Like many online ecommerce ventures, drop shipping can be fraught with fakers determined to derail your dreams with scams of a sordid sort. And if all that alliteration isn't enough to scare you, perhaps a few facts will do the trick.
First off, you have to be aware of how widespread scammers actually are in the drop shipping business. We're talking about untold levels of pervasiveness, like four pages deep on Google search results before you can find a legitimate wholesale supplier. Speaking of sneaky suppliers, that's just one of the most common ways that newbie drop shippers get suckered.
The list of usual suspects of scam perpetrators reads like this:
- False supplier review sites
- Membership fees
- Fake wholesalers
- Inaccurate drop shipping search engines.
Each of these is an all-too-common scam designed to separate you from your hard earned cash, with little to nothing to show for your expense. Luckily, there are a few tried-and-true methods of avoiding the tricksters. We'll be talking about these four all-too-common scams, how they operate and a few of the best ways to protect yourself in this week's lesson.
4 common scams
Since it's the first on the list, let's begin our lesson on with a clever and creepily well-thought-out technique that scammers use to sway public opinion.
1. Fake review sites
Many wholesaling companies invest in web real estate where they can host so-called "independent" supplier review sites that are unsurprisingly and unduly biased towards the parent companies' own products. Unfortunately, these review sites are well executed, and virtually indistinguishable from the real thing.
The best way to keep from being fooled is to use the good old "guess and check" method. Ignore the reviews you see of suppliers online, and trust what you experience through trial and error. Verifying a supplier yourself is time consuming, but ultimately much more rewarding.
Of course, there are trusted communities that can help you find your way, such as the SaleHoo drop shipping forum. Such communities pool the collective experience of other drop shippers like yourself so that you can compare notes between suppliers, both reputable and disreputable.
2. Membership fees
The next most common scam on our list is the extra costs that fake suppliers will often ask you to pay. A real wholesaler will never ask you to pay an additional fee in order to buy bulk inventory. Why pay twice? Never agree to pay any annual, monthly, or account setup fees just for the chance of purchasing in bulk. All such fees are egregious, and many times the suppliers are slinging sub-par merchandise to begin with.
Note: Some suppliers may require you to pay one-time off fees to purchase one item at a time at wholesale prices. These fees help the wholesale suppliers provide their members/customers (you) avail of better services and prices even without buying in bulk - therefore still giving you a competitive edge over other online sellers.
3. Fake distributors
These are dirty "companies" (I use the term loosely) who misrepresent themselves as suppliers. They claim to sell their goods at wholesale prices, but are actually marking up their inventory.
Be aware, though, that some legitimate suppliers will also sell their products at retail prices, and you need to contact them directly to find out the wholesale price list. Always do your due diligence when researching distributors.
4. Search engines dedicated to wholesaling
These are almost always a scam, and it's a good idea to avoid them entirely. After all, Google can do the job just fine already. These specialty search engines usually include old, outdated, or flat-out nonexistent suppliers in their listings.
They're relatively harmless, because you won't actually be able to purchase anything from the majority of the suppliers listed, but they are a huge waste of time.
So now that you know what kind of scams are most often perpetrated upon the unsuspecting drop shipper, it's time to figure out exactly how to avoid being a gullible mark.
How to spot a scammer
There are more than a few surefire ways to spot a scammer. You need to be aware of these bulk buying bugaboos:
- Scam sites are usually very new, as little as 3-6 months old. This is because scam sites never last too long before word gets around that they can't be trusted. That's why the vetting process for SaleHoo's trusted supplier directory includes checking a website's age in order to ensure that only suppliers of the highest quality make the cut.
- Suppliers demanding unsecured payment formats such as Western Union or other wire transfers are highly suspect. Don't put yourself at risk.
- A supplier that has no return policy for damaged merchandise is a liability in the first place, but more likely than not, they're also trying to pull one over on you.
- Be sure to find out as much real-world information about your suppliers as possible. Ascertain whether or not they have a physical address and a phone number. If you live nearby ask to arrange a visit.
- Real suppliers will be happy to offer you samples of their inventory. If samples aren't forthcoming, that can be a a big red flag.
- Anytime you hear the phrase "No stock on hand," it's time to turn around and walk the other direction.
For more information on how to spot scammers, take a look at this blog post, or watch this video instead.
Armed with the knowledge of these tell-tale signs, you should have no trouble identifying a legitimate supplier in a field of fakers. But perhaps you're looking for an accelerated solutions...
Wholesale directories
A whole sale directory is a database filled with dependable businesses just waiting to show you their inventory. These resources take all the guesswork out of drop shipping. As a paid service, a wholesale directory will vet each and every supplier they keep contact with. It's much more difficult for scammers to fool scam-spotting experts in order to be listed within a directory.
SaleHoo's wholesale directory is a particularly attractive option because it has:
- more than 8,000 trusted suppliers listed.
- a patented vetting process.
- and an exemplary support staff that can run background checks on your suppliers.
To prevent yourself from falling victim to a drop ship scam, join SaleHoo and get instant access to drop shippers who have been manually verified by our team of experts to keep you and your money safe.
