Cut‑Throat Dropshipping

ESTIMATE 1-MINUTE READ

Third-Party Fulfillment

As appealing as dropshipping is, it can be ruthless. Dropshipping is a business model where manu­facturers ship directly to customers so business owners do not need to purchase inventory. Some drop­shippers are very professional. However, when you share your customer’s contact informa­tion with a third party for shipping, this can open a layer of marketing complexity. Once in their database, the customer boundaries can blur.

Who Can You Trust?

The most common problem with dropshipping is a loss of control over delivery times, which may take weeks or months if overseas. You must also figure out how to manage customer claims and returns for products you may not have even seen. But it can go beyond that.

Sometimes an overseas company manufac­tures your custom product and handles fulfillment. Knock-offs are common. Do you have an exclusivity agreement? Is it enforce­able?

If your vendor pretends not to know what blind shipping or white labeling is, you may need to look elsewhere for fulfillment. Blind shipping means packaging is generic. With white labeling, the fulfillment service includes your branding. But wholesalers with an eye on higher profits may begin marketing on a retail level to your customers within their database.

It can begin with a packing slip that has the drop­shipper’s company name and website. Packaging materials sometimes include the wholesaler’s customer service number. Vendors might insert a warranty card that requires the recipient to visit their website or download an app for registration. All of this diverts customers away from your business. Why should you pay for customer acquisition through marketing and advertising, only to have a wholesale drop­shipper yank them from you with competing offers?

Options to prevent a customer identity crisis:
  1. Have vendors ship individual items to you for customer fulfillment.
  2. Inventory your own products.

The first option lengthens delivery time and adds an additional courier charge. The second option requires more up-front capital investment. At the very least, use the first option initially in order to familiarize your­self with the customer unboxing experience. Everything a customer receives—email, packing slips, invoices, and product registration—should have your branding on it. Otherwise, repeat business will drop.

Join Discussion