The shopkeeper adept of direct delivery or dropshipping does not have the products he sells on his website. Instead, he expects a customer to place an order before purchasing the goods from a supplier. The latter then sends the product directly to the customer.
In recent years, videos and sites promise to make a fortune by creating your ecommerce site, working from home and without managing inventory. On paper, launching the direct delivery, or dropshipping, is enticing, but the reality is much more complicated and the customer risks to lose in exchange. Here’s what every good consumer should know.
“A year ago, we began to have a lot of Quebecers who called us for information on dropshipping, to get started,” says Philippe Martin, boss of Shopify Factory. His company, based in Montreal, trains beginners and professionals to use the Shopify sales platform to launch or develop their online store.
“Most do not have a business plan and do not know what they want to sell,” says Martin, who says he has never worked with these entrepreneurs. They just heard an urban legend saying that you could create an online store and make money easily”.
The principle of direct delivery
A trader sells products through his website: watches, gadgets, clothes … Unlike a traditional trader, he has no inventory. Once a customer places an order on their site, the merchant buys the merchandise from a supplier. The latter then sends the product directly to the customer.
The practice is not new: Merchants have been selling products for years without having them in stock. What is innovative is the means to do it. Philippe Denis, Lecturer at ESG UQAM Fashion School
This way of doing things is quite controversial today. Some believe that wholesale middlemen (dropshippers) trick their customers and take advantage of their naivety to make them buy products at a much higher price than they could find elsewhere.
The rise of Chinese platforms
Indeed, in recent years, platforms for buying cheap products have hatched: Wish, Vova, Joom … Among them, the Chinese giant AliExpress (subsidiary of the Chinese group Alibaba) is the most used by intermediaries. On this site, mainly watered by Chinese suppliers, individuals can find everything at unbeatable prices. A slimming sheath at $ 9, sunglasses at $ 8, earrings at $ 3 … And this, postage included! If the prices are so low, it is also because the delivery times are long (several weeks) and the quality is not always at the rendezvous.
So, some have had an idea: resell products that come straight from these platforms. This is the case of Jean, a 29-year-old Montrealer, who agreed to speak at La Presse on condition that his last name not be published so as not to harm his business. After studying business, he left his job to do direct delivery a year ago. He knew this business model on YouTube, where some explained that “you could create a real money machine”.
A fairly easy launch
He then created a merchant site on the Canadian platform Shopify, to sell jewelry. ” It’s very easy. The platform offers a turnkey solution to automatically add products found on AliExpress”.
Jean sells products that his customers could have bought directly, without going through him, by visiting the site of AliExpress … and pay significantly less. To prevent his customers from being aware that the product comes from AliExpress, the contractor chooses Chinese suppliers who agree to withdraw the bills from the packages.
I sold on average three times more expensive [than on AliExpress]. This was not a problem, Chinese suppliers are used to working with dropshippers. Jean, Montreal wholesale intermediary
“The dropshipping seduces because it seems to require a minimal investment: no stocks to keep, a website at $ 30 a month without commitment on Shopify … But the entrepreneur forgets that he will have to invest thousands of dollars in advertising for generate sales!” says David Grégoire, CEO of the company eCommerce eCommerce, specializing in product photography for e-commerce.
Push to purchase
Indeed, those who create their site must make themselves known. “I advertised on Instagram and Facebook, trying to target communities that could buy,” says Jean.
And above all, once the user on the site, it must be pushed to the purchase. “I put fictitious promos on my site, with a count indicating for example” more than 2 hours to take advantage of this discount, “says Jean, who closed his jewelry site to launch a specialized in sunglasses, then in the gadgets.
“The goal is to give the customer the illusion of getting a good deal. These marketing techniques are similar to those used on other platforms in other sectors. For example, travel platforms often indicate “this is the last available room” at this price, “observes Philippe Denis.
A very competitive sector
In September, Jean made $ 8,000 in sales, but ended up in the red at – $ 200. “I made sales with a minimum of $ 15 margin on each product, but I always had to invest in advertising. I have spent $ 400 in three days advertising on Facebook so [ultimately] nobody buys any of my products. After eight months of activity without making a profit, Jean had to stop his activity of wholesale broker, to regret.
“It’s easy to get started, but to prosper is another story! There is a lot of competition”, says David Grégoire.
“It’s not necessarily sustainable in the long run. There is not necessarily customer loyalty to these businesses and we must always be looking for new customers, “confirms Sylvain Sénécal, professor of marketing, holder of the HEC Montréal RBC Financial Group Chair of Electronic Commerce.
Romain, a 20-year-old French dropshipper who has also asked for his family name, confirms: “Some, like me, have abandoned AliExpress to do more qualitative dropshipping, with serious suppliers. We must satisfy our customers with correct prices and quality products, otherwise it is not viable”.
The challenges of dropshippers merchants: Become known
One of the biggest challenges: making yourself known. “I contacted small influencers with 50,000 or 100,000 subscribers, says Jean, who has successively launched three direct delivery sites. I sent them one of the products for sale on my site for free and posted a photo on Instagram, recommending it to their community. Sometimes, we have to give them some money to put our product forward”.
“When we talk about dropshipping, everyone thinks we are scammers selling low-end Chinese products at an exorbitant price for stuffing themselves,” says Romain, a 20-year-old French dropshipper. But we have loads, like a classic trader: we pay taxes, taxes, merchandise, advertising”.
Also published on Medium.