You might be thinking of starting a dropshipping business, but maybe you are surrounded by much information leading you to ask yourself- Is dropshipping legit, or is it a scam?
We can say for sure- YES, absolutely, the dropshipping model is legit, but like any other business model, it has its risks.
Dropshipping is a profitable business model that can lead you to a successful eCommerce business. You can avoid the strain of keeping inventory and shipping.
This might be the reason why this business model has grown in popularity over time, especially among beginners.
Sadly, this is also the point from where things can start to go wrong.
The majority of new dropshippers dive into dropshipping uninformed. They overlook the fact that dropshipping has a sketchy side too, starting from the suppliers, to product quality, and more.
Want to stay away from being a victim? Let’s uncover the most critical dropshipping scams!
Why Do People Think Dropshipping Is A Scam?
Dropshipping business is not a scam, but scammers are taking advantage of dropshipping!
Scammers that send poor or fake goods are becoming more prevalent in the eCommerce industry. Due to this, many consumers and even some failed dropshippers believe dropshipping to be a scam.
Moreover, there is a lot of aggressive advertising that dropshipping is a high-profitable business. Well, it’s not!
So beginners that are not informed correctly, or do not research before jumping into a certain niche, might expect more, and get less. This might lead them to a bad experience of dropshipping, and they might think that it is a scam.
However, people frequently forget that all businesses, regardless of their format, run the danger of being scammed. Let’s find out what you should watch out for!
How To Identify Dropshipping Scams?
Although not always is easy to identify dropshipping scams, some of them can give common signs. Thus, we will list the most common dropshipping scams. Let’s start!
Scam 1: Fake products, Low quality, High price
As a dropshipper, you don’t get access to products you sell, as a matter of fact, dropshipping is the kind of business model where suppliers ship products directly to the customers, and you do not hold inventory.
But, you must be aware that various suppliers aren’t trustworthy. You can order products for low prices from suppliers because this gives you space for higher profits, but these products might have low quality.
Furthermore, never believe that dropshipping products are original! The majority of dropshippers supply their products from Aliexpress or Alibaba. There are products from a variety of brands, like Nike, Adidas, Puma, Converse, and many more at incredibly low prices. And of course, they are fake!
But, many dropshipping suppliers claim that they are the Original Equipment Manufacturer of the product, which is obvious that they are not.
So, you will eventually get negative reviews or refund requests from customers who claim that the product they received is not what was described. This can be critical to your business’s success.
Scam 2: Phony product samples
Be careful about this matter, because not all seems as it looks! At first sight, you might say- “Yeah, how nice, this supplier seems legit, and sends product samples”. But a moment later, you might be surprised.
Many sellers give misleading samples, yet the final product may be damaged or of poor quality.
Since you cannot personally examine each product as a dropshipper, they take advantage of this. Instead of simply stealing your money, they would supply poor products to your customers to earn a good profit.
This might be the cause of consumers complaining about the quality of your products frequently. Moreover, this has the potential to ruin your brand’s reputation entirely.
Scam 3: Fake suppliers and reviews
It’s possible to find dropshipping businesses that are completely fake while looking for the ideal dropshipping supplier.
By displaying an excessive inventory and maintaining their claim that they are selling their goods at wholesale pricing, these scammers may come across as credible.
Furthermore, it might be challenging to confirm that you’ve dealt with this particular scam because many reliable suppliers do sell certain things at retail pricing.
Moreover, scammers can easily create fake websites and fulfill them with false positive testimonials and feedback, so sometimes it’s hard to report it as a scam
Scam 4: Fraudulent payments
Another scam you should pay attention to is suppliers that may disappear after a payment!
The majority of the time, scammers would make an attractive offer and portray it as a once-in-a-lifetime chance to win your trust. But, they would just vanish after receiving the payment.
Furthermore, this type of supplier will probably ask for payment offline.
Scam 5: Schemes for Get-Rich-Quick
Dropshipping’s appeal as a simple way to earn passive money while working from home contributes to some of its development. While some people do experience financial loss, a large majority do not.
Unfortunately, social media advertising is one of the main ways that people get into the dropshipping industry. If you spend enough time on Facebook, Instagram, or Youtube, you’ll probably come across an advertisement with a person boasting about how much money they earned while working from home.
And here’s how it happens!
First, you will be contacted by a “dropshipping expert” who claims to have the “success recipe for dropshipping”.
Next, you’ll learn the way that makes it possible for you to reach your financial objectives and earn thousands of dollars. The drawback is that there is a little price involved with learning the “success recipe”
What happens next? You are guessing it already, the dropshipping expert would block you and vanish from sight as soon as you sent the fee.
At the end of the sad story, you got scammed.
Scam 6: Middleman vs True Wholesalers dropshipping program
Most middlemen in dropshipping pretend to be wholesalers by offering a similar dropshipping program. However, it’s not the same.
A middleman is what stands between a product’s manufacturer and its retailer or consumer is a middleman. A middleman is a person who represents a company’s products but does not actually deliver the goods themselves, and also they do not have a warehouse.
They are only acting as a channel for the actual business that will fulfill the orders and ship the goods to the store or the customer.
Working with a middleman or sub-wholesaler prevents you from receiving the best wholesale prices since these “wholesalers” increase the wholesale price, instead of you purchasing the goods straight from the manufacturer at a lower price.
How To Avoid Dropshipping Scams?
Unfortunately, dropshipping scams occur, and you cannot stop them. But, there’s always a way to avoid them. So, next, we will give you a few solutions for dropshipping scams and how to avoid them.
Solution 1: Fake products, Low quality, High price
Firstly, if you can meet the suppliers in person, this is your best option. For example, you can also attend a trade show intended for the niche you sell in. Renting a booth at a trade show costs a lot, so this might be the sign that suppliers that are attending there are legit.
Moreover, if you can’t meet the suppliers in person, you can browse their website better and see if there is some more information. Always search for contact info and physical address. You can also require product samples from suppliers to verify the product quality.
Furthermore, you may explore a supplier’s store and go through the reviews before deciding to work with them. You decide to place an order or not after the evaluation. Typically, a supplier will be trustworthy if the majority of the store’s feedback is positive.
Also NOTE: We suggest you stay away from selling counterfeit products unless you are sure that you work with reputable distributors or direct manufacturers. Otherwise, you can be dragged into legal accusations and copyright issues.
Solution 2: Phony product samples
Scammers can make tricks, but so do you! The first thing you can do is place an order in other names, or from another address and see what the supplier is sending. This is the cheapest method you could use and inspect suppliers’ legitimacy.
Moreover, the best solution for your business might be to hire a third-party QA agent. The QA inspects each product before it is shipped. If the product has a defect, the QA agent addresses the issues with the supplier.
Solution 3: Fake suppliers and reviews
There are various ways to verify suppliers’ legitimacy. First, you can ask for their company registration number and business license number. Scammers don’t give such basic registration information online, in order not to be tracked.
Furthermore search for their area code, not just the firm address or phone number.
Another approach to confirm a supplier’s legitimacy is to read their reviews, but only if the reviews are legitimate. Today, many suppliers are receiving false reviews that might be challenging to reveal if reviews are real or not.
However, you might try browsing for negative reviews. Also, right after a consumer posts a negative review, suppliers frequently receive many false positive comments. So, be careful.
Also, you can review customer complaints and see if the majority of them deal with the same problem with the products then it might be likely that the supplier is faking the reviews.
Solution 4: Fraudulent payments
First thing first – DO NOT send money offline! Most of the dropshipping platforms like Aliexpress, or Alibaba for example have an escrow service designed to build trust between buyers and sellers
However, even if you are working outside Alibaba or Aliexpress, the options you have are using an escrow service or reading customer testimonials on dependable websites like Trustpilot.
You can check some of the best payment gateways for dropshipping nowadays based on payment types, fees, integrations, insurance, etc.
Solution 5: Schemes for Get-Rich-Quick
Anyone that claims that by giving them a monthly fee, you may start earning money right away is scamming you.
Moreover, those scammers can go that far by convincing you that you can succeed by creating a fake customer base (followers) on social media, and selling in large portions.
The best way to avoid this scam is to know that there’s NO short way to success. Every business model requires hard work, time, and energy.
If you want to help yourself, you better invest your time in educating yourself with dropshipping experts or free online resources to learn dropshipping, rather than paying fees to fake professional dropshippers.
Solution 6: Middleman vs Wholesalers dropshipping program
Instead of sourcing items and offering amazing catalogs, pricing, and shipping dates, middlemen and their dropshipping program excel at SEO and self-promotion.
If a term or phrase appears on the top page of the search engine, it does not always imply that the website and the business are legitimate. A middleman covers the source while posing as the supplier.
It’s noteworthy to note that the majority of genuine supplier programs don’t typically have “dropshipping” in their title, URL, or even most of their keywords.
They frequently start as a bulk wholesaler for their merchants and only provide the dropshipping program as an additional choice that you may utilize on its own or in conjunction with your wholesale orders for your website.
Dropshipping, like any other business model, can be a profitable business model, but only if you dedicate yourself to it with your time, energy, and effort.
The majority of dropshipping beginners start their businesses uninformed or falsely informed that dropshipping is easy to lead and get-rich-quick business model, and this is when they make their first mistake. Moreover, they get disappointed when things go wrong, or they are left without money.
All these things are not negativities on the dropshipping account, but on the dropshippers!
Dropshipping scammers are everywhere, just like scammers in every other business. So the smartest decision you can make is to inform yourself about the dropshipping scams and ways to avoid them! This is what this article is here for, to help you out!