Whenever someone hears about how you can sell products without inventory just by adding your margin to the supplier’s cost and marketing the product, they ask: is dropshipping a scam?
I know that this is an important question to ask before you start building your dropshipping business, especially that you will need to invest some money in advance, and you don’t want to risk that money, and your time, before you find out that you are doing something shady.
I have written this short guide to help you know the answer and save the time and confusion, and to help you protect yourself and your money.
Without further ado, let’s dive in!
Is Dropshipping a Scam or Legit?
Dropshipping is not a scam, but it is a legitimate business model that has been around for a long time now, since the last century, and almost anyone can make money with.
However, like it is with any other legitimate business model, some people can use the ethical dropshipping model to scam customers through unethical practices.
Let’s say that someone is selling their own products on their online store, they could be legit and send quality products to customers at the agreed prices, or they could advertise a certain product with certain features and quality, get the full price when someone makes an order, they send a product of a lower quality or grade than the advertised one, or they send a broken product.
This way, they would be using a legit business model, which is selling their own products online, but they scam customers by not delivering what is paid for.
And the same could happen in the legit dropshipping model, when the dropshipper advertises a good quality product with specific features, and when a customer buys it, the dropshipper sends an inferior or a broken product, which means that the dropshipper is scamming the customers.
The main difference between dropshipping and tradditional commerce models is that with dropshipping, you don’t buy in bulk or pay for warehousing like it is with the other models, but you only buy from the vendor after you get a buyer.
In short, dropshipping is a legit business model, but it is up to you, the dropshipper, to use it legitimately to sell good products and make profit, or to scam people and take their money.
Is Shopify Dropshipping Legit?
Dropshipping on Shopify is legit as a concept, since Shopify is just a tool that makes it easy to build online stores, but like it is explained earlier, it is up to you to use the dropshipping model to legitimately make money or to scam others.
Because Shopify makes it very easy and fast to start a dropshipping store in few hours, it attracted lots of newbies and scams who care about making a quick buck without caring about their customers, in addition to fake gurus with fake screenshots and expensive courses, which made others think that dropshipping on Shopify is a scam, when it is actually legit as a concept.
5 Dropshipping Scams to Avoid
There are different ways where some scams are using the dropshipping model to take advantage off people and make a quick buck without providing something of value, which makes people think that the dropshipping model is a scam.
Here are the top five dropshipping scams and how to avoid them when building your business:
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Heavy Affiliate Promotions
Shopify and other online store builders like BigCommerce have something called the affiliate programs, which basically let’s others promote these platforms through a unique link and make commissions on every new user they bring.
This model is called affiliate marketing.
And while it is a legitimate model to do, but the problem is that some affiliates try to use spammy and fraudulent ways to promote these platforms in order to get the commission.
For example, you would see these affiliates on YouTube convincing you that you can make thousands of dollars per day with dropshipping on Shopify starting from the first month, by working one or two hours a day.
And while you can really make thousands of dollars per day with dropshipping, but this requires working more than two hours a day, and you cannot reach this level from the first month as a newbie.
It takes few months to learn dropshipping the right way, testing products and finding the ones that sell, finding good suppliers, scaling your advertising campaigns, …etc.
But when someone new listens to these affiliates and starts dropshipping dreaming of thousands of dollars per day, and then a week passes without a single sale, they get disappointed and feel like the whole thing called dropshipping is a scam.
But the truth is that dropshipping is legit, but like any other model, it needs skills, dedication, and time before you start making money with it.
To stay safe from these kinds of scam, understand that starting a dropshipping store is like starting a physical store, it takes time and work to make results, but the nice thing is that you can start it at a low cost, and you can work from wherever you want as long as you have a laptop and an internet connection.
Fake Gurus with Expensive Courses
Similar to the unethical affiliates in the dropshipping space, their are unethical trainers or gurus that show you screenshots of $10k+/day in daily sales with Shopify, and tell you that it is easy to reach this amount of sales and become a millionaire in few months through dropshipping.
And they tell you that all you need is to buy their $2,000 courses, set up a shopify store, import products from AliExpress, run some Facebook ads, and watch the money flowing in.
What they don’t tell you, assuming that these screenshots are not fake, is that you need months of work for many hours every day, testing lots of products and spending hundreds, if not thousands of dollars on ads before becoming profitable, and before you start to gradually scale your business, and it might take years before reaching even $5k/day with a dropshipping store.
Add to that, they don’t tell you that these screenshots are for the sale volume, not the profit.
Remember that you need to pay for the supplier their price, the shipping cost, the advertising cost, the transaction fees, …etc.
And in case that the product arrives broken or not as advertised, you need to refund the customer, or they will file a charge back and get their money after you have paid for the supplier and for the ads.
The profit in dropshipping might not exceed 10-20% in some cases, and while that is really good since you start an ecom business without buying inventory, but it is not as they try to show you by misleading you to believe that you can keep all of that money in the screenshots, which are mostly fake.
Stay away from all the gurus who sell their dropshipping courses for $997, $1,997, $2,497 as these courses are usually poor in value and are designed to make the “guru” money from scamming you.
If you want a real and legitimate training on dropshipping, you can get a free course from Shopify Compass, or you can join Franklin Hatchett’s Ecom Elites course, which is sold at a very low price compared to others’ expensive courses, although it provides much more value.
High Margins
It is very common that when you dropship low ticket items from AliExpress to sell them at a high markup, like 3-4 times the original price.
And while that might seem scammy, but it is mostly the case when selling low ticket items with any other model, whether through your own physical store, Amazon FBA, or any other way of selling.
You need high markups in case of selling low ticket items in order to compensate for the marketing budget, and for the time and effort you put in order to advertise the products and fulfill the orders.
For example, it might take you one hour to fulfill twenty orders, regardless of the order value.
That would be find if you have a low markup on a high ticket product.
But if you have a small markup on an inexpensive product, then you might be working hours for profiting few bucks a day.
Now in order to make sure that others are not selling the same product at a much lower price, which might lead your customers to get angry when they find out, then you better find new and unique products to sell that other dropshippers haven’t found yet, which can be done with tools like Viral Vault.
Or, you can customize a certain product and make it unique with your branding through white label dropshipping suppliers, or even add some features or make it of a higher quality through private label suppliers.
And you can find these with platforms like uDroppy.
This way, you can make sure that no one calls your dropshipping a scam because you are selling products that are not easy to find elsewhere.
Scam Dropshippers & Newbies
As I clarified earlier, because it is easy to start a dropshipping store today without technical knowledge or big budget, many scams are using this legitimate model to scam others and sell them very low quality products tricking people to believe that they are getting something good.
Or sometimes, the items arrive broken, and they refuse to refund the customers.
Or worse, they make lots of sales, and promise to ship the products to the customers, but then they collect the money and run away with it without shipping anything.
And sometimes, newbie dropshippers fall into some of the above practices even though they don’t intend to scam people, but they want to make a quick buck like the “gurus” promised them.
And all of this leads to showing the dropshipping business model as a way to scam people, which in its essence it’s a legitimate model.
To stay away from these scammy practices, make your intention to sell people quality products that help them in getting specific results or solve certain problems, find reliable suppliers with many positive reviews, make a test order before you sell any product and see if it meets the advertised quality before you sell it.
And don’t lie about delivery times, quality, brand, country of origin, or about the features of the product.
And if someone is unhappy with what they received from your store, then offer them a full refund because the chances that they received a low quality or a broken product are high, especially that you don’t have control over the supplier, even after you have made a test order by yourself.
If you intend to dropship AliExpress products, then you can use some tools to find reliable suppliers with proven history and fast shipping times using tools like SaleHoo Dropship that can save you some time and energy.
Some Similarities with Pyramid Schemes
I have explained in a previous article the six reasons why dropshipping is not a pyramid scheme, but for someone who doesn’t have the full picture, it might seem that dropshipping is a pyramid scheme, which is why they think that it is about scamming people.
The reason for that is the fact that some pyramid schemes create online stores and list some low ticket items like energy bracelets, beauty products, or nutrition supplements, and sell them at very high markups in order to sell them to the customers and get them into the scheme and asking them to promote these products to others to join the scheme in the same way, and get a compensation in return.
But dropshipping is different from that, and it is about selling products to people who benefit from them, without asking them to join any scheme in order to invite others to join the same scheme and get money in return.
The customer buys from your dropshipping store, you send them the advertised product, and that’s it.
Conclusion – Start a Legit Dropshipping Business
As you can see, dropshipping is a legitimate business model, and it is not about scamming people, but about selling them products that they would benefit from, like any online or offline store, but at least, with dropshipping you don’t buy in bulk and you can start at a low investment.
Most important is to find good quality products, sell them at reasonable prices, and be honest about the features, quality, brand, and delivery time, and to do your best to make your customers receive what you promised in exchange of their money, and keep them happy.
And remember that dropshipping is a business that takes time and effort to bring results, and it is not a get-rich-quick thing like the dropshipping scam artists make you think.
If you want to start your journey with this model, and you are willing to put the time and effort into building a legitimate dropshipping store, then you can read my step-by-step guide for selling on Shopify without inventory, and see how you can start your dropshipping store today without coding or big budget.
And if you still have any concern or any question about anything in this article, tell me in the comments’ section below, and I will do my best to answer you asap 🙂