Getting rich online without doing anything: the mirages of dropshipping
A sales method that promises to build a business empire from home pays far less than its "gurus" claim.
On paper, it is the ideal recipe for making a fortune. It allows you to open a worldwide store at no cost, to import goods without having to manage stocks, and to easily make gigantic margins. However, dropshipping is far from being the golden goose that many websites and youtubers, self-proclaimed experts of commerce, promise.
The principle of this practice, which is perfectly legal, consists in removing a step in the commercial chain: where a store orders goods from a supplier and then sells them to a customer, the "dropshipper" waits to make a sale before placing an order with his supplier, and delivers the products directly to the customer.
In practice, the term refers mainly to online stores that sell products purchased from Chinese export giants such as AliExpress (Alibaba Group) and have them delivered directly to customers in Europe, the United States, Brazil or Israel. Thousands of stores of this type appear every year, launched by Internet users who salivate at the margins promised by a business where gadgets bought in China for 3 euros can be sold for 30 euros, including delivery.
But like all miracle recipes to make a fortune, this system hides mulDream margins, high fees and cheated customers
"It's a two-sided scam," says Jean-Baptiste Boisseau of the Signal-Arnaques website, which lists reports from customers who feel they've been cheated. "Consumers are being scammed; they have a product and an after-sales service that are not at all up to scratch. And people who get into the dropshipping business are convinced they're going to make something. But the only people who gain are the middlemen: Shopify [which allows you to create a merchant site in minutes], Facebook and people who sell training. "
"I sold a lamp for $70, hoping to make $30, but my customer was in Canada, and shipping cost me $25. I only earned 5 dollars.
Because dropshipping is a difficult market. Hundreds of sites, some set up by people with no business background, are competing and often selling the same products at similar prices. Navigating through this sea of sites is almost impossible for a tipple problems. And not only because it is an important source of scams and conceals stores that more or less consciously defraud the legislation in terms of right of withdrawal, customs duties or misleading advertising. On the seller's side too, everything is far from being rosy.
An American, Cody, tried the experiment and quickly realized that nothing was simple: "After I launched my store, I made some sales the first week," he explains to Le Monde. But I didn't have enough data to do targeted advertising on Facebook. "He invests in promoting his products, but his one sale is far from bringing him what he hoped: 'Everyone advises you to offer international shipping, but not all Aliexpress [suppliers] do. I sold a lamp for $70, expecting to make $30, but my customer was in Canada, and the shipping cost me $25. I only made $5. "
Added to these vagaries are fees that can quickly add up, including the almost indispensable subscription to Shopify, the world's leading turnkey sales site. The basic option is a $30 (€27) per month subscription, plus a 2% commission on sales; in exchange, Shopify hosts the site, manages the payment systems, and offers various services. The Canadian platform, listed on the New York Stock Exchange, is quite clearly encouraging its users to engage in dropshipping: in 2017 it acquired Oberlo, a Lithuanian startup whose main product is a module for Shopify that allows you to automatically search for and add products found on Aliexpress to your online store.
Le Monde tested the service for the purpose of this article. In less than half an hour, we were able to create an anonymous online store - since deactivated - offering for sale "Hubert Beuve-Méry ties" ("Tout le sérieux du Monde dans une cravate"), bought for less than 2 euros in China, at a price of 100 euros. No warning message about trademark rights, or about multiplying the price of the product by fifty, was posted.
Fake reviews and fake notifications
Pushing the envelope, Shopify? In 2017, the group's stock had plummeted after the publication of a video by Andrew Left, a stock consultant accustomed to big shocking statements, who had compared the group's business model to that of Herbalife, a company condemned in recent years on several occasions for its pyramid scheme.
Shopify has strongly denied these "baseless claims" of a "troll". Without going as far as this unsubstantiated comparison, the Canadian company has long tolerated on its platform modules that allow, for example, to easily display fake customer reviews - and still allows tools that "import" reviews filed on Aliexpress, giving newly created pages the appearance of a site with very many customers.
Until 2018, a tool that displayed fake purchase notifications, such as "Julien in Marseille just bought the product you're looking at," was also available in the Shopify app store. It has since been removed, but it is still possible to install it with some basic technical knowledge.
Example of an email sent by Oberlo to users of its service, promising a 600% margin. THE WORLD
The platform does not make it easy to report cheating stores either: there is no button, no easily accessible procedure to alert Shopify about a problem. The company, which did not wish to answer a series of detailed questions from Le Monde, however, assures "take seriously all questions about the goods and services offered by merchants on our platform. Several teams investigate alleged violations of our user policy, reports of copyright infringement or fraud. We investigate all reports and act immediately if a reseller or partner does not comply with our policies. "
The only independent merchants who seem to be doing well are those who find a niche with little competition, or who abandon dropshipping to open a more traditional store.
Cody, a 3D designer by training, finally gave up selling Chinese products for his designs. The margins are much better because it's 100 percent digital," he says. The only expenses are the Shopify subscription and ads. "
Advertising, influencers and shady marketing
Ads are a major part of dropshippers' costs: they're the only way to distinguish themselves from other merchants and get people to discover newly created sites. In addition to relatively cheap targeted ads on Facebook or Google, some use product placements or promotional operations with influencers on YouTube or Instagram. At the end of 2018, two well-known French influencers had been nabbed for promoting Chinese watches sold for twenty times their price; the Twitter account Doubleshitfuck (closed at the time of writing) regularly reported shady marketing operations of the same type.
These promotional operations are costly, and are therefore not within the reach of individuals attracted by the sirens of dropshipping.
This sales model is on a downward slope anyway, notes Jean-Baptiste Boisseau of the Signal-Arnaques site. "It hasn't worked for at least five years. There are people who were able to make a bit of a dent in it between 2010 and 2014, but today it doesn't exist anymore. A lot of times you hear that Daniel Wellington watches started out that way. That's true, but the entrepreneurs who went through that did it for six months, made some money, and used it to start a business. Kind of like Xavier Niel [an individual shareholder in Le Monde] who started in the pink Minitel, or Steve Jobs selling pirate boxes to make free phone calls. "
However, there is a niche in dropshipping that seems to pay off: training. On YouTube and a multitude of sites, hundreds of more or less self-proclaimed experts promise wonders to individuals who would buy their training courses giving all the tips and tricks to succeed in dropshipping.
In France alone, at least a dozen people offer training courses sold between a few hundred and a few thousand euros. Sometimes using dubious arguments: Zellow, a former youtuber specializing in the video game Minecraft who has turned to dropshipping, offers a training course on how to write general sales conditions so as not to honor the right of withdrawal of customers - which is legally impossible. Zellow did not respond to Le Monde's requests for an interview.
"On our site, we have a lot of "dropshipping" gurus who come to tell us in the comments of our articles "but if it works, it's because you know nothing about it that you write the opposite", laughs Jean-Baptiste Boisseau. But every time we try to ask them for tangible proof of their success, there is no one left. The reason is simple: because it's often bogus, and for the few who really make money, it's because they have illegal practices. "
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