Dropshipping Bullsh*t

Hello and welcome to this week's episode of Sniffing Out the Bullshit. So today, I have decided to talk about the wonderful world of drop shipping. And you're probably thinking, wait, isn't drop shipping what people were doing about six or seven years ago? Well, yeah, sort of, but it's still happening now. But yeah, like drop shipping is crazy. I know that it got such interesting press that so many people tried it, and so many people were surprised by it and thinking, oh, wow, this sounds like this amazing thing to do, and it's a revolutionary entrepreneurial idea. Even my parents brought it up to me because they heard so many people getting rich from it, and they didn't quite understand how it works. So let me just talk about that for a second, because for those of you don't know what drop shipping is, drop shipping is essentially a business model where you can set up a shop, but you don't actually need any products. You don't need to keep any of the inventory. You can set up a store, you can sell whatever you like. So generally, you do this online with the likes of Shopify, or you could even do it through Amazon now. People do drop shipping businesses for Amazon. And you don't actually stock any of the inventory. But what happens is when someone purchases one of your products, it goes through, it looks like it's a normal purchase through your website, but essentially it connects to usually a warehouse in China where they have the products and they ship it out directly to your customer. So the customer purchases from your store and you receive the payment, but the order goes to the supplier. And this is great for the store owner because you don't have to have all the worry about buying stock and worrying if it sells, you literally only purchase it as it sells. So it's fantastic for that reason. The problem is, is that there were so many flaws with this business model. Now, obviously there are still lots of people out there, and this is kind of where my beef comes in. There were so many people, again, selling drop shipping courses or teaching people how to do drop shipping. And I've recently come across quite a few girls on TikTok, and they are young, gorgeous girls who are in their 20s, who look stunning, who are living the life.

And I don't know how much of it is actually true, but they are coming back home in fancy cars. But I feel like, for me, those people who are genuinely wealthy, they don't need to flaunt it all the time on social media. But this is all they talk about, is how much money they make from drop shipping. And they're encouraging others to do drop shipping. And they're encouraging others to take time away from a legitimate business idea, or from supporting their family with steady income to do this drop shipping. And so I wanted to make people aware of not only the drop shipping scam, so I want to talk about some of the scams out there from a customer perspective as well, to be aware of. But I also want to kind of make people aware of drop shipping itself, in case you are inclined to start a drop shipping business and just be aware of all the pitfalls. Because all these people out there telling all the glamorous things about it, but what about the pitfalls? Now, I even had someone as recently as three weeks ago, come to me and ask me to help me set up their drop shipping business. And I wanted to understand what has persuaded them to do this. And they said that they were trying to raise money for their wedding. And I'm like, you're trying to pay for your wedding from this drop shipping business. They're like, yeah, I heard it's a really quick, easy win, and you could just earn thousands, thousands of pounds really quickly. And so I just wanted to do it for a bit and then set it up and then leave it. Insane, honestly insane. So there were so many things wrong with that that we need to address. So first of all, let's talk about how drop shipping gets set up. So obviously, there's the website cost. Now, to set up a website, it costs a lot of money. Now, obviously, you're talking to someone who runs a website agency. And so obviously, our websites are going to start at a minimum of like 15 grand. Even if you don't choose a professional agency to start up your website, you're still looking at a few thousand pounds to set up your website with an e-commerce functionality. Now, this is why most people choose something like Shopify. And this is why I want to bring up later with the alarm bells, because if it's on a Shopify site, this is obviously why it is. Shopify is super easy to set up an e-commerce website. Now, I'm not saying it's a bad platform. It's an absolute excellent platform for e-commerce, and some large brands use Shopify to build their website. And it can be fantastic, if done correctly. Same as everything.

But Shopify is so easy for the lay person to use. They just click set up, they click a template, and they've got a website up and running. And that's what they do. They set up their website, they import some product listings, take the product description, take some pictures from the warehouse, from the suppliers, and just pop it on the website, sell a price and sell. Now, think about it, though. The products that you're selling, they probably are going to be, well, obviously, coming from a Chinese warehouse, they're going to be generally lower quality than, say, something that's made in the UK. And so you can't necessarily charge a high price for it. And your profit margins, therefore, are going to be quite depleted because you're going to have to keep competing against all the other people selling those products. Bear in mind, you can only charge a high price for something if there's very few people out there selling it. Most of the things on drop shipping businesses are everyday items that you can get anywhere. So first of all, you have to beat the ridiculously low prices that are already on Amazon, because that's why they're so low on there, because there are people trying to price out their competitors, which is just not a good market to be in. If you're going to go into a product business, I would be thinking how to find something that is different from a competitor's, so you could put your own price on it and you can make a big profit margin from that. So first of all, now think about, yes, great, you sell a bunch of stuff, say even if you make just a pound of each thing, but you sell a thousand things a month and it just kind of does everything in the background, that's all the glamour, you don't need to do anything, it just does it all for you. Great, that's an extra grand in your pocket a month, fine. However, let's talk about when things go wrong. So, you're shipping it from China. How long do you think that's going to take? People wait weeks to receive their items and no one likes to wait that long. Why do you think Amazon Prime sells so many memberships? Because people want their stuff straight away. So, if you're saying, oh, it's actually two to three weeks delivery time already, they're not going to be happy. And if this isn't announced right at the very beginning, you're going to get lots of complaints. Bear in mind that with your drop shipping business, you are going to be the one handling all of those complaints. So, when you do your budgeting, factor the amount of time it takes to handle all your kind of requests and your customer service offerings, all of that sort of thing.

Then when it comes to returns, say if something goes wrong, you're going to have to handle returns. And they're not going to like it if you're going to suddenly start charging them for returns. And think about it, where are they going to return it to? Your address or a address in China? They're not going to be happy if it's an international shipping address. So, you've got a lot of things to think about. Now, if you're selling an item that's, you know, a few hundred pounds, it's a bit different. You've got some leeway on it. But if you're selling that 10 pound items here and there, and you only say selling them for like, you know, 12 pounds, you're making a, you know, a short bit of profit on that. Think about how much hassle is going to be involved if someone tries to return that. You're going to have to just cut your losses on that sort of thing. That happens a lot, and suddenly you're in trouble. Also, think about the policies that you have, because if it is something that, you know, the supplier or manufacturer has provided to you, and it is something cheap, then it's going to break. What happens when that happens? Do you have a guarantee? All of these things you have to be considerate about. So, as a seller, there are a lot of things going on, which is why now they are trying to make sure they are covering their losses, and instead they are doing all sorts of unscrupulous things. So, let's talk about it from the other side of things of how customers can get scammed. Because of all those things I've just told you, dropshipping business owners need to cover their costs and need to make sure they make a profitable business, and this is how they do it. Let's say they take a gadget, because I feel like gadgets do the best these days in terms of tech and in terms of easy to advertise, but let's just take a gadget. And let's say that manufacturer price is probably about 15 pounds for a decent gadget. Now, in the UK, you can price that so high. Now, I've seen this a lot, and I'm thinking about specific cases that I've seen, and these gadgets are about 15 pounds, but they're being sold for 150 pounds, literally a 10 times markup. So that's what a dropshipping business will do. However, they'll spend a bit of money paying a graphic designer to brand it up in their own branding. So they're going one step further. It's not just a random shop, it's now a brand. So let's take one particular gadget. I'm going to take a wireless charger.

Let's take that. One of those multi-charging stations, because I've seen this recently, and I'm going to use this as an example. So one that charges your phone, your watch, and maybe your iPad, and your AirPods. All in one docking station. It looks nice. It's very well presented. Now, this, directly from your supplier, is about 15 pounds. But you think that, in the UK market, if you put it in a nice branded box and all that sort of stuff, you could sell it for 150 pounds. Now, essentially, obviously, this is what brands do. They obviously have a manufacturer. They obviously buy it wholesale price, and they do all the other stuff, and they brand it up. Now, that is obviously how legitimate products are sold here. They get someone else to brand it up and do that. Now, the way that the dropshipping scam works is that they get a graphic designer to mock that all up, and they put it in a nice box on the website and on your social media feeds. And it looks all nice, but actually what's happening is it's not being shipped from the UK or it's not been shipped anywhere local, and they don't have a warehouse in this country. Instead, you're getting that same £15 product. You're not getting any tweaks on it. You're not getting any upgrades. It's the same product. Instead, they've just put their own brand name on it and try to pretend that they manufacture it, but they don't. And I've had this very recently with a few things until I clocked on to this. And I say very recently, it's probably a couple of years ago now that I kind of, you know, grew wise to these scams. And, you know, I'd purchased the product, and I'm like, this doesn't look like what I purchased. And then I realised that it isn't. It's just the cheap version that you get directly from the wholesaler. And I wondered why the packaging came in like Chinese, you know, writing and customs and all that sort of stuff. You have to be really careful, also because it might get stopped by customs, and you have to pay extra for it. So that's another thing you have to be worried about. But they will then, you know, use a slick branding, but actually it's just a mock-up, and actually just get this cheap product. Everything there is made in China. So what stops you just purchasing it directly from China? That's what I realised. I was like, if I'm going to get that same product, so then why not I just buy directly from the wholesalers? And the thing is, there are wholesalers out there.

There are people like alibaba.com or aliexpress.com. I think there's another one called dhgate.com. If you go to all these websites, they are selling these products there directly for any consumer to just purchase. You don't even have to pay ridiculous shipping costs. You think they're from China, but actually some of them are free. I don't know how they make their profit. I don't understand it, but you can. Now, I remember a lot of these sites, especially dhgate, got a bit of a name for itself back in the day because that's how it sold all the fake designer goods. And I'm sure lo and behold, you could probably get some of that stuff on there. But you can also get legitimate items that are sold in the UK or sold at Amazon because that's what a lot of people do. They set up a shop at Amazon selling these products, but actually they're directly from China. And some people obviously put them in their warehouse and send them out directly from the UK, so therefore they make a profit on that. But again, they've had to bear the brunt of those costs, but the dropshipping people don't do that. So I wanted to highlight some of the ones that are out there because every day on Instagram, I see one of these source scams. And I go to their website and I have a look, and it's the same things. So first of all, the warning signs are, have a look at an amazing product that people are talking about. They've got a nice video. They've invested in that. Sometimes the giveaway is that there are Asian actors in the video as well because they're taking it directly from the manufacturer's website. But sometimes they don't. And it's just a nice kind of video. It's really well done. So the first thing to do is take a look at their offer that they have on Instagram or Facebook or however you've seen the ad. More often than not, it's a very high price and they've slashed it down for a limited time only so that you can purchase it while it's reduced. So the £150 charging unit is now only like £79.99. So, you know, get it while it's hot. So you're thinking, wow, it's 50% off. That's amazing. And if it's £150, full price, it must be really good. So you look at it and you look at all the reviews, which obviously are easily faked. So you can, you were purchasing, you think, right, great, I paid £80 for it. But actually you just bought like a £10, £15 charger that could be bought directly.

But you go on the website, and it's pretty much always Shopify, because it's the cheapest way for them to start a store. It's almost always Shopify. But you need to look at the shipping times. What I've noticed about all of these different dropshipping companies is that they will say, we aim to deliver within, and it's a reasonable time frame. And then somewhere in the terms, it will say, oh, recently has been delays due to Brexit, or some sort of thing out of their control that they will blame it on. And obviously you're not going to be regularly buying from them. So they will make an excuse to you and say apologies, or they'll even offer a £5 discount for your next order. You're not going to buy something else on them before and again in order to do that. But it's always, always the same thing. And then you need to check the returns policies because what I noticed before with one of them is that they charge you a lot of money for return. I had a product and it was awful, and I wanted to return it and they go, yeah, it's £34.95 to return it. And I'm like, are you actually kidding me? So I don't look at these things most of the time because I'm usually buying from legitimate manufacturers that I know the brands of, and so I just get caught out sometimes in an Instagram ad because that's what they do. And you don't read those return policies, you will get bitten. So I've complained before when I've noticed now, when I started to do it, sometimes I've bought them out of curiosity and I've complained because I've seen, you advertise a high quality product that was supposedly made in the UK, and I've only done it once who actually specifically say, made in the UK, this is this brand particularly, and then it's not. And I call them out on it, and I say, you've sent me a cheap Chinese knockoff basically. And most people don't notice, and they just have the product, so they use it, and it breaks a few months down the line, then it's too late. And I've done it with three different brands I've bought recently, and they've all come out with the same sort of answer. And they've said, oh, so sorry, we ran out of stock of our product. And so we didn't want to disappoint you by not shipping anything. And so therefore, we quickly ordered one for you from China as a replacement because we wanted to make sure you had a product, but we assure you it's still really good quality.

It's the same one that our manufacturers use too, but it's just not in the same branded box. And I'm like, that is absolute bollocks. And so they all say the same thing. And it's ridiculous. Now, I wanted to highlight that because this is what is going on all the time. I'm literally scrolling through Instagram now, and I'm seeing hundreds of ads for the same sort of thing. And look, I'm just scrolling through now. Here's an ad for a light that helps you take pictures, like a selfie stand sort of thing. Again, that one's 150 down to 110. Interesting. Scrolling down again. Oh, there's another girl teaching dropshipping courses. You can see I've been doing the research for this, and I've been targeted with these people. So again, these dropshipping courses, I mean, people are literally teaching you how to do this. And I've essentially just taught you in one episode, this is exactly what they teach you. But they teach you all the different ways to try and sell products. But think about it, you also need to market them. You can't just make a website, put it online and just sell stuff for you. You have to market the hell out of it. So you need a very strong marketing budget. Take that out of the profit you're making, you're making nothing. And it's the amount of hours that you're doing to make pittance per sale. And essentially your business is designed to rip off customers. It's the most unethical business model around. Like you're literally conning customers into buying a cheap product, but you're charging them way more money for it. It's so unethical. I think it's so wrong. So all of these things that people are doing, you need to actually have a look at what the real deal is. And to my advice for all of this is that you should just buy direct from the manufacturers. If you see something you like, do a bit of research, have a look, because if it's a new brand, new product, go on their website and actually see where they're making it. If it's made in the UK, then go for it. I always think buy local. Support local small businesses who are working really hard to produce handmade items. I love seeing those graph businesses. I love seeing the ones around Etsy who are like hard grafting it all the time with their products. They are putting all their effort in to raise a bit of capital so they can handmade their products and they're putting all that risk in and they're investing their time and money into the marketing to hopefully sell.

I will support those businesses all day, any day. But the ones who are just taking cheap labor from China, taking cheap products and trying to scam people from it, it's so wrong. Do not fall for it. So anytime you see a shiny new product that's being sold on Instagram or Facebook, check out who they are, where the product's been made and if it's actually ethical, because I bet you it isn't. And so this is why you should just not buy from these people. If you really have to buy that product and you really want to have that particular one, then you might as well go directly to the source and save some money. Do not keep buying from these people who are profiting off people scamming you. It's wrong and you're just going to end up with poor products anyway. You may as well go directly to them and actually if anything goes wrong, they'll probably give you a refund or probably give you a better quality product afterwards. This is exactly why there's so many fake goods running about the place. Like there are people who have tried to scam me when I've bought like an Apple Pencil off eBay. I love to kind of do second hand things and I love to recycle my things. And you know, I bought something off eBay and I went to buy an Apple Pencil and it was a fake one. And I can tell the difference. And I think this is where you guys need to have a look because more and more fake products are coming up on the rise now. And no, it was a thing maybe 15 years ago, but it's coming back again. Fake, fake, fake. And this is because everyone's so desperate to have all the latest gadgets, all the latest cool things that now people are just buying more fake things so that they can do social media videos with and show them all the new tech stuff that they've got and what a great lifestyle they have. And it's just destroying everything. So I wanted you to be aware of the dropshipping scam from both sides of the spectrum. Now, if you're thinking about launching a dropshipping business, really, really think about it. Think about the ethics behind it. Think about the profitability behind it. Are you actually going to make that much money? There's a reason why most of these people are now running courses. These people are not making money from the actual dropshipping.

They're making money from you guys, paying them to teach them how to do this scam. That's what they're making money from. That is how a lot of these people made money. They have claimed to have made money from XYZ, but actually they run courses on how to do it, when they don't even know how to do it themselves, and that's how they make their money. So don't pay them to do this. And also just, again, when you see a product out there, double check it, triple check it, do your due diligence. That's all I ask for. So that's my rant today on drop shipping and the most unethical business model in the world. And stay safe and make sure you protect your money because it's a tight time out there and everyone needs to tighten their purse strings. So definitely don't get scammed with some cheap products. But that's all for me today. And I hope you enjoyed this week's episode of Sniffing Ads at the Bullshit.