What is dropshipping: an affordable shopping scheme or straight-up scam?

You may have never heard of “dropshipping” but you probably have heard of Wayfair, Shein, Temu, and AliExpress. These sites and others like them attest to this increasingly pervasive phenomenon in the world of e-commerce.

What is dropshipping? And has it ruined online shopping? While this business model seems to make goods more affordable, it also attracts scammers looking to make some quick cash while leaving consumers in the lurch – and is often characterised by a lack of transparency and a refusal of accountability when it comes to customer care. 

There are many risks when it comes to dropshipping and savvy consumers need to learn how to identify and avoid it. In this article, we’ll explain how this form of online selling works and how you can protect yourself. 

What is dropshipping and how does it work?

When scrolling through social media, you’re sure to encounter a whole host of ads for cheap and easily marketable fad products – from blankets that look like burritos to tools for cleaning earwax. However, most of these ads are made by dropshippers who don’t even manufacture, store or distribute the product itself. 

Dropshippers are a new breed of entrepreneur. They find products on e-commerce platforms and supplier databases like AliExpress, SaleHoo, and Worldwide Brands and then create video content that embellishes and exaggerates the products’ qualities and capabilities. These ads are plastered across social media sites like TikTok, Instagram and Facebook, marketplaces like Shopify and Wayfair. 

When someone succumbs to these exaggerated ads and buys the product, dropshippers will then purchase the item themselves through the actual manufacturer or supplier and have it shipped directly to the buyer – pocketing the significant markup they’ve put on the product’s price. 

As one Wired article describes: ‘People are building business empires selling products they’ve never handled, from countries they’ve never visited, to consumers they’ve never met.’ 

And it can be a very profitable model: precisely because the sellers don’t take on any of the costs usually associated with making or storing the goods, or shipping and fulfilling customer orders. 

Common dropshipping problems

To dropshippers themselves this method of selling seems like a clever and easy way to make some quick cash. But the real cost here is workers’ rights, customer care and, of course, the planet. 

The people who manufacture dropshipped products are low-paid workers, mostly based in China, who are paid even less because of these practices. 

The customer who purchases the product is also likely to be neglected. With no warehouse or head office, dropshippers offer no customer care or complaints procedure. So when ordering something from a dropshipper, you may just have to cross your fingers and hope the product will arrive. 

With dropshipping, it is very common for items to go missing in transit without anyone to follow up or help track them down. And even when a product does arrive, there is no guarantee that it will resemble the item you thought you were buying. Many customers end up very unhappy with the quality of the item – or feel that they’ve been seriously misled by exaggerated advertising. 

So just as they rely on weak labour laws to sell cheap goods made by low-paid or enslaved workers, dropshippers exploit loopholes in consumer rights legislation. 

They do not have to offer a complaints procedure or adequate customer care – instead, they simply hope that problems don’t arise and that if they do, the item was so cheap to begin with people will give up and not bother complaining. 

Does consumer law apply to dropshipping? 

They may not make the products, but as the retailer, dropshippers are still technically liable to customers for the products they sell. Both the Sale of Goods Act 1979 (when selling to businesses) and the Consumer Rights Act 2015 (when selling to consumers) stipulate that retailers must ensure that goods are of satisfactory quality and fit for purpose.

If a dropshipper’s products do not meet these conditions, their customers have the right to reject the goods and be fully refunded. Likewise, if a product is dangerous or hazardous, the dropshipper can be held liable. 

However, when it comes time to complain you can be almost certain that you’ll be ghosted by the seller – who can hide behind a large e-commerce site to avoid accountability. 

As well as the inconsistent quality of products, a very high failure rate for dropshipping businesses means that it’s easy for consumers to lose money. When a dropshipping company fails, they will simply stop responding to customers – so you will probably never see your money back.

Read: What happens to my vouchers, gift cards and credit notes when a business goes bust?

How to avoid dropshipping websites & apps

We’re calling dropshipping a scam – as the very basis of this model is the exploitation of both manufacturers and consumers. Dropshippers mark up prices while taking no accountability for the quality and delivery of products, or customer satisfaction – acting as ‘rip-off middlemen’. 

Perhaps the most glaring sign that these tactics are underhand is the lack of transparency about the fact that these products are sourced from elsewhere and that the seller has never even handled, let alone tested, the quality of the goods they are selling. 

There is beginning to be some response to the prevalence of drop shipping on social media. On Twitter (now known as X) you will see warning messages displayed underneath ads for products that are from a dropshipping scheme. 

However, Facebook, Instagram and TikTok have yet to introduce any way of informing users about them. 

How to spot dodgy dropshippers? 

Not all dropshippers or businesses that use the dropshipping model are scams. However, scammers looking to profit from the surge in online shopping over the last few years are now using dropshipping to exploit consumers. Most of these will use social media to target shoppers with unbelievable bargains. So it’s up to consumers to learn how to spot them. 

• Deliveries and returns:

  The quickest way to tell if a seller is a dropshipper is to check the delivery and returns page. If they are dropshipping, the delivery window is likely to be 14-30+ days. The locations of items will be purposefully vague – many will state that their products come from ‘warehouses all over the world.’ 

• Reviews:

  One useful way of finding out if an online store is a scam or legit is to check independent review platforms – rather than those on the store itself, which can easily be faked. Alongside online shopping scams, fake reviews are becoming a huge problem for internet users. Our article ‘How to spot a fake review’ can give you some more advice on how to make sure that you aren’t fooled by scammers and bots.) 

• Drop shipping products:

  You can quite easily spot a product that is likely to be dropshipped. Both the nature of the product and the way it is advertised will show signs. Small items are easier to ship – so dropshipped products they tend to be small gadgets, accessories or similar items. You may also notice suddenly seeing a lot of them on your feeds. Along with the nature of the products themselves, the ads will be predominately on social media and make use of viral hashtags like #TikTokMadeMeBuyIt.

So, the next time you see that trending, shiny new cool thing that you feel like you simply must buy, take a moment to assess how and why you’re getting that ad on your social media, who is targeting you, and whether it’s worth the risk.  

If you’re currently struggling with a dropshipper or any other UK-based business, we can help you! Start your complaint with us here, for free, now by clicking here and let the platform guide you.

If you have any thoughts on this topic, or any other consumer issues you would like us to cover, feel free to get in touch with us at support@resolver.co.uk.