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To DropShip Or Not To DropShip

Apr 24, 2008
People always ask whether I offer dropshipping of my wholesale silver jewelry. The simple answer is "NO!". But because there is so much interest in this topic I want to offer a bit of dialogue that I hope will be useful for those considering this sales-strategy.

As a participant in dropshipping, your role is basically to market a product whose authenticity and quality you cannot verify to a customer you do not know. And the bonus: you have no control over the order fulfillment process. Hmmm... how many things can go wrong here?! This approach to sales is clearly not in the best interest of the consumer and therefore, I posit, cannot be one on which a sustainable business model is built.

CASE STUDY - Sandra and the cell phone drop shipper

This is a TRUE story with a fake name

Last year a customer of mine, to whom I sold wholesale jewelry, decided to expand her ebay business with a drop shipper and quickly started grossing something like $50,000/ week for a couple months! But she was now broke. What happened? It turns out the drop shipper was not as credible as she believed. Everything was great for a few weeks, then the calls started coming in. Customer after customer calling with complaints including: "I ordered 3 phones and only got 1!", "My phone is broken!", "Where is my phone, its been 2 weeks since I paid!". And like a good e-commerce citizen she refunded (EVEN THOUGH most of the payment - she only got to keep $5 per phone - she had already sent to the dropshipper) all the distraught customers and had them return the phones to the drop shipper. Guess what happens next? The drop shipper stopped returning her calls. So she has no phones, not even broken ones, no money - in fact she lost money since she refunded money she did not have... all in all she was f---d !

You could argue that the drop-shipper was the responsible party here, but in the eyes of the customer, and probably the law, she was responsible to those customers as the re-seller. 100% RISK = SANDRA, 0% RISK = DROPSHIPPER. Not exactly a formula for success. The Drop shipper really has nothing to loose and if he has a lot of merchandise and other customers, no incentive to make sure the end-customer is happy.

I forgot to mention, Sandra's paypal account was suspended and she was unable to pursue her main business for quite some time.

Drop shipping sounds like a great, low-overhead, minimal work, no money down kind of thing. But in this case the old adage holds: "If it sounds too good to be true, it probably is". Think I am making this up to promote my business? Just search google for "beware of drop shippers" .

So what are the other options? Take your time and start your business the right way. Identify a good wholesale jewelry supplier or suppliers for the jewelry or other products you want to sell, get to know them, and quality-test their products before making any large investments. And the most important thing about online sales is to develop a good marketing strategy that may involve search engine and website optimization, pay per click advertising, registering in free directories, email lists, etc.
About the Author
Aaron Rome is the successful owner/operator of www.wholesalegemshop.com and does NOT offer dropshipping!
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