I disappeared down a dropshipping rabbit hole for a while.
Hi there,
It's been a while since I wrote a blog post here, because I disappeared down a dropshipping rabbit hole for a while, and it's taken me a bit to come to my senses and dig my way out.
Now this is not a 'anti' dropshipping post at all, but I am going to share my experiences. You see, I think it's important that I write this down so that the next time I have a silly idea about going off on a tangent, I can read this and realise that it's not worth it!
I signed up for a local e-commerce dropshipping solution - which is exclusive to New Zealand, the country I live in. It integrates with TradeMe, which is an NZ auction site, not too disimilar to EBay.
The idea behind dropshipping in this instance was:
- I promote the vendor's products through my TradeMe auction site
- Buyers pay me
- I pay the vendor
- Vendor ships product direct to buyer
I earn a small markup of 25-35% on each transaction I do.
This in theory sounds great, and when one is turning over hundreds of dollars a week, that commission adds up... right?
WRONG!
By the time TradeMe takes it's hefty 7.9% fee off every successful sale (and that includes shipping fees), and I have paid for the dropshipping software at around $50 per month, this chews into that margin considerably. Oh not to mention the additional 1.95% deducted if someone chooses to pay by credit card.
There are savings to be had if you are a top seller (15% saving on fees to be exact) but even though I hit all the qualifying criteria, there was one that alluded me... so no discount for me.
"What's the problem?" I hear you ask. "You still made a couple of bucks on every transaction... so isn't it worth doing?"
I thought so. But the reality is, it wasn't. Especially if you get into a lengthy dispute about the quality of the goods you are shipping, or if something doesn't turn up, or if the goods arrive and their faulty.
And here-in lies the problem. When things go wrong, it's my good reputation on the line, not the vendor. In a couple of instances, I decided it was better to refund my buyer and take up the dispute with the vendor, to avoid damaging my reputation. But when the vendor refuses to play ball or refund the cost of the item, it's me that's out of pocket. And that has a direct impact on the overall profitibility of the dropshipping business model.
I've had vendors tell me:
"don't refund the money, make the customer do xyz (basically jump through hoops) before we will consider their claim"
Well actually, if I did that I wouldn't be able to sleep straight at night.
So dropshipping is not for me.
The funny thing is that I made more money with my niche site built here on WA through adsense, than I did on my adventure down this dropshipping rabbit hole.
Lesson learned this time?
I hope so!
Onwards and upwards, cheers, Karen
Join FREE & Launch Your Business!
Exclusive Bonus - Offer Ends at Midnight Today
00
Hours
:
00
Minutes
:
00
Seconds
2,000 AI Credits Worth $10 USD
Build a Logo + Website That Attracts Customers
400 Credits
Discover Hot Niches with AI Market Research
100 Credits
Create SEO Content That Ranks & Converts
800 Credits
Find Affiliate Offers Up to $500/Sale
10 Credits
Access a Community of 2.9M+ Members
Recent Comments
32
Hi Karen,
I am sorry to hear about the 'not so good' experiences. Glad you came out of that hole. I have written 5 posts on drop shipping including the advantages and disadvantages. You have given us food for thought here.
Yeah, I love the theory behind dropshipping. The implementation is where all hell breaks loose. Also, when you want to bundle products for your customer and the products come from different vendors, they'll all charge those fees on each of the products.
Sometimes, you'll find products with a decent margin. But, once others discover what you've got, they jump on the bandwagon and it becomes a race to the bottom on price.
One way I think drop shipping could be useful is to use it as a loss leader. In other words, you sell the dropshipped product for a small loss or breakeven and then use that as a way to get people on your email list or to sell them products that are higher margin. But, you still have to go through all the work to set everything up.
I have read about a few people who state they do quite well with drop shipping. I don't know if they are lying or they have ways to do it they won't divulge.
As for going down the rabbit hole, sometimes you have to try things to get it out of your system. Now you have something to write about on your blog, too.
Best Regards,
Jim
Hi Jim, yes you are right about the shipping from multiple vendors, which is a real hassle. Especially when the customer can't understand why you're not offering a single shipping rate. I'm just glad to get it out of my system LOL. Best wishes, Karen
Good to hear from you Karen and the experience you had with drop shipping. I have been considering going into it but my feet get heavy, now I know why. Thanks for sharing.
Debbie
Hi Debbie, great to hear from you. I'm not saying all dropshipping is fraught with difficulty, but I would advise you to proceed with caution before you get too far down that path. For me, it's now back to work on my niche! Cheers, Karen
So glad to see you back here, Karen. Sorry to hear about your drop-shipping rabbit hole adventures. Thanks for the heads up so the rest of us can avoid similar situations. :)
Colleen
Hey Karen,
Glad to have you back!! Thanks for sharing the details. I have been reading about dropshipping. Of course only good thing because they want people to join. Glad to hear from someone who actually did this.
Tried and True
Elaine
Hi Elaine, I'm sure plenty of people make good money with dropshipping, but this particular model didn't work for me. Too much risk for too little reward. Cheers, Karen
Karen, thanks for sharing your drop shipping experience. Congrats on gaining so many sales that you have been able to get first hand experience that has allowed you to determine that drop shipping is not the business model that you want to pursue.
It is not for me either.
Thanks Sondra, I'm glad you found this article of interest - it was quite the adventure! Cheers, Karen
Thanks for sharing your experience, Karen. Glad I decided not to pursue drop shipping business (I didn't know about the fees aspect of it but sure did know I didn't want to deal with customer service). So I decided to stick to affiliate marketing, specifically, Amazon niche site for now.
Basically you end up being a customer service rep for the products you are selling - it's not just a simple transaction when things go awry! Best wishes, Cheers, Karen
See more comments
Join FREE & Launch Your Business!
Exclusive Bonus - Offer Ends at Midnight Today
00
Hours
:
00
Minutes
:
00
Seconds
2,000 AI Credits Worth $10 USD
Build a Logo + Website That Attracts Customers
400 Credits
Discover Hot Niches with AI Market Research
100 Credits
Create SEO Content That Ranks & Converts
800 Credits
Find Affiliate Offers Up to $500/Sale
10 Credits
Access a Community of 2.9M+ Members
Sorry to hear you had a bad experience Karen. Glad to hear you are one step closer to clarity about what you do want now.
Yip I sure am. I'm totally focused on my niche site with a view to continue to grow my monthly traffic and adsense & affiliate revenue. The WA bootcamp stuff is going to follow, but I want to successfully apply the principles first. :)
good for you. Did you get my website feedback on your writing site?
Yes thank you :) apologies for slow reply, juggling too many things at the moment! but yes, I really appreciate your feedback. cheers, Karen