As the owner of My Small Store, I receive many requests to dropship our luxury handbags. I feel honored, yet, I decline all of the requests. Let me explain the risks associated with E-Commerce Dropshipping.

What is dropshipping?

Dropshipping is an easy way to start an eCommerce site - there is no stock to manage, orders are sent to a third party (wholesaler) who pack and ship orders.

Keeping stock is an expensive operation with huge upfront cost to buy the products, recurring costs to store and manage it, plus insurance in case of fire, flooding, theft, riots, etc.

Most eCommerce platforms have tools to synchronize stock levels, prices, and orders. The “only” thing the eCommerce has to do is to bring buyers.

We do use dropshipping to test new products or the ones we have but we barely sell.

Dropshipping is a risky business

Risks are at multiple levels and I’ll show a few.

Low Ethics Dropship Wholesalers

These have strictly no problem adding their own advertisement in packages - we tested several using employees as customers. They received a note in their package saying “Next time save more by buying directly from us @ abc.com with an example of prices.” If these were real customers… they would never come back!

Pricey wholesalers

These have “wholesale prices” identical to retail. One we liked to use had over 1,600,000 SKU in stock but their prices are now so high, it is impossible to sell a single item.

Some items are “well priced” but we can’t find any of them at a higher price on marketplaces (Amazon, eBay, etc.)

Some call themselves aggregators. They come with a high subscription fee, some are not ashamed to charge $1,000 to set up, then up to $225 per month per brand and/or channel. If you sell 5 brands on a website and Amazon it’s a monthly $22525 or $2,250 per month.

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