Control - The Problem with Dropshipping

Dropshipping has become increasingly popular over the last few years. A “Google Trends” search shows a four time increase in “dropshipping” as a search term since 2016. Despite the rise in popularity, dropshipping struggles with a bad reputation. Many within e- commerce think of dropshipping as negative for their brand, or even as a get rich quick scheme. “How I make 102.481 dollars a month from the comfort of my sofa!” ads from dropshipping providers certainly haven’t made this perception better. As a result, many high-quality suppliers and brands don´t utilize the dropshipping model.

So, why is dropshipping viewed as something suspect?

Most likely it is due to a cocktail of misconceptions, a lack of serious and transparent players, bad marketing and the fact that many smaller brands don´t know about it. However, the largest problem with dropshipping today is that brands and suppliers don´t have control of their brand image when using dropshippers to sell their products. For instance:

  • Quality brands don’t want to appear for sale next to a cheap counterfeit product, or on a webshop selling merchandise not associated with their image. This can seriously dilute the brand image and make the brand seem of lower quality.

  • Quality brands don´t want one product to appear for sale for €100 on one site, while the same product is listed for €49,99 on another site. This will further dilute the perception of quality and image, not to mention that it incentivizes consumers to further purchase based on price, not quality.

The lack of control has deterred many high-quality and image-conscious brands from starting to use dropshippers. The potential damage to the brand and image simply outweighs the benefits of increased sales and marketing dropshipping provides. At Outshifter we believe that the only way dropshipping can become mainstream is through increased control, transparency, and ease of use. That is why the Outshifter platform is built on these three principles.

Control

Firstly, Outshifter is built on providing all parties in the dropshipping transaction a level of control. Both brands and third parties need to be able to give and withdraw access to their products or channels. This way brands and third parties that fit image wise can connect and benefit one another. In order to create a successful partnership, the branding has to be complementary. Then the dropshipper is a legit sales channel for the brand, just like a quality brick and mortar retailer would be. While the dropshipper can increase customer traffic and revenue through offering great products and a better customer experience.

Similarly, brands need to have pricing control to avoid competition based on price and to ensure customer trust. This is also important for the dropshipper, knowing that the competitor can´t sell the product for half the price they are. On Outshifter, pricing control is built-in regardless of the distribution channel.

Transparency

Secondly, we believe people should know what they pay for. Meaning brands only pay for transactions and third parties only get paid for sales. This way is both transparent and fair. It doesn´t make sense to have to pay large amounts upfront for distribution or marketing, not knowing how the return will be. While the seller doesn´t have to take on a large inventory costs, not knowing if the products will sell. This is the very nature of dropshipping, that makes it so attractive for both sides of the partnership. If we couple this payment structurewith a rating system and more intelligence such as sales volume and traction, we will achieve a higher level of transparency and set the right expectations from day one.

Ease-of-use

Lastly, finding dropshippers, third parties to sell through, the right channels to sell on, or products to sell is difficult and time consuming. It can also involve a lot of intermediaries that drive up the costs or reduce the margins. The Outshifter infrastructure makes discovering easy, not to mention that we facilitate the connection, payments and all technological infrastructure to make dropshipping as user friendly, secure and smooth as possible from start to finish – for all parties involved.

Through using the three principles; control, transparency and ease of use, as a starting point we can unleash the potential dropshipping holds for all brands, suppliers, dropshippers and individuals – Dropshipping is so much more than a get rich quick scheme.

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