Dropshippers can make millions selling cheap products on Facebook, Instagram, and TikTok, but buyers beware
Dropshippers are the ultimate middlemen
The trending e-commerce model has been behind the ads that Facebook, Instagram, TikTok, and Google’s YouTube have been using since the pandemic At a much higher rate, the demand for online purchases is skyrocketing.
The model is based on targeted ads designed to prevent consumers from scrolling long enough to make an impulse purchase, usually in a Shopify store set up exclusively for that product has been. The dropshipper only places an order when the customer does. and rarely touches the goods. It is often shipped straight to the customer from China, which can lead to lead times in excess of 90 days.
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Nick Peroni started dropshipping in 2016 and now does it all day from his home in the Philippines.
“I was an Army Veteran who lives in Philadelphia trying to figure out what I want to do with my life and just do different kinds of tests f business model ideas, ”said Peroni.
Last year, Peroni said he tried to sell 10-20 products, before getting some big hits. His garden care product sales were over $ 1.9 million in six months in 2020, and in October he sold $ 150,000 of fleece-lined leggings in three weeks. Peroni uses agents in China to vet products and sourcing companies to reduce shipping times.
But dropshipping can also be a minefield for consumers.
Cheats and counterfeits
“A lot of people just get into the business model and She is lazy. they don’t see it as a business. They look at it as a cash grab, as a get-rich-quick idea where we can sell this product using Facebook ads and make a lot of money, “Peroni said.
what happens is then a whole cascade of different events where you buy fake reviews. to distinguish yourself. You buy fake ratings, fake positive votes, lots of ads, marketing, but it all adds up, “said Saoud Khalifah, founder of the consumer protection software company. Fakespot.
Fakespot has a Chrome plugin that alerts shoppers if a seller on Amazon, Walmart, eBay, Best Buy, or Sephora cannot be trusted. It recently added capabilities to detect untrustworthy stores in Shopify.
“They made this a -top-shop for you to install a store, and it’s very easy for you to start selling online and a lot of these dropshippers know that,” he said. Khalifah. In an analysis of more than 124,000 Shopify stores, Fakespot found more than 25,000 that were engaged in some form of fraudulent activity such as fakes, privacy leaks, or buying fake reviews. Of those, nearly 72% showed evidence of dropshipping tactics being used in their business. In the Shopify Help Center, there’s an entire section dedicated to tips and strategies for dropshipping.
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Sportswear company Gymshark used influencer marketing to grow a cult following, and now dropshippers are capitalizing on that success. and more copycat dropshippers selling knockoffs.
“Someone else is acting like the brand at the time. And we invested a lot in assets, content, etc. So someone coming in and almost copying that is frustrating,” Chana said.
Gymshark is forming her legal team to protect intellectual property, but Chana also asked Shopify for help.
“What we could really do with your help and support is actually when people are abusing those trademark rights and running away with a business model which is unsustainable for both them and Gymshark if they regulate it better. You have the right to say that we are going to shut down this website or that you are not acting competitively, ”said Chana.
A Shopify spokesperson told CNBC, “We have several teams dealing with potential breaches of the Shopify Acceptable Use Policy (AUP) that clearly outlines the activities that are not allowed on our platform, including copyright infringement, and we won’t hesitate to take action if action stores are violated. “
For the 21-year-old direct mail-order company Kamil Sattar, this iPhone data protection screen protector was his breakthrough product. He said he had sales of $ 1 million in less than two months. Many drop shippers can find products like cell phone cases and Bluetooth headphones on AliExpress, a China-based online marketplace where small businesses sell products directly to international buyers, but they’re not all hits: he says that pineapple cutter and dog grooming gloves flopped “Now we have software that we use where they run AI technology, and they tell us what are the best products right now, what’s trending? “
A version of this software comes from Mordechai Arba, who started the popular Ecomhunt blog after earning millions as an early adopter of dropshipping. He started in 2014.
“When I started, I thought it was like a side business, an extra income that you can make late at night and wake up in the morning and have extra money without doing a lot of work. But when I started selling it wasn’t easy, “said Arba.
” If you want a future in this business, you have to take it seriously.
CNBC / TechConflict.Com