Anyone heard of dropshipping?

[Mumnetter111]

Thoughts on this?

It's a pretty shit thing to do ethically.

Yes I’ve heard of it. Do you want to be more specific in your questions?

No. Not heard of it. Care to explain?

Yeah it's a crap thing to do. Very scammy in essence.

Businesses might have delays in getting stock and then their suppliers can send the item to the customer directly. Not all suppliers sell retail but might drop ship if they aren't getting stock to retailers. Some special/large items might come directly from supplier to save double handling. Sometimes retailers advertise items from other companies as it fits their "collection" - joules do it and the product comes from the other company.

What's bad about it?

Just read up about it. So basically you act as a middleman selling stuff you don’t actually own.

This isn't accurate from a tax perspective. I work in tax and see a lot of people and businesses thinking they don't need to pay tax or register because they don't own the products. You can't sell something you don't own.

Just to make you aware OP if it's a business model you are considering.

I don't understand what's a scam or suspect about it! I buy items that are drop shipped all the time. It's often used by small entrepreneurs who can't keep stock - you have, say a T shirt design, it gets ordered by customer and a third company (Redbubble, Society6) fulfill it. I sell stickers and other items through them. They are my designs, and a customer can order them printed on a phone case, magnet etc. print on demand but they also ship.
I think some pp are thing of large companies that ship out of China? Still don't see how that's a scam, though scammers do use dropshipping.

i thought it was fairly common?

basically instead of storing physical stock to send out to customers, businesses get it shipped directly from the supplier to the customer.

you can often tell when you order, then a day later you get an email telling you it’s out of stock.

i can’t see what the scam is? It’s been around since the start of internet shopping.

@Testina
If anyone could advise me on these:

1. How to deal with shipping times with aliexpress (have looked into CJDropshipping but it doesn’t seem to have good reviews associated with customer service.)
2. What is the legal side in the UK (Do you need to pay taxes, register before beginning?)
3. Is there a better option other than shopify e.g eBay and Amazon
4. How to avoid losing money - any hidden costs?

TIA

I'm not in the UK, but it's fairly common here. I don't see any issue with it. It just means a business doesn't have to carry a massive amount of stock.

Answer to 2 - the legal side.

In the UK you would either need to register as self-employed or you can set up a Ltd company. Taxes are paid on profits.

Answer to 4 - hidden costs.

Business insurance, business banking fees, web hosting fees, international transaction fees and exchange rate differences, card transaction fees, and that's just for starters.

Whether you're selling via Shopify or a marketplace will affect your VAT liability.

I work for a retailer and we stop this if we find out a customer is doing this. It creates issues around refunds and guarantees and there's the whole GDPR issue now too. The recipient often comes back to us but we can help as it hasn't been ordered in their name. The dropshipper often isn't interested in helping so it affects our reputation.

Lol at people with clearly no knowledge stating dropshipping is a scam or unethical! It's a recognised business model and if you're a human who shops online, from big or little shops, chances are you've bought something that's been dropshipped before. It makes no difference to the customer if your new xyz is sent from a warehouse owned by the retailer or supplier, none at all.

We have company that dropships op - it's homeware and furniture. My main warning would be that it is definitely not quick or easy money, it's a business that you need to work at and invest in like any other.

I can't help with aliexpress because I avoid them. It's too big, too much uncertainty and risk imo and we don't dropship from abroad. Less profit sticking to UK suppliers and wholesalers but greater peace of mind.

The business is technically DH's - he's registered as Self Employed which is quick and easy to do. You need to pay tax on your profits the same as any other income.

We have a website and FB page. We have 7 suppliers on our books and all of our stock is dropshipped direct from the supplier to customer. Choosing the right suppliers took us 9 months.

It took us 2 years, plenty of false starts, frustrations and mistakes to set the website up properly. 6 months ago we spent £3500 as a one off cost for an independent Web designer to refine it - make it more user friendly, more appealing, SEO efficient etc - and it was money well spent. I wish we'd done it at the start.

We plough through thousands and thousands of items from our suppliers, select our chosen stock and upload it to our website...this is not always an easy process and you need to be quite techy to manage some of the spreadsheets ime, it's totally beyond me but DH is a whizz at it. The pictures and item description are provided by the wholesaler. Customers buy from our website, like any other. We collate the sales and forward them to the suppliers every other day. Item gets sent to customer. We pay our suppliers invoices, we get paid by the end customer, picking up the difference minus card processing fees.

Profits vary and setting your price is a minefield. We might pay a supplier £45 including delivery, for a lamp. But that exact same lamp will be sold by ten other companies. We research it (Google image is an underused tool!), set our price point, and sell it for £65.

The marketing is key. We're not the cheapest for any of our products - but our website is shit hot. Easy to use, beautiful, looks like a professional major retailer - you'd never know its just me and DH sitting at our dining table and that's the aim. People buy from you because of your website and brand, not the product. We stock some of the same ranges found in The Range. The only difference is that The Range buy wholesale in bulk, making their costs lower and profit greater so they can afford to lower their sales price. We use the same supplier but for dropship.

Social media is a drain that I hate - posting daily lifestyle produvt photos, marketing, encouraging shares and likes, making engaging and interactive posts. Bleughh. But it's necessary. We're going to outsource the SM side next year because it takes a huge amount of time and I'm just done with the faff.

Costs - website and email hosting, website design, business insurance, marketing. And the cost of mistakes. We once sold 4 x £149 (cost price) tables for £56 each. No way to rectify it. Spreadsheet error by us and lesson well learned.

We made a loss for 6 months then pretty much broke even for a year. Now in profit which is increasing monthly, after our website overhaul. Slowly building our products and brand.

But it's been a slog to get here. Research, product selection, marketing, website development, it takes months or years to build and improve it if you do it right. You can do it in a fortnight - but you'll have a pop up website that looks like a one man band that no one buys from.

Don't believe the shopify 'easy middleman income' hype - if it was that easy, everyone would do it!

Oh and we don't use shopify - there are plenty of website hosting companies out there and shopify are a long way from the best of them, despite the marketing fluff they put out.

@TeresaBlue thank you!! That was one of the most informative posts I’ve read on the internet. So much fake information across the internet from SM and people trying to promote their courses. Marketing and web design I’m not as worried about as I have a background in that type of thing. A few more (probably stupid) questions.

1. how do I go about finding a legit uk supplier - all the information about dropshipping suppliers I can find are Chinese?
2. does tax and insurance have to be payed before even starting the company or is it just after it starts making a reasonable profit in the UK?
3. how do you deal with people wanting refunds?

any other tips would be great, have learnt so much from that post.

Yes I've heard of it. I believe you are the middleman advertising & selling products that could be actually stored anywhere in the world and taking orders for the stuff which then gets shipped to the customer from the actual owner of the products.

Ah no problem, I'm glad it helped!

We watched hours of You Tube tutorials on dropshipping at the very beginning - some were helpful for a basic overview but most really are about pushing their paid for courses or make out you can be a millionaire in a month, it's difficult to pick out the good bits! I also went down the Amazon FBA/private label/Chinese suppliers rabbit hole for good while...but we decided sticking to the UK and selling only from our own site was best.

If you have a background in marketing and Web design you're already in a great position - DH and I were complete beginners and had to self teach. I must have spent weeks of my life reading articles on SEO and SM marketing tactics and DH the same on website design and building, it was a total chore to 'learn' it from scratch.

In terms of finding suppliers, I suspect we went about it in a totally arse backwards way but it worked in the end lol. Started just from Google - 'UK dropshipper homewares'. Skipped past pretty much all the top results which are for shopify and the like. I found one (small) supplier, set up with them.

I went through their inventory and found products I liked. And when I found a product I liked, I Google image searched it and found other websites selling the same, who were obviously also using this supplier. What I found is that UK retailers who dropship from one UK company often stick to mainly UK suppliers.

Then - when I found a retail website I liked selling that exact item, I looked at the websites other items that weren't from this dropshipper. And I image searched these items and googled the product name and eventually traced them back to the supplier. Then set up with that supplier. Also lots of general research into each specific supplier once we'd tracked them down. Rinse and repeat. Like I said, arse backwards and probably the 'wrong' way and took ages - but it did work! Feels a bit like being a detective lol.

Insurance we set up about a year in - should probably have had it at the start though! And tax wise, DH was already registered as SE because his day job is as a cabbie. So he just does an annual self assessment for the tax - I would set up as self employed straight away though, it's quite straightforward from memory.

Refund wise we've been incredibly lucky I think because we barely have issues. Each dropshipper will have their own T&C for how to handle refunds - some accept returns, some don't (except if faulty) so it's something to keep an eye out for. We have our own refund and return policy on our site. Customer contacts us, we provide a return address and refund one we get confirmation from the supplier that item has been received back. Customer pays postage unless faulty.

We've had a couple of arseholes, lowish value items, turned up damaged, photo proof of very minor damage but customer screaming about putting it on twitter - and we've just refunded them direct and told them to keep it. It's not worth fighting for risk of reputational damage sometimes - but luckily we haven't had this happen with a high value item!

Happy to answer any other questions op 😊

The reason I think it's dubious ethically is because you're generally importing stuff direct from China are you not? And therefore it completely bypasses any kind of quality/safety standards that exist for the protection of consumers in the UK market. I don't think it's great to be selling stuff that could be dangerous or at the very least is often poor quality and falls apart after a short period of time which is terrible environmentally. Not to mention the environmental cost of shipping stuff unnecessarily across the planet (although, I'm sure we all do this to some extent).

I did not actually realise that you could do it with products that originate in the UK - but even if you are, I still think it's a bit weird to sell products you've never seen or touched yourself. That would be important to me if I was running a business.