More and more people are starting their own drop shipping businesses, in wake of courses such as Drop Ship Lifestyle and Store Coach. With that brings many entrepreneurs looking for a quick buck selling products they really shouldn’t be. After years of experience, here’s 5 drop shipping stores you should never start.
5. Fake American Sports Merchandise
Nearly every week I see some smartass selling their ‘established‘ shopify store on Flippa, which consists of cheap custom printed knockoff merchandise from outfits such as NFL, NHL, NBA and UFC. They market their special deals using Facebook ads, on pages such as, ‘I Love The Boston Bruins.’
First of all, it’s unethical and in theory illegal to sell products you aren’t licensed to resell. It’s also against trademark and copyright laws to create your own copies of licensed products, i.e. placing a Patriots logo on a t-shirt and flogging it via your Shopify store.
Yet, thousands of Shopify stores do, and most of them get away with doing so as Shopify allows them too until a trademark holder contacts them to complain about your store.
Yes, this method will make you filthy rich but will ultimately catch up with you. It’s fraud, plain and simple. I feel even more sorry for the entrepreneurs that buy into such schemes on Flippa when they could start their own drop shipping store for free.
4. Counterfeit Brand Name Clothing
Another popular trend in the last few years is drop shipping counterfeit clothing such as Abercrombie & Fitch, American Eagle and Victoria Secret from Hong Kong or China. Again, unless you’ve contacted an official distributor of such brands, move on.
In fact brand name clothing is very rarely offered under a drop shop model so if it sounds too good to be true, it definitely is.
Again, this method has people seeing dollar signs from day one (“Ohhhh yeah I can make $50 a sale pure profit”) however another fraudulent activity that many people fall victim too.
3. The FREE + Shipping Carnage
In the last year many entrepreneurs have created courses on this subject which involves offering a $1-$5 item for free on your store provided your customers cover shipping. You’ll usually set shipping at $10-$20. You then spam the offer on Facebook (They are cracking down on this now) and await the carnage.
This sounds like a good idea until you start to receive 1000’s of orders from all over the world. If websites such as Dealextreme and Banggood can offer free shipping on a $2 product you can bet your life it will take months to reach your customers, if delivered at all.
Problems? You’ll spend hundreds of hours trying to ship those orders, unless you’re using a Shopify plugin such as Oberlo. You’ll then spend hours every day replying to impatient individuals whom email you every day wanting an update. Lastly you’ll get the countless number of chargebacks you’ll receive ($25 a time – look it up on Charge, Shopify, Paypal etc).
Oh and if you have a Facebook page, everyone will start calling you a scammer too. By the end of it, if you’re actually keeping a profit and loss record, you’ll definitely be in the red.
2. Branded Electronics
I can bet you any electronics you can buy from a drop shipper is cheaper on Walmart, Amazon, Jet.com or Best Buy. It simply is not worth the hassle of trying to score a good deal on electronics to start your own business these days, that is unless you are selling unbranded electronics from sites like Aliexpress.
Factor in your legal requirement to offer a one year warranty, deal with replacements if something goes wrong and adhering to fixed price selling requirements you’ll be scratching your head from day one. Try searching for an electronic product, i.e. Roku 4 and you can bet your life the top 10 results are your competition.
I once had a client, whom was making 20% margin on Apple products, he was actually making a loss by offering such products to his customers after taking into account his advertising costs, sales fees, merchant fees and staff wages.
Unfortunately many people start and fail drop shipping stores in this niche everyday. Don’t be one of them!
1 – Thai Shrinking Clothing
If you buy cheap Thai t-shirts, an XL in America is definitely not an XL in Thailand, in fact it might be a 2 or 3XL but that depends on where you look. There are so many different types of Thai sizing but the biggest issue is the way Thai clothing is made, mainly t-shirts, it’s nasty and if you’ve ever been to a Bangkok night market and bought some ‘cheap replica tees for 100 baht’ you’ll know they shrink up to 50% when you wash them.
I had a client in tears who came to me after sending over $100,000 worth of t-shirts from a Thailand supplier, only for over 75% of her customers to request a refund due to their clothes shrinking nearly 2 or 3 sizes after first wash. She went broke, and her store is no longer trading – lesson learnt.
Lesson, buy and sample all your products before selling thousands of them via drop shipping.