Drop Ship Scams and How to Avoid ThemLast Updated:
Pouring out your heart–and more importantly, your pockets–into an online business is a risk in itself. Although laying the groundwork may not be as tedious compared to setting up a brick and mortar store, you will still be investing a significant portion of your hard earned money and precious time for your venture.
Imagine having everything set up: your website, drop shipping suppliers, contact channels, even your ads and customer awareness efforts. Then, you find out that your drop ship supplier is a total scam–either by asking for exorbitant prices (resulting in you not being able to compete with the market), or by shipping product knock-offs that will surely end in customers fleeing from your store. The damage done will be a pain to undo! This why before even signing up for any drop shipper, you should be on the lookout for drop ship scams. Here are a few pointers to help you avoid them.
Look for Transparency in Content
As suggested by numerous online entrepreneurs, real drop shippers won’t be afraid to show you their products, even before you subscribe to their service. A legitimate drop shipper takes pride in the variety and quality of items that they have to offer, and showing these to potential clients can even be the push they need for them to sign-up. On the other hand, a scammer will try to entice a client with as little information as possible, so as to have them pay for a nonexistent service.
It’s also important to look for the product information. If a drop shipper is carrying the actual product in their warehouse, they should be able to provide comprehensive details about it. Meanwhile, if they can only give out snippets of information about an item, it is probable that they do not have the item, or is only acting as a middleman (more on this below).
Check for Supplier Contacts
In most countries, especially in the US, business licenses require companies to have a listed landline number and a physical address. You can ask for these details from the supplier if they aren’t published on their website. If you are located in a country that doesn’t have strict business license requirements, you can still ask for a physical location, since they should have an office or warehouse somewhere if they are carrying and selling products.
If you prefer to do a little sleuthing on your own, you can also do a Whois search to get details; such as the domain owner’s name, contact details, and the duration up to which the domain has been registered. If the owner has not registered any identifying details, or if a website is particularly new, then you should be cautious.
Spot The Unnecessary Middleman
One form of drop shipping scam is the undeclared middleman: a poser pretending to be a wholesale supplier, but is really just sourcing their products from another drop shipper. This means that you are getting higher prices than the usual, because the middleman gets a cut with every order you place. Their presence also causes delays in the process: instead of you sending the order details directly to the source for processing, you send them to the middleman; which in turn, will then send them to the original source, adding an extra step and wasting everybody’s time in the process.
More often than not, their catalog is a cluttered mess of unrelated products, because they don’t have the products themselves; they are just a member of probably a whole network of drop shippers. Their prices are also higher than others, which is why a simple price comparison from different suppliers can help you avoid these scammers. You’re hitting two birds with one stone by doing this, too, since you can identify the supplier from which you can profit the most.
Search for Feedback, Both Good and Bad
You will find a ton of positive reviews for any drop shipping company, some within their respective websites. This won’t come as a surprise, though, as they are trying to convince you that they are worthy of your trust and money. Look deep into what customers are saying: Do they have a high delivery rate? Are they able to process orders, including returns, properly? How is their customer service performance with other entrepreneurs? A customer with real experience will be able to give specific details about the service, and not just leave a generally positive comment. Customer reviews can also shed light into which company is a credible one.
That said, don’t just look for customer feedback in drop shippers’ own websites. You won’t find negative feedback there, because it will drive away clients who are still in the window shopping phase. This is where drop shipping forums and customer review websites are useful. Users from these websites don’t just give companies purely positive feedback, and some may even use it to warn others about scams and bad service. You can look for how the company responds to complaints, too–which should be a reflection of how they handle issues.
Do take note, though: there are some review websites that are sponsored by drop shipping companies, so some may not be as objective as one would think. For objectivity, check out Better Business Bureau and TrustPilot, which are established review agencies and have hundreds, if not thousands of companies reviewed by customers.
Those That are Just Plain Bad
Another thing to keep in mind: while you may be able to identify drop shipping scams, there are companies that are legitimate drop shippers, but just happen to be a bad supplier. This may be due to a variety of reasons: a limited product list, delayed order delivery, or just subpar service in general. This is where you can put your trust in drop shipping directories. They carry a list of verified suppliers under their respective roofs, which can save you time from doing the research all by yourself. The downside to this is that they may require monthly membership fees, or a one-time charge for you to access their list. But given that some of them are only around $20 to $40 a month, it may well be worth it to subscribe.
With the number of people trying out their luck at running an online business powered by a drop shipper, it’s no wonder why scammers are scrambling to create fake drop shipping companies to cheat hopefuls out of their money. But, with the combination of research and vigilance, you won’t have any difficulty steering clear of them.
If you want to skip the hard work, visit our list of best drop shipping companies, where you can also find an in-depth review for each company to help you decide which one is a best fit for your online business venture.