The Dark Side Of Drop Shipping Stores (From Aliexpress)

I can’t even browse Facebook, Instagram or Youtube these days without being shown a drop shipping course every 5 minutes from a 20-something year old kid who claims to have made a million dollars on Shopify and Aliexpress and is willing to teach us all how to do it for a mere $47.

I won’t get started with Alex Becker and his wolf mugs.

Over the last few weeks I’ve had the pleasure of traveling to Bali and spending time relaxing, in the process I decided to checkout a bunch of these new courses and found all of them are lacking in one fundamental area.

The busy side of drop shipping and the down right dark side that no one ever seems to talk about in public. But don’t get me wrong, you can still succeed with Aliexpress drop shipping if you do it right.

Let’s get started,

1. Payments (Dark)

The first major problem most stores will ultimately face when they actually start doing serious volume is that Paypal and Stripe will take a strong dislike to your business. Drop Shipping is a high risk business for companies that accept credit cards on behalf of others and as such you can expect them to block 50-90% of your cashflow for up to 180 days to ensure customers receive their goods.

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How many of the gurus told you that? Don’t believe me, check out the posts from the Facebook ad groups out there, it’s only a matter of time before it happens to you.

You better hope you’ve got a large overdraft limit or a healthy credit card balance as you’re going to have to loan money to fulfil your orders before the funds are released.

If you’re using Stripe too, don’t be shocked to see your account banned within a few months too. If you read Stripes terms and conditions closely they actually prohibit drop shipping. Maybe Shopify payments is available in your country? So far they seem to be a lot less relaxed on drop shipping.

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2- Delivery Times (Dark)

China is good for one thing, cheap or free delivery but that comes at a cost, long delivery times. Your customers will be waiting up to 4 weeks for their products to show up, even longer if you choose to sell to somewhat corrupt countries. While most gurus recommend using ePacket (a new faster shipping method) it would be fair to say most deliveries are made within 14 – 21 working days regardless of the new service.

Free Shipping China

During these 3 or 4 weeks your going to need to keep your customers in the loop, more recently I’ve seen lots of gurus promoting aftership which is a service I reviewed last year and is a good way for sending updates automatically to your buyers. If you don’t invest in such apps you can bet your life you’ll get emails every few days from nervous buyers who think they’ve been ripped off or those inpatient buyers who want their product now.

There is a solution here but it comes at a cost, DHL and Fedex both service China to the world as well as EMS which is slightly cheaper. Your customers will receive their goods within 2 weeks usually but it can be rather expensive.

Free Shipping China

Other options include buying in bulk from your supplier and using a storage facility such as Shipwire to ship locally. Again these local storage facilities are rarely mentioned by gurus as it hurts your bottom line and is often far too complex for most wannabe entrepreneurs just starting out.

 

3- Chargebacks & Refunds (Dark)

It would be fair to say that between 5-10% of your customers will request a refund, this is what I’ve found when reading through the Facebook groups. In my own drop ship business this is around 3%. I even saw one guy with a 33% refund rate which clearly showed he was doing something wrong!

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What the gurus fail to mention is how to deal with refund requests. You’ve got three options,

  1. Request they send it back to China and piss them off when they see the postage fees.
  2. Request they send it to a US or local mail forwarding provider/or your own address.
  3. Just refund them.

Ultimately if you’re doing any serious volume it makes sense to just refund them without taking control over the goods again. You can almost guarantee a buyer will kick up a fuss if you have them ship it back to China.

I once bought a phone from Hong Kong which turned out to be faulty, New Zealand Post wanted $90 to ship it back to them without a signature. It was $50 extra for the signature. Needless to say the item mysteriously went missing in the mail, I lost my money and couldn’t get a refund.

Another time I bought an item and it didn’t show up, the seller kept sending a tracking link saying it had been signed for by someone in New Zealand, so the seller assumed he was covered.

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Wrong! And gurus out there fail to cover this topic too. If an item is not received by the buyer regardless of the tracking status it’s your responsibility to put it right. The tracking ID could be for any customer, unless my physical signature is on the tracking URL you can argue all you want, but a credit card company will 99% of the time award a chargeback in the buyers favour should it come to that.

As your business grows you will become more exposed to chargebacks and refund requests. You need to stay on top of them as if you’re chargeback rating goes up too high, your provider will pull the plug on you for being too high risk.

If that happens to you, good luck.

If you do end up getting a chargeback you’ll get charged a $25 admin fee and lose the value of the order.

 

4. Warranties & Replacements (Dark)

Of all the courses I looked at, not one mentioned about warranties and replacements. Maybe the gurus think that as they are shipping goods out of China they don’t have to offer any warranty or replacement to their customers.

The major problem here is that most of you are going to be living and doing business in countries such as the United States, Canada, Australia, Europe and Asia. And guess what? There are laws that protect consumers buying goods online.

Unless you’ve setup a company in China or a country that doesn’t offer such laws you’re not exempt from providing a warranty on goods you drop ship from China.

It’s your problem, not your drop shippers. Deal with it.

So what happens when the selfie stick you sold Johnny 1 month ago breaks and he wants a refund? You will need to sort out a replacement or refund. If not Johnny is well within his rights to lodge a chargeback or dispute with Paypal.

I suggest you read into your obligations (US) to providing warranties. Just reading the numerous Facebook groups on Aliexpress drop shipping shows no one has any clue about warranties or refund policies.

 

5. Customer Service (Busy)

If you’re pumping out orders like some of the big guns, you’ll start to receive a ton of customer service emails direct to your inbox. If you want to live the dot com lifestyle that goes with the drop ship store, you’ll need to find yourself a VA (Virtual Assistant) and one that you can trust!

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There’s many places to find VA’s, but finding one that you can really trust to send out your orders and reply to customers in a professional way will take time, I know when I found mine there was lots of training to do.

Some places to look for VA’s include Upwork or Freelancer or even Onlinejobs.ph. Personally I find the Philippines the best place as the level of English is much higher there than in countries such as Thailand, Vietnam or India.

If you’re receiving more than 100 emails a week you’d be better integrating a customer service management system for tracking tickets and emails, Freshdesk or Zendesk are popular among drop shippers.

You should also install an order lookup app on your store for customers to track their orders.

 

6. Facebook Ads (Busy + Dark)

You might have the best looking Shopify store on the planet and the hottest products, but without traffic your store will make f! all. Most of the popular courses recommend using Facebook or Instagram Ads. Others such as Drop Ship Lifestyle recommend Google Adwords or Bing Search.

Personally I prefer Facebook Ads and most of the courses I followed do too.

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You’ll ultimately spend hours and hours testing new ads and niches to target. A few years ago it was widely accepted that you could find winning ads using a $5 per day method. If you think that works in October 2017 I’m sorry to be the barer of bad news, it will cost you far more!

I know marketers who’ve spent thousands and have nothing to show for it. Don’t be surprised if you fall into this category when you’re starting out. In the ads game it’s all about testing.

If your ads are going well you’ll need to ensure your account isn’t banned for policy violations. I suggest you have a read of Facebook Ads policies, there’s a ton of them. If you don’t, your ads might get pulled at any time, without warning. Getting your account reactivated is nearly impossible too.
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7. Product Selection (Dark)

All of the courses I viewed over the last month struggled with product selection. Quite a few suggested going to Aliexpress and finding the best selling products and copying them. Others suggested finding hot new products using Kickstarter and looking for similar products.

But what they all failed to mention is to test your products before selling them. I’d recommend buying a product from the supplier you plan to use, request a ‘drop ship order’ and see what turns up in the mail.

You’ll quickly find out:

  • How good is the product quality?
  • How long does shipping take?
  • What was the packaging like?
  • Should I sell this product??

Most of the people who buy drop ship courses quickly rush out and start selling products they have never bought, consumed or seen themselves and this is where your biggest down fall probably will be.

Oh, also what happens when your supplier is out of stock, can you buy from another supplier easily?

8. Electrical Products (Very Dark)

Another topic that’s rarely covered by any course is your obligation to ensure your selling safe products online. Did you know that shipping a product with American rated voltage to an Australian customer will probably guarantee that the device blows before the consumer even gets to use it?

The number of people I see selling shitty products with electrical power cords is scary, how would you feel if you caused a consumer to have a fire in their home? Or worse caused someones death from a faulty electrical product.

In the United States and most western countries, businesses pay thousands of dollars for electrical testing on their products before they are allowed on the shelves. Do you think these Chinese drop shippers follow the same process? Yeah. Right.

 

And there you have it, some of the dark sides to drop shipping. But they are all possible to deal with, you just have to do further research yourself as most of these so called courses, definitely won’t show you the way forward.

 

 

 

 

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4 thoughts on “The Dark Side Of Drop Shipping Stores (From Aliexpress)”

  1. Hi Rhys,

    I really enjoyed your review. Points that you stated are 100% true. People are getting lured due to fake promises of so called Gurus. I have seen people claiming that they have sold a ‘ring’ and became millionaires 🙂

    So others think of copying business model > open a shopify store> get oberlo app > run facebook ads > disappear in this air after few months as they get to know that recovering shopify fee is tough, forget making profits.

    I am not saying its failure but its not easy as gurus claim. It requires dedication, testing, marketing etc like any other business.

    Have you heard of Frank Keeney? I see his facebook ads these days. He talks about buying stuff from USA (and not china). I am attending one of his sessions.

    Cheers!

    Reply
  2. Don’t forget about product instructions.

    If you are selling electronics or mechanical devices, many of these devices will not come with English instructions. It will be therefore up to you to produce instructions (which brings up liability issues) or have the supplier/manufacturer of the product produce an English version.

    Reply

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