Dropshipping Lies Debunked
A few weeks ago a Facebook friend wanted me to check into this “New Online Money Making System”. The system he wanted me to check out, has been around for a long time. Successful Internet Marketers call it “Arbitrage”. Others refer to it “Dropshipping”.
How I made $250,000 a Year
So why would this Facebook friend seek me out?
In the age of Dial-Up Connection, were AOL (America On Line) was King, I was making money Dropshipping. Many of my Facebook friends connected with me years ago. During the 90’s I owned a successful Online Business. I sold Computers & Software for retail stores. I also sold retail Barcode Scanners, Cash Drawers, and Receipt Printers.
Why My Dropshipping Method Worked
Dropshipping is a somewhat easy business. You offer a product that offers the solution to a problem. The aftermath of Hurricane Andrew left many businesses in Florida and the Southern US destroyed. Many rebuilt their retail businesses and were looking for an easy to use a computerized system.
My Offer Was The Solution
This is what I offered. At one time I was shipping 5 Systems a week. I only needed to sell 100 Systems a year to make over $250,000. At one time I was in the Top 10 of Dell Computers Independent Resellers.
Dropshipping’s Big Fat Lies
The Dropshipping Method that my friend wanted me to check out claimed they sold $200,000 in products. You could make over $1000 a day.
They also produced PayPal deposit history show in the final month the presenter actually his $210,000 in monthly sales. He sold 9444 product. A key point in the video series was about returns. The claim that all returns would be handled by the product manufacturer is misleading. Now for the Lies. (Keep in mind that the presenter sells on Amazon)
Lie 1: Processing All The Orders
Lie 1: Products Sold are Dropshipped from the manufacturer. The presenter stated that it took him about 5 Minutes to “Complete” a Dropshipping order after a sale was complete. He further stated that he alone runs this business.
In his record-setting month, he sold 9444 Items. A person could only ship 12 Items an hour. It would take him 787 hours to Complete the orders. The month the presenter used as “Proof” only has 744 Hours. So where do the extra 44 Hours Come From?
“I did it all by myself.” stated the presenter. If the month the presenter offered as proof had 31 Days. He would have to work more than 25 hours a day, just to “Complete” the orders.
It would take more than 3 employees working 8 hours a day and 7 days a week to fulfill all the orders.
Lie 2: You Could Make $1000 a Day
Lie 3: The Return Policy
Lie 3: The presenter said that Returns were no problem. Views of the video were told just to contact the supplier for a return and the manufacturer will handle the returns with no problem. Where to start of this one? Well, let’s start at the beginning, the sale.
The Client visits your website from a paid ad posted on Facebook, or some other Social Media Network. They decide to order the product for $22.00 and pay you via PayPal. You order the product directly from the manufacturer for $14.00 and you keep the $8.00 Profit.
The customer decides to return the product. You notify the manufacturer and a return shipping label is emailed to you. You forward that return mailing label to the client. That’s it, according to the presenter the Return is now Completed. Nothing is mentioned about the monetary Refund. As you can guess most customers that return a product expect some kind of Monetary Refund.
How Much This Return Policy Cost You?
The only thing the Presenter forgot to mention was who was going to refund the money. You sold the product from a Paid Ad on Facebook. Costing you a few dollars to run.
Let’s Talk About Fees
- Restocking Fees are not uncommon for product returns. Restocking fees range from 20-50% of the cost of the product. Costing you even more. If the product costs $14.00, and the manufacturer only refunds to you 80% of the product cost, charging you a 20% restocking fee.
- Your selling porthole, eBay or Amazon, charged you listing and selling fees with each sale. These fees in most cases are nonrefundable. PayPal, your Payment Processor, happily refunds your Client the Full Price of $22.00 they Paid for your product.
You have $8.00 profit. The manufacturer refunds you $11.20 ($14.00 minus the 20% Restocking fee of $2.80).
With the profit and refund now have $19.20 to go towards the $22.00 refunded. Credits will be issued by your online porthole, eBay or Amazon. PayPal will not issue credit for fees. You will have to make up the difference of $2.80 per return.
The Presenter of the Video showed an Office Chair that Sold for $100 but the cost was only $49.00 including Free Shipping. Your selling fees would be about 24% or $24.00. Your Profit on this item would be $27.00 per sale.
The Client wants to return the chair. PayPal happily forwards the $100.00 to your Client. I know the manufacturer charges a 50% Restocking Fee. The $27.00 Profit your have will go to the $100 Refund. Another $24.50 will be returned by the manufacturer. You now have $27 + $24.50 = $51.50 to go towards the Refund of $100.00.
The remaining balance of $48.50 will be withdrawn from your Bank Account or Charged to Credit Card you gave to Secure your PayPal Account.
The Profit from every chair you sell will be needed to go toward each item returned.
If you sold 10 Chairs, your profit would be $270.00. If 1 Chair or 10% would be returned your Profit would be $221.50. Reducing almost $50 for each chair returned.
Why Did They Hide The Fees & Return Policies
The goal of the Presenter was to paint a rosy picture of what it takes to run a “Dropshipping” business. If you continued to watch all the Videos offered for Free, you will see an Online Class. This Online Class is available for $279.00. The goal is to make you a Dropshipping Expert in no time.
You will also be offered Online Live Training costing you well into the hundreds if not thousands.
The Free Videos give you very little information about what you really need to do in order to run a Successful Dropshipping Business.
What It Takes To Be A Success
Over the past 20 Years, I have successfully helped retail and online businesses of all kinds. My System has a Proven Track Record. Most Online Coaches want you to stay a customer for life. I want you to be a Success and to become a Cohort and not a Client.
A Cohort is someone you can relate to. Someone you can confide in. A Business Partner that benefits from your friendship, not your wallet. Together we can grow Strong. You will benefit from all the mistakes I’ve made in the past until I developed a “System” that really works.
I can only help a few Clients at a time. Each client has different needs and goals. I will help you discover your goals and help you plan for your success.
Not all businesses are a success, however, I will always be brutally honest with yours. If you would like a free business consultation just email me at email@example.com.
Thanks for taking the time to read this article and I hope you share it with all your friends.