Dropshipping=pyramid scam?

Question

Is anybody familiar with dropshipping? My boyfriend says its the same thing as a pyramid scam?

Answer 1

Dropshipping is nothing like a pyramid scheme.

Drop shipping is a supply chain management technique in which the retailer does not keep goods in stock, but instead transfers customer orders and shipment details to wholesalers, who then ship the goods directly to the customer . The retailers make their profit on the difference between the wholesale and retail price. It may be less expensive for the retailer to do this than to keep an inventory of the product on hand.

Dropshipping is a legitimate retail practice used by many companies, large and small. However, some multi-level marketing plans also use dropshipping, which is probably why your boyfriend associates it with pyramid schemes. (Multilevel marketing is often equated with pyramid schemes.) And, of course, most dropship suppliers make wildly inaccurate claims about how successful you can be if only you would sell their products.

So beware, if you do a web search for 'dropshipping' or 'dropshippers' you will find very little objective information. Mostly, it's a lot of sites saying you can earn an easy income opening an online business and either trying to entice you into selling their own products, or trying to sell you a directory of dropshippers. It so easy to start an online retail or auction business that there are lots of other people out there all selling the same things from the same wholesalers. If you want to make money, you would need to find something more unique to sell, and you're not going to find it from wholesaler that is primarily a dropshipper.

Answer 2

Drop Shipping Scam

Answer 3

Many legitimate businesses use dropshipping methods. Many eBay sellers use this to sell product. The seller does not actually have the product they are selling. The product is with another company. Most companies will dropship the product for you with your company name and address on the package. So, unless they tell you that they are dropshipping the product, you will never know.

If you plan on doing this to sell a product, I would first see if the company is what they say they are. Have something dropshipped to a friend at a different location to see if it arrives like they promise.

This a good way to sell product without having an inventory.

Here is a URL link to wikipedia that explains the methods and the risk. http://en.wikipedia.org/wiki/Drop_shipping

Here is another site that explains the method. http://www.virtuallyignorant.com/drop_shipping.html

There are some companies that do scam people doing this, but others are real and work.

I hope that this is helpful.

Answer 4

I'm not certain in what context you're using the term.

There are many companies that handle the shipping of your orders. Some simply take possession of your product from the manufacturer, warehouse it, and ship according to your sales. Thus they relieve you of the added expense of warehousing and staffing for that area of a business.

There's also companies that send you a catalog of items that they carry. You make the sale(s) and then they fill the order without you ever touching the merchandise. Many of these are reputable. Many of them allow you to put your own labels on the products to make it appear that your company manufactured these products.

What your boyfriend might be thinking of are those companies that tell you that you don't have to sell items to make money. What they want is for you to bring on someone within your tier/chapter/cabal or whatever they call it, and you make money off of what they sell. Structured properly these are not true pyramid schemes although they can smell and act like one.

Just be careful of this last group. Anyone who pushes you to make money by bringing on new members to sell for you is shady in my book. If they require you to buy-in, then they're definitely a pyramid scheme.

Be careful.

Answer 5

Anything can become a pyramid scam.

Dropshipping by itself is not if you work with a legitimate company.

What they do is provide merchandise and/or catalogs where you can have YOUR company's name imprinted on them. When a customer orders from the catalog or website, the company ships the item out to the customer and you get the payment minus your cost.

It could be a lucrative business IF you find the right company, but alas, many provide shoddy merchandise and service.

Do your research.

Answer 6

Drop shipping is a fulfillment model that allows you to buy products individually from a wholesaler and ship them directly to your customer.

Instead of purchasing a large amount of inventory, you simply partner with a drop shipping supplier and list their merchandise for sale. Then, once you receive an order you forward it to the supplier for fulfillment. The supplier will ship the product directly from their warehouse to your customer, and charge you only for the price of the shipped item.

What are the benefits of drop shipping?
The drop shipping model has a number of advantages:
Lower Capital Requirement: With drop shipping, you don’t need to invest thousands of dollars in inventory. Instead, you only purchase a product when you have an existing order to fill.
Wider Product Selection: When you don’t have to pre-purchase all the items you sell, you can offer a significantly larger number of products to your customers.
Reduced Risk: Without thousands invested in inventory, the risk involved with starting an online store is dramatically reduced. If things don’t work out, you aren’t stuck with thousands in inventory you have to sell at a loss.
Location Independence: Because you don’t have to worry about fulfillment or running a warehouse, it’s possible to run a drop shipping business from anywhere with a laptop and an internet connection.
Highly Scalable: Because you don’t need to manually fulfill each order, it’s relatively easy to scale a drop shipping business.

Answer 7

check out http://scamsbeware.com - consumer resource center. all kinds of scam info there, there's also a forum where u can keep up to date on current and future scams. And if u have any questions just post it in the forum and somebody out there should help u. http://scamsbeware.com/forum Best of all it's FREE 2 join, just register at the top it'll be worth it for u to keep up 2 date on scams/fraud. Hope this helps.

Answer 8

1

Answer 9

Drop shipping is almost always a scam, with proper research you can find out, its just the way it works!


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