There is a lot of buzz around on the Internet regarding the increased prevalence of dropship scams. However, we need to think and ponder for a moment. Different people are referring to different things as scams. A scam is actually when you are promised something and cheated out of it.
However, if you look at it that way, many dropshippers may not be scamming their customers at all! But, a look at wholesalers reviews at any popular website will tell you that they are. So, what is this scam, and why is it called a scam?
Usually, when we say scam, the picture that comes to mind is of a conman taking money from unsuspecting customers and absconding. But, this is not the case. These companies are very much there scamming one customer after another as their old victims blame them on online selling reviews.
The real scam is that you are being charged twice for the same service! This makes it unviable for any retailers to make profits. Ideally, a dropshipper does the following tasks to create value for which they are entitled to remuneration.
Breaking Bulk: A dropshipper will buy from the wholesaler and sell it to the retailer. This saves the retailer the hassles of maintaining inventory and all the costs that come along with it. This is a legitimate value addition, and the dropshipper needs to be paid. There is no dropship scam here as such!
Shipping and Handling: The dropshipper also does the mundane tasks of packing and posting, saving the customer unnecessary transportation costs.
Also the operations are managed by the dropshipper. Hence, this too is a legitimate transaction. So, what is the whole dropship scam about?
The scam is that most dropshippers have an option to either add this markup in their price or pass it on to you as a fee. Many will charge you both an elevated price as well as fees. If there is fee involved, then what is the higher price for? This double charging makes the business unviable for the retailer and is the basis for a dropship scam!