Home – New Forums Logistics Is Dropshipping a dirty word?

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  • #984853
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    Until recently we have never used the word dropshipping (dropship, drop ship, drop shipper, etc) in any of our marketing because we believed the industry as a whole had a bad reputation. We are currently going through a marketing upgrade of sorts and have started using the term for the first time… We are having some success with it, but it’s still a little too early to tell whether we have made the right decision or not…

    Wondering what do you think… Too use the term or not?
    Also wondering what your opinion is on the industry as a whole…

    Looking forward to hearing peoples opinions on this.

    Steve

    P.S. I should point out that we are a dropshipper!

    #1149940
    LucasArthur
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    Hi Steve

    Personally, i believe there is no shame in saying what you are.. although it could be an industry that has been having its name tarnished a tad by overseas dropshippers and the lack of service provided by them.

    As you are Australian based, and being a suave FS member now, i am sure you are already aware of your strengths over the international bodies that also drop ship..

    So in saying this, i believe playing to those strengths would certainly be an advantage to you being local etc etc as long as you fulfil your obligations..

    As for the marketing of said drop shipping, i have found in the past unless one is involved in the online business that not a lot of people actually really know what this is.. easy to explain, but having a core understanding is not often shown.. ANd those in the game, may also know the inherent issues thus making your aussie based venture (or should i say Heidelberg venture) more appealing..

    Look forward to seeing how you travel and conversing some more.

    Cheers
    Jason ;)

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1149941
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    Hi Steve,

    I think you have made the right decssion, if you dont use the word drop shipper on your marketing material you will need to educate an entire country to the new term. Even though there may be bad eggs in the industry people will still search for the services they need.

    Steve

    #1149942
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    Yes, I was surprised how few people actually know what dropshipping is. I guess being in the online retail business for so many years I am kind of insulated to what everyone else’s knowledge of online terms and procedures actually are…

    That being said, plenty of people who have tried dropshipping have had bad experiences. So many of them are trying to make huge profits out of China on sites like aliexpress. I don’t know if this is indicative of the industry, but it’s the one that gets the most airplay… If it’s too good to be true, then… Well you know the rest!

    So I think you are right Jason, the Aussie based thing is a BIG plus!

    And don’t get me wrong, we are always very clear in what we tell people we do. We have very clear instructions, a brilliant user manual, great communication and so on. People know exactly what we do from the get go, we just weren’t using the actual word.

    You know… Don’t mention the war! (Thanks Basil!)

    I should ad that we have been very surprised as to how people have responded now that we are…

    Steve

    #1149943
    Johny
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    I think drop shipping does get a bit of a bad rap and a lot of that is service based, as in not shipping goods on time or not having stock available when requested.

    It can be a great method for people to break into something like online selling when they neither have the capital nor space to buy and hold stock, or are risk averse to tieing up their money in something they are not sure will succeed.

    And that is where I think a lot of the problem comes in. Expectation and lack of understanding about how to assess your proposed supplier and work with them.

    To me its a bit like buying stuff from China. I don’t deal in drop shipping, but I know a lot about buying stuff from China, and many of the problems people face when buying from China are the result of not doing enough research in determining the most suitable suppliers and how the system works. Then, as is the norm these days, its easier to blame the system, rather than yourself for not doing enough to qualify your supplier. Then it becomes, “oh those Chinese are all scammers…”, or ” drop shipping doesn’t work…”

    I think it is more about the amount of negative comment you hear rather than the reality of what really happens. And I don’t believe being based in Australia automatically delivers a better level of service. (I think Australians kid themselves when talking about service levels in Australia, in a lot of cases.)

    Steve, I think you mentioned in another post, that you do things like guarantee your quality, guarantee you ability to deliver from stock holdings, offer pretty good return policy etc. So although I do agree with Jason that there is benefit in promoting yourself as Australian based, I think those things are much more important to show, because I believe there are more and more people prepared to buy internationally these days. And in my opinion, peace of mind comes from guarantees, not just location.

    And it is also those guarantees that help you to compete, because having already imported the stock means having paid taxes and transport etc, so there has to be some benefit to counter that additional cost you have incurred which possibly makes your products more expensive on a simple price for price comparison when compared to an overseas supplier.

    #1149944
    eWAY
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    Hi Steve,

    As far as the banking industry is concerned drop shipping is about the dirtiest word out there!

    Why?

    It all comes down to chargeback risk. When you’re using dropshipping you’re obviously selling products that you never hold. You take cash, make an order with a supplier and then the supplier sends it directly to the customer.

    Banks don’t want to have anything to do with it because in the event something goes wrong, it’s all a bit muddy about where the responsibility and risk lays. Who do they talk to about missing products? If there’s a problem with the product who do they send it back to? Who do they go to for a refund? Who does the bank chase for chargeback requests?

    So, unfortunately for this reason you’re always going to be subject to using PayPal or bank transfer for taking your payments which makes growing the business a bit more difficult.

    Anyone who has filled out an application for a merchant facility recently will have noticed a question similar to ‘Do you physically hold the goods/products’ Answering ‘No’ is an express way to a declined application.

    Maclean

    #1149945
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    eWAY, post: 172188 wrote:
    Hi Steve,

    As far as the banking industry is concerned drop shipping is about the dirtiest word out there!

    Why?

    It all comes down to chargeback risk. When you’re using dropshipping you’re obviously selling products that you never hold. You take cash, make an order with a supplier and then the supplier sends it directly to the customer.

    Banks don’t want to have anything to do with it because in the event something goes wrong, it’s all a bit muddy about where the responsibility and risk lays. Who do they talk to about missing products? If there’s a problem with the product who do they send it back to? Who do they go to for a refund? Who does the bank chase for chargeback requests?

    So, unfortunately for this reason you’re always going to be subject to using PayPal or bank transfer for taking your payments which makes growing the business a bit more difficult.

    Anyone who has filled out an application for a merchant facility recently will have noticed a question similar to ‘Do you physically hold the goods/products’ Answering ‘No’ is an express way to a declined application.

    Maclean

    Hi Maclean,
    we have already been working with our bank and we have had no problems… But I think you are placing us on the wrong end of the supply chain… We supply the products to online retailers and we do physically hold the goods.

    As for your questions:
    Who do they talk to about missing products? If there’s a problem with the product who do they send it back to? Who do they go to for a refund? Who does the bank chase for chargeback requests?

    We also guarantee our sales, our delivery and have a full refund policy for faulty goods. We have a very clever system for this… We even have a change of mind policy that has no time limits for our members customers! This means our members don’t have to worry about any of that…

    As for PayPal, I am not a fan, but that’s another story for another day! :D

    It’s interesting that you bring up the bank issue though, I have never heard of this from any of our members. I will be sending out a questionnaire to check how members are going with their banks now that you have pointed it out…

    Steve

    #1149946
    eWAY
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    12.26, post: 172192 wrote:
    Hi Maclean,
    we have already been working with our bank and we have had no problems… But I think you are placing us on the wrong end of the supply chain… We supply the products to online retailers and we do physically hold the goods.

    As for your questions:
    Who do they talk to about missing products? If there’s a problem with the product who do they send it back to? Who do they go to for a refund? Who does the bank chase for chargeback requests?

    We also guarantee our sales, our delivery and have a full refund policy for faulty goods. We have a very clever system for this… We even have a change of mind policy that has no time limits for our members customers! This means our members don’t have to worry about any of that…

    As for PayPal, I am not a fan, but that’s another story for another day! :D

    It’s interesting that you bring up the bank issue though, I have never heard of this from any of our members. I will be sending out a questionnaire to check how members are going with their banks now that you have pointed it out…

    Steve

    Hi Steve,

    Don’t get me wrong, I’ve got nothing against drop shipping, I think it provides awesome opportunities, especially for people looking to start their own business.

    Just wanted to throw in some information from the other side of the fence so you had a different perspective.

    Would be interested in your clients feedback though, particularly if some banks are being lenient etc. You’ll find that it would only be merchants applying for new facilities having issues, one they’ve got the facility it tends to be smooth sailing.

    Maclean

    #1149947
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    Johny, post: 172181 wrote:
    I think drop shipping does get a bit of a bad rap and a lot of that is service based, as in not shipping goods on time or not having stock available when requested.

    It can be a great method for people to break into something like online selling when they neither have the capital nor space to buy and hold stock, or are risk averse to tieing up their money in something they are not sure will succeed.

    And that is where I think a lot of the problem comes in. Expectation and lack of understanding about how to assess your proposed supplier and work with them.

    To me its a bit like buying stuff from China. I don’t deal in drop shipping, but I know a lot about buying stuff from China, and many of the problems people face when buying from China are the result of not doing enough research in determining the most suitable suppliers and how the system works. Then, as is the norm these days, its easier to blame the system, rather than yourself for not doing enough to qualify your supplier. Then it becomes, “oh those Chinese are all scammers…”, or ” drop shipping doesn’t work…”

    I think it is more about the amount of negative comment you hear rather than the reality of what really happens. And I don’t believe being based in Australia automatically delivers a better level of service. (I think Australians kid themselves when talking about service levels in Australia, in a lot of cases.)

    Steve, I think you mentioned in another post, that you do things like guarantee your quality, guarantee you ability to deliver from stock holdings, offer pretty good return policy etc. So although I do agree with Jason that there is benefit in promoting yourself as Australian based, I think those things are much more important to show, because I believe there are more and more people prepared to buy internationally these days. And in my opinion, peace of mind comes from guarantees, not just location.

    And it is also those guarantees that help you to compete, because having already imported the stock means having paid taxes and transport etc, so there has to be some benefit to counter that additional cost you have incurred which possibly makes your products more expensive on a simple price for price comparison when compared to an overseas supplier.

    Hi Johnny,
    thanks for your response.

    I am enjoying responding to these points people are bringing up as it gives me a chance to see if our system has addressed why people think dropshipping is a dirty word!

    You have brought up one of my favorites… China!

    While we can ship directly from China directly to our members customers at the moment we are not doing so… We have found impulse buying is a bigger thing than price buying, as long as price is still competitive… (I mean it doesn’t have to be as cheap as long as it’s in the ball park) We manufacture in China as well as buy in China and locally. Naturally we are subject to taxes and duties when we import that customers buying a single unit may not be. But because of our buying power and the fact we manufacture and buy stock ourselves we are still competitive on price.

    But it’s the shipping that makes the difference to us… If people know they will get next day shipping it makes a HUGE difference.

    A few years ago we bought some handsets for the office, paid with PayPal. A month later when they still hadn’t arrived we opened a dispute. 2 weeks later we go a refund. 2 weeks after that our handsets arrived… We had to contact the supplier and pay them the money. (Fairs fair!)

    After that rant I must say I agree with you Johnny, buying in Australia is no guarantee on service or quality over buying OS! It does, however mean that the company you buy off is subject to Australian consumer laws. (Although a recent bad experience with a computer company in Melbourne might yet prove to me how little that may mean!)

    Steve

    #1149948
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    eWAY, post: 172202 wrote:
    Hi Steve,

    Don’t get me wrong, I’ve got nothing against drop shipping, I think it provides awesome opportunities, especially for people looking to start their own business.

    Just wanted to throw in some information from the other side of the fence so you had a different perspective.

    Would be interested in your clients feedback though, particularly if some banks are being lenient etc. You’ll find that it would only be merchants applying for new facilities having issues, one they’ve got the facility it tends to be smooth sailing.

    Maclean

    Sure Maclean, I’ll keep you in the loop after we’ve chatted to a few members… :)

    #1149949
    LucasArthur
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    Hi Johny

    As always, LOVE YOUR WORK! I do always appreciate your invaluable adds as you tend to look at it from a perspective that we dont (or i miss sometimes)..

    Although i did mention being Australian Based is an advantage, please do not take this literally as trashing international locations for drop shipping.. my inference was all about the past and the why’s to the reasoning behind why Steve should be comfortable in using the word drop shipping..

    As the past has some negative connotations, the immediate reaction (locally) would be.. “Oh so when we order from you, you then place the order overseas and then they eventually ship it to us.. is that correct Mr Steve from 12.23?” When really Steve simply cuts that negative train of thought off by saying “We Mr Potential DropShipper, we are a local based operator that offers simple drop shipping from our warehouse in Heidelberg that is FULL OF STOCK for you to sell”… Its just a positive in the eyes of what people have perceived of drop shipping…

    Remember, Steve’s initial query is “Wondering what do you think… Too use the term or not? Also wondering what your opinion is on the industry as a whole.” which is what the majority of my reply was based on..

    So, really though.. Any business from anywhere in the world can stuff up supply chains.. over promise and under delivery.. which i am assuming Steve is trying to turn around and make an advantage for him and his business?

    Also, one very important thing to note that has not been mentioned (or i have passed across, apologies if this is the case) is that there are NUMEROUS drop shippers in technology, fashion, etc etc that use drop shipping services from China and other international ports although represent that they are AUSTRALIAN and ship from here.. There are lots of lies going on.. in fact, lots out of Hong Kong and lots in the technology field – especially photography!

    Great post though peeps.. and great insights from some regulars that i always enjoy seeing around here..

    Be well everyone

    Jason ;)

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1149950
    Johny
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    Hi Jason,

    Wasn’t having a dig at you or anyone with my comments. Rather was also making some general comments.

    I have no doubt many people will buy from an Australian based dropshipper simply because they are Australian. All I was trying to point out is that, given more and more people are buying from OS directly, maybe that’s not as important as it once was. I for one, care more about what I am going to get, and if/when I will actually get it, rather than where it came from.

    I know you are not trashing anyone. That really wasn’t my intention to suggest that, as I was trying to relay my thoughts in a general sense, hence my comments about buying from China having similarities to dropshipping in terms of people thought process.

    #1149951
    1226
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    eWAY, post: 172202 wrote:
    Hi Steve,

    Don’t get me wrong, I’ve got nothing against drop shipping, I think it provides awesome opportunities, especially for people looking to start their own business.

    Just wanted to throw in some information from the other side of the fence so you had a different perspective.

    Would be interested in your clients feedback though, particularly if some banks are being lenient etc. You’ll find that it would only be merchants applying for new facilities having issues, one they’ve got the facility it tends to be smooth sailing.

    Maclean

    SimplyReplica, post: 172251 wrote:
    Hi Johny

    As always, LOVE YOUR WORK! I do always appreciate your invaluable adds as you tend to look at it from a perspective that we dont (or i miss sometimes)..

    Although i did mention being Australian Based is an advantage, please do not take this literally as trashing international locations for drop shipping.. my inference was all about the past and the why’s to the reasoning behind why Steve should be comfortable in using the word drop shipping..

    As the past has some negative connotations, the immediate reaction (locally) would be.. “Oh so when we order from you, you then place the order overseas and then they eventually ship it to us.. is that correct Mr Steve from 12.23?” When really Steve simply cuts that negative train of thought off by saying “We Mr Potential DropShipper, we are a local based operator that offers simple drop shipping from our warehouse in Heidelberg that is FULL OF STOCK for you to sell”… Its just a positive in the eyes of what people have perceived of drop shipping…

    Remember, Steve’s initial query is “Wondering what do you think… Too use the term or not? Also wondering what your opinion is on the industry as a whole.” which is what the majority of my reply was based on..

    So, really though.. Any business from anywhere in the world can stuff up supply chains.. over promise and under delivery.. which i am assuming Steve is trying to turn around and make an advantage for him and his business?

    Also, one very important thing to note that has not been mentioned (or i have passed across, apologies if this is the case) is that there are NUMEROUS drop shippers in technology, fashion, etc etc that use drop shipping services from China and other international ports although represent that they are AUSTRALIAN and ship from here.. There are lots of lies going on.. in fact, lots out of Hong Kong and lots in the technology field – especially photography!

    Great post though peeps.. and great insights from some regulars that i always enjoy seeing around here..

    Be well everyone

    Jason ;)

    Hi Jason and Johnny,

    thought I’d chime in…

    “Also, one very important thing to note that has not been mentioned (or i have passed across, apologies if this is the case) is that there are NUMEROUS drop shippers in technology, fashion, etc etc that use drop shipping services from China and other international ports although represent that they are AUSTRALIAN and ship from here.. There are lots of lies going on.. in fact, lots out of Hong Kong and lots in the technology field – especially photography!”

    Several of our staff here, including me, have bought off eBay from a seller that lists product location as Australia and has then received a parcel from Hong Kong or China. This has left every person it has happened to feeling cheated. It’s not that it has come from OS, it’s the fact that we weren’t properly informed…

    This is what often gives dropshipping a bad name as it is especially prevalent there I think…

    It’s all about managing expectations and transparency. As long as you can do this it doesn’t matter if the parcel comes from Australia, China or Guatemala… :) In fact I think a lot of Australian businesses have failed to realize this and have tried to play on the Aussie owned premise alone, which is a mistake. As has been rightly pointed out it is a strength, but only as part of an overall equation.

    What Australia does have over OS for local buyers is accountability, contactability (is this a word???) and speed of delivery. Otherwise we are really all on a level playing field these days…

    Please note all this is from the point of view of someone in the rag trade…

    rant over… :)

    Steve

    #1149952
    LucasArthur
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    Morning Johny

    Sorry mate I may no have explained myself well.. there were no misconceptions in the your comments, as I said I ALWAYS value your well thought out comments and did understand the points you made :)

    I then began to add on to the lost and rambled a little more.

    Be well mate
    Jason ;)

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1149953
    Petemac
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    Hi, I see dropshipping as going straight from the actual supplier to a businesses clients whereas I see what you are doing in holding the goods in Australia for a business which is more regarded as Warehousing and 3PL. If that’s the case I wouldn’t be using the word ‘dropshipping’ as it probably puts the wrong idea in people’s mind and may give them the wrong impression of what you are able to achieve. For me 3PL is a great way to go if a business doesn’t want to get into the day to day movement of goods.

    Pete

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