Dropshipping is one of the most attractive models for an e-commerce startup. It ticks all the boxes as there are no inventory costs, flexibility to work from any location, does not require a lot of resources and a very low initial investment. For your dropshipping business to be a success, you must have a reliable and efficient dropshipping wholesaler. The supplier is the backbone and motor of your business as they hold the inventory and deliver it to the customers. Which is why, you must ensure that they are trustworthy before signing an agreement. Many startups have witnessed premature closure by dealing with fake dropshippers, so choosing them is a process which should not be rushed. Here, we point out 7 signs or indicators that the dropshipping wholesaler that you are negotiating with is fake.
1) Lack of Contact Details:
It is true that dropshipping wholesalers do not have the resources and expertise to create an attractive website. However every dropshipping website is expected to provide multiple contact details such as addresses, multiple contact numbers, as well as other basic details. A supplier whose website does not have all these pieces of information should not be trusted as they are certainly fake. You should not waste your time on any negotiations with them.
2) Sell To The Public:
What differentiates dropshipping wholesalers from regular businesses is that they provide the inventory for e-commerce websites who do not want to hold their own inventory and complete the order fulfillment on their behalf. Any supplier who runs their own business by selling to the public is fake. Do not waste your time hearing any explanations or claims that such suppliers will make, because they are violating the fundamental principle of being a dropshipping supplier.
3) Claim To Give You High Margins:
The nature of dropshipping is that your per product margin will be extremely low. This is due to the fact that the wholesaler will hold and maintain inventory, as well as complete the order fulfillment on your behalf and the whole process consumes a lot of monetary resources. Any supplier who claims to help your business make quick profits by giving you high margins should be considered as a fraud. These are tricks played to trap startups by luring them with false claims. Such suppliers will either provide low quality products or cheap packaging, which will eventually lead to higher returns from unsatisfied customers. To avoid cost escalation, do not enter into any agreement with such suppliers.
4) Refuse To Provide Samples:
During the negotiation process, you must ask the wholesalers to provide you with samples. Not only is this is an important practice to check the quality of the produc, but also it is also a filter to find out how legitimate the supplier is. Fake dropshipping suppliers will be hesitant to provide samples or ask for extra time to send it (so that they have ample time to arrange for a counterfeit). These are the red flags which indicate that they are fake and you must not hold any further interactions with them.
5) Ask For Monthly Membership Fees:
This is an extremely common fraudulent tactic to deceive startups. Legitimate dropshipping wholesalers do not charge any fees for holding inventory as payments are made on a per order basis. Any suppliers who ask for either monthly membership or service fees are fake and must not be contacted any further.
6) Refuse To Sign Any Contracts:
Before entering into a dropshipping business, it is essential to prepare a contract with the dropshipping wholesalers. This will clearly state the terms and conditions as well as mention the course of action to be taken in an ambiguous situation. If any supplier refuses to sign the contract, then you must look for another one as this supplier is fake and therefore will not want to enter into any legally binding agreement.
7) “Middlemen Dropshippers”:
Another fraudulent group which many startups fall prey to are middlemen wholesalers. These websites claim to be dropshippers themselves but in reality they pass on your order to the real wholesalers, thus turning out to be middlemen. This reduces your margins, as these middlemen will also want charges to be paid to the actual dropshipper. For complete clarification (in case any doubt arises in the negotiations) you could order a few test shipments without informing the supplier. That will bring out their true colours and help you identify if they are suppliers or fake middlemen.
Dropshipping requires a lot of caution before starting. Be patient and identify the fake dropshippers with these indicators so that you do not have to waste time and resources on correcting their wrongs. Good Luck!