DropShipping can be an excellent second income source, new venture as an entrepreneur or a way to finance your retirement further – but there are things to watch out for. Due to the no-contact nature of DropShipping, e-commerce shop owners can be the targets of scams and online fraud.
As a leader in the DropShipping industry, we’re here to help you identify scams before they happen. There are essentially three types of scams DropShippers should look out for: set up, wholesaler and customer scams.
Setting up for Success
Many websites, YouTubers and online personalities are touting ‘too good to be true’ claims about DropShipping and how you could be making millions in the first couple of months as a DropShipper.
In these instances, it’s always a good idea to rely on the age-old adage, “if something seems too good to be true, it probably is”.
Whilst it may be appealing to sign up for DropShipping courses from someone who says they are an expert or are making tons of money a month in a very short amount of time, it’s prudent to be sceptical.
There are plenty of free courses available and trustworthy DropShipping companies like Armaan Resales that provide you with the necessary education about the industry – without filling a charlatan’s pockets.
Wholesaler Scams
The internet is full of companies claiming to be your perfect DropShipping partner – but you must be wary. Here are a few red flags to watch out for when choosing a wholesaler to source inventory:
- Fake website with embellished reviews – this can be hard to spot. Do a bit of research into how old the website is. If it is 3 – 6 months old, more often than not this is not a legitimate company or at least a company to be extremely wary of. In terms of reviews, if they aren’t listed on a trusted review website such as TrustPilot or Reviews.co.uk take them with a grain of salt.
- Fees – when looking for a wholesaler, if they ask for upfront fees or monthly/annual fees to use their services or if they tack on a fee for ‘buying in bulk’, avoid them at all costs.
- Unclear contacts – real wholesalers will have transparent contact methods – including the name of the person you’ll be dealing with. Additionally, check the address of the wholesaler. Do your due diligence and research.
- Low-quality items – the products you’ll sell as a DropShipper will affect your trustworthiness and credibility with consumers. Before choosing to use a wholesaler, ask for a sample of products you’ll be selling to verify their quality.
Customer Scams
Customer scams (fraud) can severely impact profits, a real threat to retailers of all descriptions, not just DropShippers. As an e-commerce business destined for greatness, these types of scams are something you will inevitably come across. There are two types of customer scams to be wary of:
- Identity theft – common amongst online transactions, fraudulent purchases occur where a consumer has stolen someone else’s identity and makes purchases using their details. The actual customer (whose details have been used) never receives the purchased product, claims fraud (rightly) and issues a chargeback on the stolen credit card/bank account.
- Fraudulent chargebacks – these happen when real customers purchase a product, receive it, then falsely claim that they’ve not received the product and issue a chargeback to their credit card/bank account.
In both situations, your company is on the hook for the purchase of the product. It could impact your profitability and your business’ reputation. Avoiding these types of scams are tricky – but there are things you can look out for.
Receiving your first large order is exciting – but there’s reason to have red flags when these occur. Before allowing your website to process the order, investigate the following:
- Is this a customer you’ve dealt with in the past?
- Does the order origination IP address match the shipping address?
- Is the billing address in the same country as the shipping address?
If you’re still unclear whether the order is legitimate after looking into it, contact the customer. If the customer is real, they won’t have any issues speaking to you to verify their order. If you don’t get the answers you’re looking for, don’t process the order.
Spotting those pesky scams in the DropShipping industry can be difficult.
Set yourself up for success by working with an experienced, trusted partner. Armaan Resales can help ensure the long-term success of your DropShipping business thanks to its connections with verified suppliers, by providing you with handy hints and tips, and offering unparalleled customer support.
