Is Dropshipping a Scam?
No, dropshipping is not a scam. It is a legitimate business model that allows you to make money online starting with a low budget and scaling up as you go.
However, there are many reasons that might make you think that it is a scam, and in some cases, it can become a scam, depending on how you do it and how you deal with your customers.
I will list below reasons people thing dropshipping is a scam, why it is actually legit, and how you can avoid being a scam dropshipper yourself and start your business the right way in this field.
What Is Dropshipping?
Dropshipping is an e-commerce method that allows you to start an online store of your own without having to purchase and keep any inventory in advance. You even don’t have to ship anything by yourself.
As in the following flow chart, you create your online store and items to sell that are being stored at someone else’s warehouse, but you list them at a higher price from their price.
And when someone buys from your store and pays you money, you take your cut and you pay the original merchant their price and ask them to ship the product on your behalf to the end customer without you touching the product.
The store could be built on your own website and using your custom domain name through a web CMS such as WordPress, Shopify and others, or it could be created on a popular online marketplace such as Amazon, eBay, Etsy, …etc.
And this is a great method of making money online that has become very popular over the past few years, thanks to the many platforms that allow you to easily build your online store and add products and start promoting them during the same day.
However, like anything related to making money online that goes popular, there comes the important question:
Is Dropshipping a Scam?
No, dropshipping is not a scam. Dropshipping is a completely legitimate business model like any legitimate e-commerce business, except that it allows you to start your online store without having to purchase the items you want to sell in advance.
Is Dropshipping a Pyramid Scheme?
No, dropshipping is not a pyramid scheme and it is not a multi-level marketing (MLM) model.
I have explained my answer to this question in detail in my other article titled: Is dropshipping a pyramid scheme?, but here’s a brief explanation:
With dropshipping, you sell real products to customers who might benefit from purchasing them and profit from the margin you make between the price you sell at and the price you purchase at.
Dropshipping is not a commission based system and therefore, it cannot be an MLM model.
4 Reasons People Think That Dropshipping Is a Scam
Like with any method of making money online or offline that becomes popular, raises the question whether that method or model is a scam or legitimate, and the same applies to dropshipping.
Here are the four main reasons why people thing that dropshipping is a scam:
1 – The Big Hype about Dropshipping Recently
Thanks to the general increase in people who use the internet in general, and for purchasing stuff in particular, and thanks to the development of many platforms that made it easier than ever to start an online store in few hours, the dropshipping model has become more popular than ever during the past few years, mainly among people who are desperately trying to start generating income online.
This, in turn, has led to many people starting this kind of business without having any experience in managing any business in general, which led to creating lots of poorly managed online stores that didn’t treat customers as they should, which to some extent, gave a bad reputation to the industry and made dropshippers look like scammers.
2 – The “Gurus” With Expensive Training Courses & Fake Screenshots
If there was one thing I have about this industry, then it is the courses that are sold at “only” $997, $1,997 or even at “only” $2,997!!!
Many of these “gurus” who try to sell expenses courses haven’t been actually successful in the dropshipping field themselves and didn’t make any profit in this business. Instead, their main income comes from selling expensive courses to people who want to learn this method and they are probably giving them recycled information that didn’t work in the first place.
And regarding the screenshots of making $80,000+ this month alone, these are either fake, stolen from someone else, or they are misleading you by making you think that these all are profits, without telling you that you still need to pay the merchant who will ship the products, and you need to pay the advertising platform you are using to promote the items you sell, in addition to the transaction fees, management fees. …etc.
This, in turn, leads to many naive people who join these training programs to fail and lose lots of money, which then, makes them think that the whole thing is a big scam and that no one succeeds in this business.
The truth is that, despite the many fake gurus with useless and low quality programs, there are some legit ones who really teach you what you need in order to succeed in building your dropshipping store and they have been successful themselves in dropshipping through their own stores and they sell you their courses at a fair price.
Check out the conclusion section at the end of this article in order to learn about the best training program in the industry in terms of training material, support and cost.
3 – High Margins
As you will learn if you join a proper training, in order to make a reasonable profit, you need to price the product you list on your store at a higher price than the original price from the original merchant, sometimes 3-4 times that price.
This sometimes sounds like a lot, and it might make you think that you are cheating or scamming the customers by selling them at this high margin, but the fact that this is how all commerce work as the seller (like you) needs to cover the expenses of the marketing activities, the cost of the product, fulfillment and shipping, transaction fees, …etc. and you need to make the profit in order to sustain your business.
This is how brick and mortar stores work and this is how many of Amazon sellers work.
You are not cheating the customers but instead, you are leveraging the currency and wages difference between different countries in order to offer good products at fair prices and make your profit in the process.
4 – Selling Products Mainly From China
In order to be able to sell at reasonable prices and make good margins, most of the experts recommend that you get the products you want to sell from China so that you get them at low prices and this, sometimes, gives you the feeling that you are scamming people with “Chinese junk”.
And although it is true that some products come from China with a very low quality and short lifespan, but there are also good quality products that come at reasonable prices and you can make money selling them as a dropshipper.
Actually, there are many good products that you buy either from Walmart or from Amazon that actually came from China. It is you who decides what to sell on your store.
These were the main reasons why many people thing of dropshipping as a new scam that is spreading everywhere, but it is actually not a scam, as you will learn in the next section.
4 Reasons Why Dropshipping Is Legit
Here are the four main reasons why dropshipping is not a scam, but rather, a legitimate business model that you can use in order to make money with:
1 – It’s Been Around for Decades
Believe it or not, dropshipping goes back to a long time ago, even before the current popular methods of doing dropshipping online, dropshipping has been a method that some merchants followed by selling stock that they didn’t have and asking the original owner’s/manufacturers of those products to ship the products to their customers, whether in retail or in bulk.
And even online, dropshipping was technically possible on the popular online marketplaces such Amazon and eBay, which means that it would have been exposed by now if it was a big scam.
2 – Successful Dropshippers Actually Exist
Yes, despite all the many fake gurus out there with the useless expensive courses, fake screenshots and misleading information, there are actually many successful dropshippers who have created their own training courses after they have made lots of money in profit with dropshipping, like my recommended dropshipping coach in the last section of this article.
And among the students of these legit teachers, there are many successful students who even surpassed their teachers in terms of generated income with this method.
3 – The High Margins Are Necessary to Operate The System & Are The Same as on Popular Marketplaces
As explained earlier, like any other business, there are some costs that are associated with building and operating an online dropshipping business.
And although the cost to start a dropshipping business online is very low, but the cost of running it and generating consistent income does exist and you need to keep spending on your business consistently if you want to build consistent income.
And this makes it necessary to sell at few times the original price of the product, especially if you are using paid advertising methods such as Facebook ads in order to drive traffic to your online store, which are getting more and more expensive everyday.
4 – Many Sellers on Amazon & eBay Are Dropshippers
You might not know it yet, but many of the sellers on Amazon, eBay and other online marketplaces are actually dropshippers who don’t own the products they sell. And the chances are that you have already purchased form some of those sellers without knowing that they are dropshippers.
And that’s fine, there’s nothing wrong about dropshipping as long as the dropshipper finally sends you the item you paid for and they provide you with a refund if it wasn’t as described.
So, as clarified above, dropshipping is a legitimate business model just like any other legitimate business model, whether online or offline.
However, like any legitimate opportunity to make money online, it’s YOU who decides if you want to do it ethically and professionally in order to succeed, or you want to be someone who is just playing around and scamming people by not delivering the advertised products that people have paid for or by not giving them their money back if they didn’t receive what they paid for.
6 Tips to Becoming a Legitimate & Successful Dropshipper?
Here are the main six steps you need to follow in order to become a successful & legitimate dropshipper:
1 – Treat it as a Real Business and Think Long Term
Like any other kind of online businesses, if you want to succeed, then you have to realize that you are actually building a REAL business, just using some different tools that allow you to lower the initial and running costs.
But you still need to treat it like a business and not like a hobby, and you need to put in the consistent effort on daily basis and this is where most of the people fail in making money online.
Most of the people fail in making money online in general and with dropshipping in particular not because it is impossible or difficult to make money online, but rather, because they don’t know how to make money even in real life.
They come in to the online world with the mindset of an employee and not with the mindset of a business owner, and they think that they only need to put a specific number of hours per day or per week.
Or worse, they listen to some fake guru who tells them that they can “push that button and see the money rolling in”.
Unfortunately (and fortunately at the same time), it is not that fast or easy to make money online. If it was that easy, everybody would have done it.
You need to treat dropshipping as a real business and you need to put it in the consistent effort in order to succeed and make a significant income.
And most important, you need to stop listening to the fake gurus and instead, learn from the best in the industry, like my recommended place in the last section of this post.
2 – Setup a Professional, Good Looking Online Store Using The Proper Framework
And that doesn’t have to cost you lots of money.
Actually, with the existence of dedicated software programs and platforms like Shopify you can now start your own professional looking online store in two hours without coding or prior experience as I wrote about it in my post about the different possible ways of making money with Shopify.
Also, this platform offers you a set of free, nice looking themes in order to start with, although you can always purchase one of the best premium Shopify themes in order to increase your store conversions at anytime.
3 – Don’t Sell Useless, Low Quality or Broken Stuff
Yep. There are millions of products to dropship from China and from other countries, and for the same item, you can find all ranges of prices and all levels of quality, and unfortunately, many dropshippers try to maximize their profit by sourcing the products they sell at the lowest possible prices regardless of the quality level, which leads to many unhappy customers who eventually feel that they have been scammed.
How to avoid this and select the right products to dropship?
Before you select a product to sell:
- Think as if you were the end customer and if you could benefit from purchasing the product or not.
- Read the existing reviews and possible complaints from people who purchased it already from the same place and from the same merchant.
- Try to purchase it and test the quality yourself.
4 – Select The Good Suppliers
In almost any marketplace you want to purchase the products you sell from, there’s a rating system that reflects the customer reviews about the products purchased from each vendor, the communication between the vendor and the customers, the support and the time for how long this vendor has been in service.
Try to outsource your products from the merchants who have been around for long time and sold big quantities and with a high rating from the reviews of their customers.
This will make your life easier by minimizing the number of unsatisfied customers and the refund requests, and therefore, it will lower your support costs and might bring you more repeated customers.
5 – Don’t Deceive People or Overprice The Products You Sell
Yes, you can price the product you sell at 3-4 times the vendor price in order to make a good profit, but don’t make people feel scammed after realizing that they could by the same product from a reputable seller on amazon for half the price you sold to them at.
Of course, you can price your products at higher prices than it is on Amazon, with a reasonable difference, just don’t let people thing that you are selling them a piece of jewelry for $200 while an Amazon seller is selling it at $30 and you both have purchased it from an AliExpress supplier for $10.
6 – Provide a Great Customer Support & Money Back Guarantee
What makes people trust an Amazon seller?
The reviews help the seller, but more, people trust Amazon’s policy, support and guarantee.
People prefer to purchase at a reasonably higher price form a place where they know that it will protect their money.
I know it is difficult to compete with Amazon in terms of trust, but still, if your store shows that you are building a serious and respectful business, people will buy from you.
How do you make sure that your dropshipping store shows trust and doesn’t look scammy?
- Make it look good, no grammar mistakes, no circus looking colorful store, not too many bells and whistles, …etc.
- Publish a delivery/shipping policy that is honest. Most of dropshipping vendors, especially those from China, offer longer shipping times when compared to what Amazon offers, and this might turn some people off and make them anxious when they don’t receive what they paid for within few days, and therefore, they might think that they have been ripped off and request a refund or a charge back. In order to avoid this, be clear on your product pages and in your shipping/delivery policy that tells people in advance what to expect before they order. Of course, this might lower the conversion rate a little bit, but it will make you less headache as your inbox won’t be filled with “where is the item I paid for?” only two days after people have purchased.
- Offer a refund policy and a money back guarantee. People would be more willing to buy from you if they know that their money is protected. Offer a refund policy and respect it, if someone asks for a refund because they are not happy with the received item, give them their money back. Wouldn’t you ask for the same if you received a broken item that you ordered through Amazon?!
- Offer a secure checkout. Thanks to platforms like Shopify that make it easy to integrate your store with popular online payment gateways such as PayPal and Stripe, you can now offer your customers many secure payment options so that they buy from your store knowing that their payment information is protected.
So, these were the six tips you need to follow in order to make sure that you avoid being a scam and be a legit online dropshipper and build a long term, successful business.
Note that these are the main, high level tips, and each one of them includes many smaller steps in it that you need to follow in order to accomplish your desire in becoming a legitimate dropshipper.
And if you are interested in learning these smaller steps, then head over to the next section below.
Conclusion – A Detailed, Step-By-Step Guide to Building a Legitimate & Successful Dropshipping Business
As I promised you earlier, I will tell you here about the best place to learn how to become a successful and legitimate dropshipping business owner through guiding you to one of the best, if not the absolute best, dropshipping teacher who teaches you how to do dropshipping with the Shopify platform in particular.
My recommendation for you in order to learn dropshipping the right way is a guy called Franklin Hatchett, who offers a comprehensive training course at a very low price when compared to the mediocre or even good courses that are being sold at $997 like Print Profits or even at higher prices that might reach $2,497 or even more.
While Frank’s course, which is called eCom Elites, is being sold at a much lower price than these courses, and it is continuously updated in order to reflect the new methods and strategies that arise.
And Frank has been successful himself in dropshipping before creating the training program you will join. He even created his own professional theme which that I wrote about in my eCom Turbo review.
So, if you are ready to start a legitimate dropshipping business and avoid being one of the dropshipping scams, then click here to learn about eCom Elites course now in order to start your journey today.
And if you have any questions regarding this post, or if you still think that dropshipping is a scam, then leave what you want to say in the comments’ section below and I would be happy to answer you asap 🙂