Reconnecting...
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
Reply
Not sure why you would need drop shipping software. That's something I never had to use.
The only thing I had to pay for was the access to the over 1,000 certified wholesalers who offered free drop shipping.
My cost was much more cheaper than what you paid. I only had to pay a one time cost of $299.00 USD, and I get Life-Time access.
I can sympathize with you on the fees for selling items. Where you paid TradeMe a 7.9% fee, eBay is even higher at 10% and the PayPal fee is 2.9%. This is why I stopped selling on eBay.
Eventually I will build an e-commerce website here at WA, and use my access to the free wholesale drop shippers.
Seeing how I have Life-Time access, I do not need to rush back into drop shipping. I can start up again when I am ready.
Drop shipping can be quite profitable but only if the vendors you are working with are genuine wholesalers.
One sure fire way to know if they are genuine is the cost to you. Working with certified wholesalers does NOT require you to pay a membership or monthly fee of any kind.
If you are being asked to pay a monthly or any kind of a membership fee to a vendor, you are getting ripped off.
The only time I had to pay a vendor for a service is if I had a return and a restocking fee was applied. Even so it was never more than $5.00 USD.
When it comes to doing drop shipping, one must be careful. There are a lot of drop shipping scams. Drop shipping for the most part should always be FREE.
It's just too much hassle with the customer service.
I couldn't handle it.
Left it (thank God I did!), felt lost for a few weeks, got online again looking for something else to try out, came across this 'thing' called
- affiliate marketing.
Decided to explore a bit more and ended up here! Yeeey!
And this is, why in the end, I am forever grateful to dropshipping. Had it not been for my poor experience with that line of business I would have never tried affiliate marketing.
So, even if something doesn't work out, it does serve a purpose in the end.
Welcome back! :)
Best,
Alenka
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.
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
Colleen
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
