It just depends on where your buyer is located. They could wind up being told by customs, that in order to get that rod, they’re required to pay out an additional couple hundred bucks just to get it out of the customs hold. On top of that, alibaba (another branch off of aliexpress), can’t even get a lot of the products to the buyer. The product stops at the coast. It becomes the buyers job to then ship the item from the coast to home, out of their own pockets. And just like that, they’ll drop that fishing habit quick as a wink. They’ll also report you to Amazon, Ebay or the Better Business Bureau.
Again, I cannot stress enough…do the research prior to jumping!
I did find a few Aliexpress suppliers that were actually great. I ordered small items, to avoid issues with customs.
Aliexpress Suppliers I would recommend based on my own experience: (my experience only includes LOW WEIGHT ITEMS and NO ELECTRONICS…I haven’t got those earbuds yet, so I’ll let you know).
The first was 77 Fashion. I ordered a small decorative watch. There were zero issues and it came within two weeks. It’s my favorite piece of jewelry.
The next is Love Eternal. I ordered this bracelet. It also arrived at a decent time frame. Maybe 3 weeks. I love it and the quality is good.
Another is Fashion Leader. They were very kind and kept in touch, the order was shipped as pictured and I believe that one took three weeks. I actually bought two of them.
And those Steampunk glasses that came quickly? They came from: HD Crafter
Here’s what they looked like…and yes, everything pictured arrived safely.
It’s like shooting fish in a barrel. I got lucky with these specific suppliers, but there were many that weren’t great. It pays to buy up front. But that’s not what dropshipping is. Dropshipping is paying no money up front. And I knew the ship time and was willing to wait. An Amazon buyer, wants their item now. There are a million other sellers that can offer them 2 day shipping. How many times have you started ordering Christmas gifts one month prior? Try that with a product that isn’t located within your country…eek!
Oh…and the difference between Alibaba and Aliexpress, is Aliexpress allows you to buy ONE item and ships to your door depending on the item. Alibaba requires BULK. And ships to the nearest coast. The delivery to the door, is on you. And returns are insane. It can take months to replace an item, that the buyer already waited a long time to get.
One option to combat and completely circumvent that whole drama…
…is to use a ‘country of shipping origin’ dropshipping company. For the purpose of this article I’ll us my own, the USA. Believe it or not, there are local dropshipping companies here in the US. Also for the purpose of this article, I’ll be talking about Trademark Global. Reason being…I’ve been in the warehouse, I know how it works and can therefore use first person experience rather then internet quotes.
Their websites: Trademark Global and Trademarkcommerce can provide even more info.
Trademark is a USA based supplier. I know that if I dropship via Trademark, my items will be shipped from the US. The product is here in the country. And how it works is similar to overseas companies. They have a list of items that they have for you (the seller) to dropship to your buyer. They sell at wholesale, then you sell at retail. Your job is to advertise the product and sell it. They’re job is to provide the product. You keep the difference for advertising and selling the product. That is the very definition of a dropshipping seller. And just like overseas companies, Trademark doesn’t require you to buy all of their products in bulk and store them in your living room. Again, they actually have the product in the building at the Trademark warehouse. They get paid, when you do. Plus, it’s simple to return the item to the warehouse and get a new one or a refund. They can even include return shipping labels in the packaging. You decide what or if any, documents you want shipped with the package. Do you want a packaging sheet with your stores name enclosed? Maybe a coupon off their next purchase? Trademark does that for you. To repeat (because clearly I’m repetition obsessed), here’s how it works.
- You search the Trademark Global catalog and pick an item.
- You post your item, description and your selling cost on Amazon or wherever.
- A buyer purchases the item from you, at retail.
- You then buy the item from Trademark, at wholesale. (So if it doesn’t sell, you aren’t stuck with an item…nor did you pay out of pocket).
- Trademark locates the item in their warehouse, packages and ships it off to the buyer.
- You keep the difference. Transaction complete.
No customs for USA buyers and no insane shipping costs. Plus FED EX or UPS can get it there quickly. That pretty much guarantees returning customers. The alternative (waiting over a month for an item), pretty much guarantees you will lose customers.
Again… I cannot stress enough the need to research your supplier, the product and customs laws prior to jumping into dropshipping via an overseas supplier. It’s all fun and games until someone loses money or product. Or gets hurt. That’s a big one. There is a reason why we have safety standards here in the US. To be a successful business, you have to be reputable, on time and know your own products.
Another tip: Always test your product, no matter where its from. Buy one for yourself. Physically look at the item in person. I can’t tell you how many times I have ordered a product online ; only to get a cheap material, shoddy build, distorted colors, etc… Photoshop can make any suppliers item look bloody fantastic. And if you sell a toy to a parent here in the States, that doesn’t hold up to our safety regulations, you my friend…are screwed. And you’ll have zero local entities to blame, making you the fall-guy.
Local dropshipping companies, have already passed US inspection. For instance Trademark Global sells this game. We know it’s safe to sell, as the product is on site and approved.
Prime example of item not as portrayed: Here’s an item I bought from Aliexpress (their photo on the left). On the right is me. What you don’t see is the sizes. I weigh maybe 120 lbs. I’m 5’7″. I had to buy an XXL. Get it? The small or medium wouldn’t fit my Cocker Spaniel. And notice the color difference. I didn’t use photoshop, so guess who did? And the picture on the left is the one you would be re-posting on Amazon in order to dropship that dress. Fortunately, I paid maybe 3$. If you had sold this to me on Amazon at 30$, I’d be requesting a full refund and posting negative feedback. (That reminds me….it’s virtually impossible to return anything overseas, without taking out a second mortgage).
And quite frankly, that’s what the buyer is paying retail for. They’re paying for the item, safe in the knowledge that you did the research for them. They know you aren’t at home building iPhones. They know you aren’t the manufacturer. You are the store. You pick products for your store, just like Target does. And just like Target, they expect you to know your inventory. They expect that you will have picked decent products. If you don’t know your product, or cannot ship in a timely manner, or ship broken items from overseas that took two months to arrive, or sell cheap poorly made items and the buyer has to pay for customs…your business will fail.
So anyway, that’s dropshipping in a nutshell. As I said, I don’t dropship. But I do enjoy research. And the more something starts to flood the internet, the more my curiosity takes on a life of it’s own. I’ve considered dropshipping, but I’m one of those people that needs to look before I leap. Plus I flat out like to argue. And I can’t debate a topic prior to knowing what the hell I’m ranting about. Yes…we all know I like to rant.
On a side note: As a country it’s true we’ve lost quite a bit of our manufacturing to overseas manufacturing. One thing to consider is that using a USA dropshipping company, actually employees US citizens. It takes a lot of workers to pick, package and ship. Trademark Global’s existence in Lorain, put a lot of unemployed people to work.
I had written an article a while back . Lorain, Ohio: Let’s Play the Blame Game
Now here’s where it gets interesting…
Many of the items now manufactured overseas, are items that while in the manufacturing stage (such as plastic components) …have cancer causing chemicals. If you read the article in my link above, I’m not sure if I posted it or not, but you’ll see my father worked at the shipyard. What you don’t know, my father was one of the many of the workers who later developed mesothelioma. So yeah…he was employed by the shipyard and lost his job when it shut down…his job that was killing him. And he’s not the only one.
Many of our lost industries were moved overseas due to our country becoming more regulated safety wise. The assumption has been made that all of the industries left due to cheaper production overseas. But there’s actually more to it then that. Many overseas countries are less regulated when it comes to their workers. And yes that is sad. Pathetic actually. I don’t think anyone disputes the poor working conditions that do exist across the globe. And no…I personally do not agree with anyone being exposed to harmful substances without the proper gear.
That being said, some of those countries are growing by leaps and bounds financially, thereby increasing better conditions for their workers. I can’t just blanket statement that they all suck. I haven’t been there to tour the factories.
In order for the US to make the same products, the cost would be massive. You wouldn’t be able to afford the resulting products, because the parts required to make them just wouldn’t be possible to create, under our existing safety standards. For instance, a factory worker here may be required to wear a fully functional safety suit or special mask. And where are the parts from the mask going to be made? How much are they per employee? What about the exposure to skin? Better buy a suit too. And some stuff, we are flat out not allowed to make. Businesses also don’t want to be subjected to the resulting class action suit that will eventually happen, when their workers start dropping from cancer. By law in the US, we simply are unable to produce many of the items that are made overseas. We have many products on the planet, that were created by using ingredients that were dangerous during the ‘chemical reaction’ stage, but rendered harmless once that stage was over. It’s basic chemistry. And it’s that danger during creation, that our laws are based on. Here’s a link to OSHA if you want more info. OSHA If you’re considering dropshipping items that are not located within your country of origin, make sure they can pass inspection at customs prior to posting the product. You would be amazed at how much stuff cannot.
But here’s the issue. Consumers decide the product, not the manufacturer. It’s a supply and demand world. How pissed would you be if you were having a heart attack and the docs couldn’t help? Because here in the states we legally cannot expose workers to certain chemicals needed to mold that specific component required to save you.
Below is a pic of a part required for an EKG machine. This is just an example. We may actually be able to make it. But I went ahead and chose GE, an ‘American Made’ company, that I would like to buy the part from.
Now let’s go to GE’s website:
And here’s the link to the photo above, so you can see for yourself….seriously…I can’t make this stuff up. GE American Made
Their parts are not all American made. The reason the parts cost more to make here, is due to our safety standards for factory workers. It would cost a company more to ensure the safety of their workers. We don’t want to get sick making the parts, but we still need the item to keep our health. It’s a catch 22. Let’s face it…we already pay an ass-load for healthcare. I still haven’t been able to speak out loud my out of pocket expenses after my son was hurt. And I have Blue-Cross. Can you imagine how high they would be if the machines required to save him, required parts that were triple the cost of what they are now? In this example…an EKG machine. And as far as the factory jobs lost…the workers wouldn’t make enough to offset the increased prices anyway. Believe me, I know it sucks. But it’s a cycle, we currently have no solution for it. Do we dump our safety standards and create more workers with mesothelioma, like my dad? Or do we provide more jobs, by opening the distribution field. There’s a fiberglass factory in Elyria, paying 9$ an hour. You think those employees could afford a more expensive EKG machine? And they’re employed factory workers here in the States. That’s their income. Still miss those jobs? (Go to college kids!) Only the higher-ups make more then that. How screwed would they be if their deductible was 800$ to walk into an ER, vs the already sucky 250$? Assuming they have benefits. And for the record…they offered me a job, which I declined, after they told me in full disclosure I would be exposed to hazardous cancer causing chemicals. (I’m going with my own deductible as an example. I have no idea what the costs are for other insurance companies).
While we can’t make the part, we can still house the parts in the USA and create jobs via distribution companies. Trademark Global did just that. They employ hundreds of Lorain residents. So keep that in mind.
In closing, dropshipping can be a very lucrative business. But it can make or break you in a second.
- Be careful who you choose as a supplier
- Know your product
- Know the customs laws
- Know your shipping times
I’ll be doing an article on Social Media Advertising at some point. Such as how to get followers quickly, what platforms to use, which email subscription company to use etc… And how to do it free.
I hope I covered most of the bases. And hey…I’ll let you guys know how those earbuds buds work…if they ever get here.
UPDATE: The Earbuds Arrived!
They work perfectly.
Order time & date: 03:50 Jun. 22 2017 Arrival 6/30/2017…so 8 days for delivery. Not bad at all! I have a new favorite seller.