I am very involved in the internet marketing industry and one of the things this entails is me to do is look at the various ways I can make money through it. Drop shipping is certainly one of them and I’ve even written up articles on how to make money through this method, giving quite good tips that I’ve used in other methods that have always worked, the only thing, I just switched the method of making money to, while the central success tips remained the same.
However, I’ve been coming around more and more to believing that drop shipping can be quite an unethical practice and in some places, even illegal and I’d like to give you my personal reasons on why I’ve come to this conclusion and what other alternatives you can look at to make money in an ethically sound way. So let me clarify a few points:
Drop shipping, is it actually illegal? How Amazon and eBay look at it.
2 of the most common places where you’re likely to encounter someone selling via this method are Amazon and eBay, so on the question of legalities, you simply need to look at their policy on this and the short answer is:
No, it is not illegal.
The reason why is that as long as the actual product is delivered/sold in a timely matter and the customer buying is happy, then it’s fine.
So what’s exactly unethical about that? Well this is where I have to “air” some issues out I have with this whole model and there’s really 2 central issues I find with the whole idea:
1) It is often FAR more expensive to buy through drop shipping, than the original merchant.
Let me give you an example,when I wrote my previous article on this whole topic, I cited a personal experience when I was trying to get my hands on a good phone and because it was out of stock everywhere and as far I remember, out of production, limited supplies were available, but you REALLY had to look for it.
I did find them on both Amazon and eBay, but the problem was (and you can always tell this is a drop shipper selling it), the price was substantially higher than the actual market price for the phone AND there was only “1” in “stock”.
And while the market price for the phone I sought was about $300, the prices these guys were putting up were higher (one case had it at over $500!).
Now I want to make something clear: I understand that prices fluctuate but to charge nearly twice as much for such expensive things is a bit much in my opinion. I suppose it’s a question of proportion…
But then we get into another VERY common issue with drop shipping:
2) There are often misleading auctions and listings put up by the seller.
The same people who put up that there’s 1 product left in stock for whatever you’re seeking to buy, also tend to mislead the buyers in various ways. At least that was the case for me in at least 5 instances.
What happened was, in the cases where I was fortunate enough to find the model phone I was looking for, at a price that wasn’t that much higher than the market price, I tried to place the order, only to get an email in EVERY single instance from the seller that they were “actually” out of stock.
After seeing this happen twice, the next 3 times this happened, I left a negative feedback to the seller because I was mislead.
What these guys were doing was they would inform me that the model I wanted wasn’t in stock (even though their listing said they had 1) and they wanted to sell me another.
Furthermore, they ALSO kept the listing up of the same model I wanted after I had the incident, meaning the next person to try and buy the phone from them would have the same problem.
This is VERY deceptive and unfortunately very common with drop shipping. This destroys the buyer’s confidence in that they’ll actually be able to buy from a GOOD seller.
3) Issues with shipping and prolonged wait times…
Very often the listing/auction as well as the number of supplies in stock put up by the seller is an inflated, false number. They may often NOT have a single product in stock (and in reality they do not since they’ll just order it from the vendor directly and send it to you anyway) and will claim that they do.
Then when you place the order, they’ll obviously try to get it to you. But…
What happens if the drop shipper is lazy and takes their time with the order YOU placed?
What if the seller goes to the company that owns what you want and they don’t have it in stock or there’s a long wait time?
It all leads to a negative experience for YOU.
My final thoughts:
When you put all 3 of these major issues together, these lead to a longer wait time for you to get your product. The whole issue here is that the seller is not actually the owner of what you want and they have to get it from someone who is and that extends the wait time for YOU, the buyer to get the product anyway and by the time you do, you will have waited longer, paid more and possibly have already gone through people falsely advertising they had products anyway.
While I agree that in many instances, a drop shipping approach to business can earn you more money because you can charge more, I see some ethical issues with this, because as I said, sometimes, this can go out of control and frustrate the buyer.
This is why I have said that traditional affiliate marketing is better than this because while you don’t own the product you’re promoting, you’re still leading the buyer to a person who does own it and is responsible, so they will get a fair price for their purchase and the shipping will be on time.
Compare that to drop shipping when the buyer will likely get the opposite experience, and you have a big issue that can destroy the trust and reputation of the seller. This is not the type of business I will be practicing nor endorsing in the future.
I think if you’re been on the receiving end of negative effects of drop shipping, you would agree with me. Why then, would you want to be the person engaging in it? Stick to affiliate marketing or at least OWN the product you’re going to sell to the buyer, so at least they know you actually have it and will get it to them, Then set your prices however you deem it to be fair.