Is Drop Shipping A Good Idea?

Beginners are often attracted to the many drop shipping services offered online. The services promise low prices and high profits. Besides the intense competition to sell these same products by thousands of other wanna-be marketers (which drives the prices to rock bottom and sometimes below), there is another problem.

Say you sign up with one of these outfits and pay your $39.95 “membership fee” for the privilege of promoting products. You offer one on eBay and sell it via a PayPal transaction. You then purchase the product from the drop shipper with your credit card and have it shipped to the buyer. All is well…for the moment.

After the buyer receives the product, they claim it is damaged and of course contact you.

You tell them they have to return it to the drop shipper. The buyer does not want to pay for the return shipping, so you PayPal them the shipping cost since you want to protect your feedback score (there goes some or all of your profit).

The buyer returns it, but the drop shipper is out of stock and the item is now back ordered. The buyer is not happy. They want a refund. You refund their entire purchase amount. The drop shipper will refund your purchase, but of course charge you a restocking fee.

When it is all said and done, you are out the original cost of shipping the item, the return postage cost, the restocking fees, and the eBay fees. There went your profits for the next several sales.

This is just one scenario in which working with one of the many drop shipping services could end up losing you money.

When you don’t have control over the shipping and quality of the products, you leave yourself open to all sorts of problems.

Drop shipping is fine IF you completely trust and have a good relationship with the manufacturer. I suggest avoiding any drop shipping services which require a monthly or yearly fee.