I disappeared down a dropshipping rabbit hole for a while.
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?
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