
Dropshipping: Hustlers making millions from goods they never handle - yarapavan
https://www.bbc.com/news/technology-53759932
======
mattkevan
Unless you started early enough, like a decade ago, or are unusually lucky, it
seems like the only way to make money drop shipping is to create a course that
promises to teach others the secrets of making lots of money with drop
shipping. Bonus points for standing next to an expensive car and holding a wad
of cash for the promo photo.

Of course if drop shipping was so lucrative, they’d be doing that instead of
bilking hopefuls with their expensive courses on Udemy or wherever.

~~~
Justsignedup
Everything about dropshipping reads like a pyramid scheme

~~~
zalkota
You don’t buy the product and store it, you just find the customer and the
distributor mails it directly to the customers, not you.

In a pyramid scheme, you would be buying the product and holding onto it.

~~~
dexterdog
In a pyramid scheme you would be tricking others into buying junk for "their
own businesses" to sell to other people.

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binarymax
I almost got scammed when looking to buy a miter saw from a big box store. I
went to the websites of Lowe’s and Home Depot after doing some research, and
seeing lots of reviews on the product by different accounts saying it was $200
cheaper in other places (but not saying where - that’s the interesting
thing!). Searching for the model number brought me to a couple places that
were selling at the price touted by the reviewers. On one of the sites I got
as far as the PayPal checkout button, but didn’t pull the trigger until
emailing. Couldn’t find contact info aside from a web form and realized what
was going on. Interesting tactic.

~~~
ta17711771
Still need one? Happy to help with the best price you'll find on powertools,
handtools, or consumables. Drop an email address if interested.

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peteretep
The odds of making a killing on dropshipping seem to be similar to those of
making it as a rockstar, with a small but real number of people ending up
making it as a session musician asa consolation prize

~~~
wasdfff
This is way less work than being a session musician for your beer money,
though.

~~~
peteretep
The session musicians I know and the people with successful drop shipping
niches I know tend to work about equally hard and get paid about the same
amount. I don’t know anyone who’s able to keep a drop shipping business going
“passively” given the intense competition

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dorkwood
I wouldn't be surprised if there was more money to be made in teaching people
how to dropship. I've seen a lot of "how I make 30k per month with
dropshipping" ads over the last five years or so.

~~~
emit_time
If you sell a course you made 100% profit, basically very little chances of
loss, and your business can go to zero overnight, but not negative, and very
little needed to scale up.

Compare that to running a real business where things change all the time

~~~
xenihn
Ad costs eat into that 100% profit.

~~~
dexterdog
So do production costs

------
dawnerd
Everyone seemed focused on dropshipping from China but there’s a lesser known
form where they will source from eBay and sell on their platforms. A lot of my
eBay sells are obvious drop shippers (asking to ship without a packing slip or
anything mentioning eBay). I don’t have a problem with it though, I’ve had
zero returns or negative feedback from them.

~~~
jariel
They source from Walmart and sell on Amazon.

Not kidding. $5 arbitrage.

Get an Amazon box, then a Walmart box, then the product makers box.

2020.

~~~
dawnerd
Yep I’ve done that but honestly it takes a lot more work than the youtubers
make it out to seem. Much easier to just source from garage sales or thrift
stores.

~~~
jariel
? Sourcing from 'garage sales' means working capital, shipping trickery,
limited inventory.

Sourcing from 'Walmart' means you just 'click and send' \- it's pure
arbitrage. No working capital needed.

~~~
dawnerd
That’s not how most Walmart arbitrage works. People use tools like brickseek,
find the clearance or price mistakes, drive to all the stores then send into
amazon FBA. If you get a Walmart box inside of an amazon box that’s precisely
what happened - although that’s just really weird in itself but whatever.

I make way more money being selective than when I have drop shipping a try.
It’s really not all that cracked up to be.

~~~
jariel
My brother arbitrages and does none of that - just arbitrages off list price.

There are people that just don't shop around, he can literally charge a little
more or around the same price, the key is getting good rankings on Amazon.

Many people searching Amazon are just looking for something, they don't care
about a few dollars here or there.

So as long as his price is reasonable, and he can get ranking ... it works.

------
sct202
If someone's trying to sell you something that takes 1 month to ship out, you
might as well go more direct and look for it on Aliexpress.

------
scribu
Dropshipping has been around for a while.

What's new is using Influencer Marketing to lend more credibility to
knockoffs.

~~~
im3w1l
The influencer is the brand.

------
la6471
Ok another clickbait and shallow article. HN needs to stop promoting these.
Dropshipping in itself is nothing wrong. Dropshipping with the intent of
defrauding people and selling counterfeits is what is wrong. Why cannot the
writers of these articles be precise and responsible in choosing the title of
their articles? With one stroke of pen they malign a whole group of people
without any second thoughts.

~~~
mellosouls
Out of interest, what value do legit drop-shippers add generally?

Edit: thanks for all the answers.

~~~
Reebz
If you reverse it: Effectively it’s the manufacturers outsourcing a sales
funnel.

~~~
mmerlin
Dropshipper also absorbs the losses from credit card fraud, de-risking
ecommerce for the manufacturer.

------
LatteLazy
I love how anyone doing their own thing must be engaged in something dodgy.
The vast majority of people dropshipping are honest and entrepreneurial and
doing no hard to anyone. Good luck to them, not everyone wants a 9-5 with a
boss and low wages.

~~~
Kaze404
In my experience working at a payment processing company that dealt mostly
with dropshipping and other barely-legal sellers, I don't believe that's the
case. Fortunately I wasn't in the customer service team, but I heard the
stories all the time.

~~~
gameofcode
Was it the payment processing company that were prone to dropshipping and
barely-legal sellers, or that what was clogging up customer service?

I'd imagine those rare exceptions are exactly where most of customer service
time in ecom/payments is spent.

~~~
Kaze404
Most of our clients were dropshippers, so I don't have any basis to compare.
It could be confirmation bias or just misinformation, but I can't not let my
experience sway me into at least avoiding them entirely in the future.

------
msie
Comment on comments: How can someone in one breath mention sourcing material
directly from China for their customers while in the next breath say "mass
produced China junk/apparel" when referring to other people's products?

------
emmastory
There's a really interesting episode of the Reply All podcast that acts as a
good explainer for dropshipping from the perspective of people who are
encountering it in the wild and have no idea what to make of it. I found it
useful as someone who has seen a lot of ads for dropshipped products on
instagram and elsewhere but didn't understand how exactly the method was
making money and for whom.

[https://gimletmedia.com/shows/reply-
all/dvhe3l](https://gimletmedia.com/shows/reply-all/dvhe3l)

------
level09
The biggest issue I found when I tried dropshipping around a year ago, was the
insanely long shipping times. I'm not sure how people get around this problem
(who wants to wait 10 days+ for sometime they liked on instagram to arrive?)

Maybe nowadays there are some solutions around this? Any dropshippers would
like to share their feedback on this?

------
wrnr
This is just arbitrage over time and space, why is it so hard for people to
understand that information is also an economic good. Look closely at your
life and try to find when you are not doing it. We all know: "It is difficult
to get a man to understand something, when his salary depends on his not
understanding it", we need something like: "It is difficult to get a man to
understand something is wrong when he is doing it".

------
muunbo
This is exactly how Amazon got its start: Jeff Bezos didn’t have a stockpile
of books; he only ordered them when a customer made an order on his site. The
difference of course was that he did physically handle the books.

~~~
superhuzza
>The difference of course was that he did physically handle the books.

If that's how it worked, then it wasn't really drop shipping. It's not drop
shipping because the goods didn't go directly from vendor to customer. That's
more like Just in Time fulfillment.

[https://retailops.zendesk.com/hc/en-
us/articles/202763175-Se...](https://retailops.zendesk.com/hc/en-
us/articles/202763175-Set-Up-Vendors-for-Dropship-or-
JIT#:~:text=Using%20Dropship%2C%20retailers%20send%20customer,forward%20them%20to%20the%20customers).

------
s5300
Fuck. I'd love to get into more detail and write out a massive essay/text
wall... but today's not the day...

An unfortunately long time ago now, when I was a younger teen (like, 13), I
had a large amount of mechanically inclined hands on hobbies. As a dirt poor
person from the _really_ dirt poor part of Appalachia, if you wanted
something, especially in a niche hobby, you built it from near raw materials.

At the time, a few of the things I needed had a surprisingly small supply
chain/availability in the U.S., and with asinine prices at that. One thing in
particular, could be found practically nowhere aside from a single source in
the U.S., and at something like $20/pop with a business type account necessary
to purchase.

Frustrated, and having been raised by the internet, I went to China, mainly
Alibaba/AliExpress for sourcing - Tangent: as I write out this comment, I was
going to state "back before everybody and their uncle knew about AliExpress in
the U.S., atleast." \- turns out, it was only a year after AliExpress had
launched. Didn't know that till now.

So, I found the specific thing I was after - needing only two of them. Two
were $8 shipped, 10 was $17 - and these were the exact thing being sold for
$20/PC from one U.S. supplier, and a pain to purchase. Obvious what choice I
made, luckily had an older friend to use their credit card for purchase. Since
I only needed the two, I for some reason thought, hey, maybe somebody else
might be in my same situation, put them up on eBay for $5/PC + shipping, and
hoped that maybe 2 or 3 would sell in a month and I'dve gotten what I needed
for basically free.

By the end of the night, all eight of them had sold. Kinda shittered myself,
and that's how I became a go-to stateside supplier of a few very niche fans,
some other RC-type hobby supplies, and most notably the second top-seller of
quality multi-stranded silicone "hobby" (UL 3135) wire on eBay as a sick 13-15
year old. A little over 2500 packages in 2.5 years. And, I think I've
forgotten to include the main point - I was making some pretty massive margins
on sales - but still undercutting the next seller by half or more. My entire
point of doing this was in hopes of making some niche hobby stuff more
accessible for people like me. I'm lucky enough to be able say that I'd
regularly reach out to buyers and get fairly frequent replies, and found that
I was often able to fulfill that goal.

Anyways, that's my I should definitely be asleep by now HN ramble of the week.
My apologies that it wasn't on topic/directly related to "anonymous"
dropshipping in which the "importer" never even touches their "product" cause
err, my entire point being - I _absolutely_ fucking _HATE_ this shit ass fad
or whatever you may want to call it I hear being talked about everywhere.
Honestly, fuck these people. Fuck em like the intro to Method Man.

~~~
random_visitor
My friend started a somewhat similar business 2 years ago. He started
supplying RC parts and laterally moved into other categories. He's now dropped
out of college and hired 2 more people to get stuff imported.

Whenever I talk to him he has a similar opinion that dropshippers are one way
or the other getting in his way (take order for X, don't deliver. People are
now hesitant to order X from other suppliers). His clients stay for a long
time but getting more is always an uphill battle.

Whenever I see him moving into a new field with a handful of offerings and
make profit, it makes me realize how many more business in niche areas can pop
up in every country, that too by only putting some effort in effective
fulfillment and maintaining relationships.

~~~
s5300
Right as I had to stop, I was at a point where I'd created my own product that
had actual demand. Could've patented it (well, had somebody of age patent it -
but patents are mostly dumb and pointless IMO - hilariously, I'd also
met/gotten to speak/slightly work with Ohanian and Schaaf due to some local
startup stuff at the Uni in my town)

Unfortunately, becoming extremely physically ill, of which I'm still barely
moving towards recovery from, and having absolutely abhorrent and parasitic
parents kinda ruined everything at the same time. Always hurts to think of
what could've been, but life is strange ¯\\_(ツ)_/¯

I've definitely developed an absolutely pessimistic, utterly cynical view
towards all of the people that are coincidentally mostly my same age with
their whole "build up your own brand, sell your own product" when it's just
them hiring a graphic artist that they're paying practically nothing to slap
"their brand" only widely available mass produced China junk/apparel. I
completely realize it's not a healthy quality/habit in any way, and I actively
try to fight back against the feeling... but sometimes the pettiness/fakeness
of it all is just too much.

Edit - just as it popped back into my thoughts... for two years after I'd
completely taken down all of my listings/sale fronts, every few months I'd get
some random emails of people still trying to get the more niche things I'd
sold, or old customers coming back. I guess eBay caches stuff in some weird
ways with regards to Google searches. As I for the most part had everything
still laying around, I filled around 20 of those orders. Eventually, things
did completely stop popping back into my life, haha.

~~~
dbancajas
how much total did you earn for that?

~~~
s5300
Not something I want to specifically post on this account for some reasons,
but quite a good amount. All squandered in the most misfortunate way though.
Quite sad all around, haha

------
ricardobeat
> 'It's very easy to take the moral high ground, but if a lot of people had
> the skillset and were making tens of thousands of dollars profit a day, then
> they would probably think pretty differently'

I imagine this is the way most criminals rationalize their work.

~~~
eertami
That quote sickens me, such a tragic waste of oxygen.

Worse still, he believes others might share in such an abhorrent world view
except they simply aren't "skilled" (haha, yeah right) enough to be scam
artists.

I've filed a complaint with the BBC, because on top of being purely terrible,
this is also blatant self promotion and offers nothing of value to the
article.

~~~
kovek
What does the self promotion look like?

------
dang
A large thread from a few months ago:
[https://news.ycombinator.com/item?id=23041138](https://news.ycombinator.com/item?id=23041138)

------
bjyoung93
Old news here, revenue can be crazy for these stores. Ask them about their
profit margin. But hey some really do work, just capital intense

~~~
milesvp
I got sucked into watching a bunch of videos on youtube from drop shippers,
and no one talks about profit, only about revenue. The more I watched the more
convinced that the only reason these people are wasting their time posting
these videos is that they make more money on their guides and tutorials than
they actually make off of drop shipping. And then you can finally start to see
the cracks if you watch enough. You see their failed experiments and realize
that it's not uncommon to need to spend crazy amounts on ad spend, just to see
if you can get any orders. And then you find out that most of these products
have a lifespan measured in months. It looks like a total grind looking for
new products that might turn a small profit, and hope you get another big one
before you can't afford any more experiments.

~~~
tootahe45
I learnt from the first 5 videos the real money is in selling get-rich-quick
ebooks. Some of those guys even do $1000 consultations, i recall one of the
top business guru youtubers had a bunch of people pay $25000 each for a 1 week
in-person course..

------
Ologn
I used to sell a particular 3M product via the mail. I generally did not drop
ship it, I ordered it in bulk from a wholesaler and then sold it on eBay, as
well as on a website I maintained, which ran a heavily modified version of
osCommerce.

Buying this one item, which I knew had regular demand, from a retailer allowed
me to offer a price which was competitive, but from which I could also make a
small profit. With dropshipping, I was competing against others who could drop
ship the same items, so I could not offer as competitive a price, nor have any
kind of margin.

I used dropshipping for two scenarios. One was if I traveled and was unable to
ship out the item I had in stock. In this scenario, I would drop ship the item
and lose any margin (or sometimes even take a small loss).

The other scenario was to test new items to sell. My main wholesaler (which I
bought my 3M bulk item from) could drop ship a catalog of items at a decent
rate from their one watehouse. I also had accounts with two larger
dropshipping wholesalers, both of whom had multiple warehouses with mostly the
same catalog in stock - with items more likely in stock, but at a higher
markup.

So what I did was for through my main wholesaler's catalog and see what items
they had. I then checked that both other wholesalers had the same item in
their catalog, and that all currently had the item in stock. Generally my main
wholesaler would drop ship for the lowest rate. So I put the item up on my
website, at a break even price. I did this for many items.

Sometimes I would have a sale. Often my main wholesaler still had the item in
stock. I would break even on the sale, but would know there was demand.
Sometimes they would be out of stock - then I would drop ship from one of the
two backups and lose some money on the sale. Maybe I would increase my sale
price until I knew my main wholesaler had the item in stock again.

As margins were small, one goal was to sell more and increase margins. If I
bought boxes, tape and shipping labels in bulk, my margins increased a few
cents per sale - I could decrease the sale price (and increase sales doing so)
while also increasing my cut a few cents. This worked for a number of things -
with $3,000 a month in sales my Payapl fees would drop, with $10,000 a month
in sales they would drop even more. This would also allow me to offer more
items at a competitive price.

I'm not sure how it works nowadays. One lesson I learned was what to do when
you succeeded. I got to where I was shipping several items a day and making a
small margin, and had the opportunity to ship even more. But it would then
outgrow my closet space - I would need to rent some warehouse space or
something to receive shipments and store items. Also, as sales grew, I spent
less time programming my web site, and more time putting items in boxes,
taping up boxes, weighing boxes, printing out shipping labels to attach to
boxes etc. I figured I eventually would have to hire someone part time to ship
items out during the week. By then I was familiar enough with the business to
decide I did not want to make this leap, and decided to wound down my
business. Actually I stumbled out of the business like I stumbled into it - my
friend had some familiarity with some of these wholesalers, knew I could sell
online and suggested I try it out, which I did.

------
foolinaround
"the fool and his money are soon parted"

This has become quite a phenomenon due to the rise of the 'influencers' and a
generation that blindly follows them.

Even though this method may be legal, the onus is on the people to look for
something like BBB certification, and this new certification, whatever form it
may be, should be nimble and easy to initially obtain, and fast to update by
the consumers.

~~~
dicknuckle
Imagine thinking BBB is anything more than Yelp.

~~~
s5300
Unless I've been reading absolute bullshit my entire life...

The BBB is and always has been a literal "you give BBB money, we give you good
rating - no money, no rating/bad rating"

They had good enough PR that they made themselves look like an official
government/whatever else trustable entity...

They're literally just a private business with a name that was good enough to
fool people into thinking they're legit/worth something.

Can somebody correct me on this? Am I crazy?

------
tedunangst
Are these revenues or profits?

------
optimalsolver
If it's not sold by and dispatched from Amazon, I don't wanna know about it.

