Considering opening a drop shipping store? I'm sure you've heard about the benefits; so I'm here to offer the other side of the story. In late 2017, I ran a successful dropping store called Stock Tennis. After about a month of testing different strategies, I found myself with a winning marketing campaign that produced the stats you see below.
The numbers you see above are from a 3-day period where I was testing a certain advertisement. If I continued with the same successful strategy, I would easily be making $800.00 per month in profit, and that was with five dollar daily marketing budget. But, I didn't continue. I decided to sell the store and move on.
So, why would I scrap a profitable drop shipping store with so much potential?
Eventually, I came to believe that drop shipping was an unethical business model, at least in the way that it is most commonly practiced. For anyone who doesn't know, essentially, the concept of drop shipping is to buy products from online wholesalers in China (such as AliExpress), enter your own customer's information, and have the supplier ship the product to your customer. Obviously, the price you pay the supplier is less than what your customer is paying, so you keep the leftovers as profit.
When I do business, I want to engage in win-win transactions. With dropping shipping, it always felt like I was taking advantage of my customers. Not everyone will agree with this, but charging an insane amount for a product that your customer could easily buy cheaper somewhere else feels wrong. Now, just the fact that the customer agreed to the price means that it was a win in their eyes, so what's the problem? The main problem I have with drop shipping is not the fact that it involves selling, let's say a $5 pair of sunglasses for $30. Frankly, the problem is that I feel scummy after doing it.
Clearly, I'm not the only person questioning the ethics of drop shipping. Right now, if you were to google "drop shipping", you'll see the following suggested question.
Just the fact that people often ask "is drop shipping legal?" makes the whole business model seem shady. Even the click-bait thumbnails and titles of youtube videos and articles make it seem like a "get rich quick" scheme.
Yes, it is legal, and yes, it's easy to make money drop shipping. However, when chasing "easy money", you often sacrifice your own nobility. If someone were to ask you "how do you make money?" or "what do you do for a living?", how would you respond? If answering these questions make you feel even slightly uncomfortable, drop shipping isn't for you. As someone who cares about their legacy, I refuse to stain my career path with a practice that isn't respectable.
If you can get past the moral aspect, you're not out of the water just yet; there is also a major practical issue with drop shipping. Even if you're okay with taking advantage of your customers, you still have to deal with all of the emails about shipping. Since just about every drop shipping store gets their products from China, shipping is a nightmare. Customers in the U.S. are accustomed to quick and easy shipping, something that drop shipping stores can never offer. When you inevitably receive emails from angry customers, it's not fun explaining to them that shipping can take up to (and often over) a month. Even if you provide a disclaimer regarding the shipping times (which I did), you will still end up dealing with order cancellations and returns. Not fun!
Finally, I'll end this post with a little slogan that I first heard from Gary Vaynerchuk.
"How you make your money is more important than how much you make".