Does drop shipping create mistrust with customers.

Why do so many e-comm sites avoid mention of drop shipping.

[lgn1]

In our industry, close to 100% of ecommerce merchants have adopted drop shipping as a business model. And Im talking about mature businesses in a mature niche industry; not some coffee table operation.

Yet very few mention that the products are shipped directly from the manufactuer.

Drop Shipping (with real time inventory control integration, etc), is a win-win situation with the consumer, from receiving there shipment quicker, greater stock choice, and a reduced carbon footprint from the enviornmental side.

Yet I have not seen a company proudly promote that they drop ship; and list all the advantages; as a marketing tool.

Why are ecommerce sites lurking in the shadows when it comes to drop shipping?

The closest I have seen, is mention that products may ship from multiple warehoues (that just happens to be in the same city as the manufactuer).

We are thinking about comimg out of the closet about or drop shipping activity, and where the label as a proud progessive company with envionmental concerns.

[bears5122]

Customer frustration only comes from hiding business practices and not explaining to the customer what to expect.

But you are. You are telling them that the item they have ordered will be shipped within this timeframe and will arrive within another timeframe. I don't see how not dislosing that the item is being dropshipped is somehow misleading or not fulfilling their expectations.

When we eat at a restaurant, we aren't told what slaughterhouse the meat came from. Certainly we could ask and the restaurant should provide the information. But as a customer, I'm ordering a steak and my expectations are that they will provide the steak. I'm not purchasing the means for how that meat arrived in that restaurant.

Now there may be benefits to advertising that you are a dropshipper. But that's more of a marketing issue and not one of not fulfilling a customer's expectations. As long as you are providing them with the item they ordered and not lying to them in the process, I see no problem with it and doubt many customers do as well.

As someone who runs a store that mixes dropshipping and warehoused items, I've never had a single person complain or bring up the issue of it.

[Edge]

Don't see the issue, you order it arrives. If your happy with price, delivery and service who cares where it shipped from?

[HRoth]

The restaurant metaphor doesn't work. It would only work if you were to compare dropshipping to going to a restaurant for a steak and being served a steak that was cooked elsewhere.

[Sgt_Kickaxe]

Because it makes your company seem like just a pusher of products. In some industries, like the auto industry, that's ok but in others there is a stigma. You are a middleman and for common everyday items many people prefer the source. There is a certain amount of self worth tied into many products as if a person is somehow cheapened by going through a middleman or drop shipper.

[walkman]

At least two issues:
People want to know who to call if it doesn't work. Saying you're a dropshipper doesn't sound as assuring.


People want to buy as directly /cheaply as possible and hate the idea that they are middlemen involved (even though they know.)

[McSpike]

Personally, as a developer, I will turn down requests to develop ecommerce sites if it is based on a MLM model. I consider drop shipping business models MLM.

Wow, that's narrow minded. I wish you good luck developing for a small part of the economy. The moment marketing and sales are included you consider that MLM. You actually don't have a clue what MLM is. To you even companies that are not one-man band are MLM structures. You have employees that work in marketing - which is marketing one level lower and they receive a fraction of the sales. Then they outsource the marketing and pay affiliates even smaller fraction. And everyone is happy in the process and that's how economy works. Except you. You consider the "fair" market to be only one-man band products without any sales or marketing strategies selling directly to the consumer by word of mouth. I salute you. Good luck with your work!

[HRoth]

I wouldn't go so far as to say that dropshippers are involved in MLM, but they have no quality control. Even if they know the product, which is often not the case, they have no idea of the quality of the product being shipped from the dropshipper. If it's a sweater, for instance, they have no idea if those sweaters have absorbed cigarette smoke or if they are seconds or if they are Chinese knockoffs because if they have ever seen them, it was once and not subsequently. They just have to trust their dropshipper that they are shipping something acceptable. Customers have figured out that dropshippers have no quality control and unfortunately often have little customer service either. Given on top of that that dropshippers often have little but canned text and images, well, why would customers want to deal with them? They offer pretty much nothing.

Examples:

I have been buying from a particular distributor for many years. Their widgets are generally of above-average quality. But once in a blue moon, I get a widget that has bugs in it. They're hard to see. I discover them because I open up the widget. I handle it. I see it up close and personal. If those widgets were being dropshipped, who would see those bugs first? THAT is one of the problems of dropshipping.

I myself have received items that were of incredibly bad quality that the retailer did not realize were of such bad quality. Like ceramic bowls and pots that were so poorly fired that their glazes were pitted or they were misshapen. Those were dropshipped. Now, maybe the retailers would have sold those bowls and pots anyhow. But I doubt if they had seen those bowls and pots that they would have sold them. I returned them and was sent dropshipped replacements of exactly the same poor quality. Do you think that I will buy anything else from that dropshipper? Do you think they are ever going to actually have a look at the low quality of some of their products? Even when they are in bankruptcy court?

Quality can be a huge problem for dropshippers, because there is absolutely no way for them to ride herd on it.

[wheel]

What advantages to the customer? That you have access to lots of stock from the drop-shipper? How is that any different from a company that has access to lots of stock from their shelf?

Stocking an item is a benefit to me as a consumer. I would expect (and likely see) faster shipping times and better assurances of stock.

[fabulousyarn]

THis is totally fascinating - I have been working out this paradigm question over the past year. My niche are custom made luxury goods - and we focus on high end consumer support - mostly, people purchase a range of items from us - so drop shipping is LESS green for us (we'd have to ship from 5 different places to fulfill most orders) and MORE expensive. THere is a reverse model in place that manufacturers in our industry seem to be using a lot - called Shopatron, and its a pain in the neck - basically reverse drop shipping - where WE ship what customers order at the MANUFACTURERs/Vendors site. I dislike this too, because Shopatron does not prep customers very well that they are actually NOT buying from the vendor, and I believe that when people make a purchase at someones site - they believe they are receiving the goods from that site and that company. I have drop shipped in extenuating circumstances, and 1 out of 3 times something screws up - so it doesnt work in our business. There are several parts to being on online store - and most manufacturers don't grok the most important part of it - targeted one-on-one customer service. Opening a store is easy and quick - running one, and maintaining quality customer service, etc, is not.

[aleksl]

SevenCubed: Personally, as a developer, I will turn down requests to develop ecommerce sites if it is based on a MLM model. I consider drop shipping business models MLM.

That post derailed the whole thread, because he voiced opinion which is essentially clueless.

What if manufacturer actually doesn't have machine shop in his location? What if he turns around and makes product in China? Then you would consider manufacturer MLM? Welcome to the real world, bud, where 90% of "american" products are made in china. You want, as consumer, to turn around and buy directly from China? Or wal-mart, which is basically a china-mart, and is a disaster to american economy? Good luck with that.

--
Bck to the orignal question:

wheel: Stocking an item is a benefit to me as a consumer. I would expect (and likely see) faster shipping times and better assurances of stock.

if it can be stocked. sometimes products are manufactured or assembled on the fly. Sometimes product is so heavy you can't possibly ship it from manufacturer to dealer to consumer, as shipping would eat all the profits. Sometimes products require additional assembly before shipments. Sometimes there are just way too many varieties and not everyone has $300,000 start-up capital to buy all of them. Some products have a short shelf life, and if you aren't moving many you can't stock them, because you are going to loose, say a 1/5 of your stock due to expiration dates. etc.

I myself have received items that were of incredibly bad quality that the retailer did not realize were of such bad quality.

That's a problem with china-mart economy. It's because stocking distributor isn't a manufacturer, and they have no local manufacturer to blame, because they bought from china. So you will turn around and buy from wal-mart next time, continuing a perpetual china-mart cycle and the destruction of american manufacturing base. How about you buy local-made product next time and pay extra few bucks for it? Guaranteed quality by a local manufacturer? Why blame drop-shipper for something that isn't really his fault?

[PCInk]

I think we may be talking about different types of drop-shippers. I am talking about highly experienced, professional companies that have been drop-shipping for more than 25 years, back in the days when you had to telephone the order in.

Next day delivery is standard and same day deliveries can be arranged (at a cost). That is the same speed or even faster than I can deliver from my own stock, assuming I have the item in stock which isn't always the case when you are selling 35,000 different product lines.

But reading other peoples experiences, it shows one thing: There is huge difference between one drop-shipper and the next. It shows you have to be very careful who you choose - it has to be a company you trust. But when you advertise this to a customer, you have to show them that they can trust them as well - and that's difficult.

[HRoth]

Actually, aleksl, I make a point of not buying anything whatsoever from WalMart, and I avoid buying anything from China as well. I bought the pots from a family-owned shop that has been in business for over a hundred years and has gone online in the past few years. The bowls were from an American shop that specializes in high-end cooking stuff and that has been in business for 25+ years. Both online shops have brick-and-mortar shops but dropship online stuff. The pots were supposed to have been made in the US. Whether they were or not, I don't know. I just know they were crap dropshipped goods, just like the crap, dropshipped bowls which I know for a fact were manufactured in Ohio at an old production pottery and dropshipped from that pottery to me. So wake up and smell the coffee yourself. Dropshippers have no quality control. That is the bottom line.

[badbadmonkey]

I avoid buying anything from China as well

Yeah right!

Are you equally bigoted about products from Vietnam, Thailand, Taiwan, Philippines/Indonesia, other Asian countries?

[rachel123]

Maybe it's just me but I don't see what China has to do with it.

What I have learned is that drop shipping is like anything else. If you take the time to know your suppliers and their products, and your dropshipper is good at what they do, it can work, and the customer experience can be seamless.

If you don't take the time, or keep taking the time, and any one of the parts of the supply chain(s) falls down, it can be a real hassle for you and your customers, which gives dropshippers a bad rap among consumers deserved or not.

[HRoth]

badbadmonkey, in my post of examples of crap products I received from dropshippers, I said that they were made in the USA. There was no way for the dropshippers to know those products were crap because they never saw them. That is a major problem with dropshipping.

That said, I do avoid buying products from China because my experience has been that most of the stuff coming out of there is crap.

[rogerd]

Drop shipping seems to add another variable for problems, which may put some customers off. When I had a catalog company, we attempted to drop-ship some heavy items in order to avoid double freight. Our supplier wasn't up to the task, and the service on those items didn't match that on our warehouse inventory. Troubleshooting problems with late delivery and shipping damage were also problematic. BUT, that was due to the systems at that supplier. Good product, bad systems.

As a customer, I don't know and don't care exactly where the product ships from. It could be:
1) The ecommerce firm's own warehouse.
2) A fulfillment company's warehouse.
3) The manufacturer's warehouse.
I care about prompt and predictable delivery, easy tracing via UPS/Fedex, and swift problem resolution.

[rogerd]

>>Dropshippers have no quality control.

It's up to the merchant to deal with a quality source, whether they are bringing the product into their own warehouse or dropshipping. Trust me, a high volume ecommerce company doesn't inspect every product that they handle - they rely on the supplier to maintain quality. Any change in quality will be quickly evident in returns and customer complaints.

(A mail order firm's favorite kind of product is a "slapper" - a product that comes in a UPS-ready box that only needs a shipping label slapped onto it.)

[badbadmonkey]

That said, I do avoid buying products from China

Really? Assuming you really aren't anti-Chinese and are happy to include most of Asia as equally distasteful, where is every component in the PC you're using now made? Most of your electronics and home appliances? Clothing? Components in your car? Food products? Utensils, kitchen utilities...? Even if you irrationally favor western products, the reality is the components of most of them are Chinese...

because my experience has been that most of the stuff coming out of there is crap.

That has absolutely NOTHING to do with China, or the competence of Chinese manufacturers, and ONLY relates to what western importers are bothering to order. China/Asia is simply one of more economical places to look to for manufacturing in many industries. Conversely your own experiences illustrate that western produce is really no more reliable, if we're honest. The average consumer wants cheap #*$! and supply forms to meet the demand. For the quality niche, it's all about quality of the brand (reputation) and QA by the middle men... so see I'm not really off topic :)

[incrediBILL]

But you are. You are telling them that the item they have ordered will be shipped within this timeframe and will arrive within another timeframe. I don't see how not dislosing that the item is being dropshipped is somehow misleading or not fulfilling their expectations.

Huh?

That's nonsense.

The drop shippers I used sent the product same day as the order was placed, unless it was a custom product requiring custom manufacture time which was also disclosed, so I don't see how that's misleading at all!

The problem we were solving was to stop people from refusing to accept orders because it either wasn't private labeled or came from a different location so we simply put that information in their face as many times and places as possible so they didn't forget.

You would be surprised how often it happens that people refuse a package because they simply don't remember it was being drop shipped if they don't see your company name on the box. If you still want the sale, the customer doesn't feel obligated for paying to have it re-shipped, so the solution was to try to stem the problem at the source.

Disclosure helped with our problems.

YMMV

[dpd1]

I love it... Somebody is being called a bigot for trying to buy merchandise made in their own country? Unbelievable.

The original post was based on asking... Why would companies hide that they drop-ship. Judging by the heated responses here, it would appear that it's a sore subject at best. So if people are that divided about it HERE, then that means...

So there's your answer. As anybody who deals with customers knows... In the end, this isn't about logic or what's really happening. It's about what people PERCEIVE to be happening. How people perceive things is based on tradition. And traditionally, the general public usually expects people to physically stock the stuff they are buying.

[Propools]

dpd1

Right, but there's nothing "traditional" about buying on the web.
Buying online created this paradigm shift which I've discussed in "What to do when someone moves the cheese?" [webmasterworld.com]

[HRoth]

Yeah, I do avoid buying products made in China, because most of it is crap. Not all, but most. I don't care WHY it's crap, whose "fault" it is. I just know I'm not interested in rewarding greed, engaging in overconsumption, or continuing to buy unrepairable crap that breaks into useless plastic bits that will be here centuries after all of us are dead. You know? I am sick of that. I prefer to buy things that are made in the US because that means more jobs for my fellow citizens. The more of my fellow citizens who have jobs, the more they will buy my stuff and it just makes for a nicer day all the way around. I like things that are sturdy, and that hopefully profit the little guy merchant who might be my neighbor rather than the stockholders of soulless multinationals that outsources all the jobs and money. I like things that can be fixed if they break. I have gone through four printers in the past four years, and it seems criminal to me that they basically cannot be fixed when they break. So I buy a lot of stuff used. Like I got sick of cheap Chinese crap fans, having had to buy SIX fans in the past five years because they kept breaking and I could not find a sturdy, well-made fan ANYWHERE at the chain stores around me. I ended up buying a used American fan made in 1953 off feebay. It has worked for decades, it continues to work, it has not got one bit of plastic on it, it profited the American who sold it and all the rest of us when it didn't go to a landfill, it didn't have to cross the ocean to get to me, it was less than a cheap Chinese crap fan, and it has no plastic bits. What's not to like. If there is something that I need that is made in the US or better yet, that is used and made in the US, I will buy that over cheap Chinese crap any day. I especially like it if it is from somewhere nearby and so saves on fuel. It has nothing to do with bigotry and everything to do with caring about my fellow citizen and myself. And if you think I am an oddball whose views have nothing in common with those of other American consumers, think again. My buying habits are similar to those of a small proportion of Americans, but that proportion is growing and will continue to do so, out of necessity, if nothing else. Frugal does not equal cheap. Frugal people want quality. So think real hard about quality, things that last, things that build jobs in your own country, things made and sold by small businesses in your own land by your own neighbors. That is a real future for us, not cheap Chinese crap or dropshipping or other throw-away, produce-nothing approaches to business. Rant over.

[dpd1]

Right, but there's nothing "traditional" about buying on the web.

I agree... But we are in the business of selling stuff on the web. Once again... The original question was... Why don't people announce that they are drop shipping. And that relates directly to how the general public perceives things. Which is something totally different than how we as sellers perceive things. Whether we like it or not, we are at the mercy of how people perceive things. There's plenty of things that I think make sense and I wish the customer would understand them... But they don't. And so, like it or not, I have to adjust for that.

[dickbaker]

HRoth, you seem to be equating drop-shipping with the quality of goods, or of service, and maybe a few other things.

I don't sell junk. The products I sell are name-brand, and I make sure that they're the best quality. I don't need the hassle of people returning defective products.

I've also found distributors who drop-ship, and do the job better than anyone else in my industry. The distributors who screw up orders are the ones that I stop doing business with. One distributor/drop-shipper in particular has an operation that runs like a Swiss watch. (I also don't tell friends of mine in the business who my distributors are).

I know my product. I know the delivery times. I know my customers. I have a five-star rating at one of the best-known online merchant ratings sites.

I can think of hundreds of stocking retailers who can't say any of the above.

This is a really interesting thread. The question I have for those who believe that buying direct from the manufacturer is the only right way to buy: when was the last time you bought a Ford directly from Ford?

[dickbaker]

HRoth, you seem to be equating drop-shipping with the quality of goods, or of service, and maybe a few other things.

I don't sell junk. The products I sell are name-brand, and I make sure that they're the best quality. I don't need the hassle of people returning defective products.

I've also found distributors who drop-ship, and do the job better than anyone else in my industry. The distributors who screw up orders are the ones that I stop doing business with. One distributor/drop-shipper in particular has an operation that runs like a Swiss watch. (I also don't tell friends of mine in the business who my distributors are).

I know my product. I know the delivery times. I know my customers. I have a five-star rating at one of the best-known online merchant ratings sites.

I can think of hundreds of stocking retailers who can't say any of the above.

This is a really interesting thread. The question I have for those who believe that buying direct from the manufacturer is the only right way to buy: when was the last time you bought a Ford directly from Ford?

[Propools]

People don't announce they're drop shipping because they know that to the consumers the only thing they care about is getting the product, preferably in one shipment but most importantly at the lowest delivered cost.
(All other things being equal).

[piatkow]

As a customer I expect a supplier to know if something is in stock or not. When the system takes an order and I get a note 48 hours later telling me that it is on backorder then I am not a happy bunny.

I don't care if you use a third party for fulfullment, I do care if you can't give me a realistic delivery date.

[firstconversion]

Ive looked at this at regular intervals over the years and never found a dropshipper I could use in the UK that I had confidence in.

The websites look so low quality and the SERPS are so poisoned its impossible to get a feel for how good they are without a personal recommendation from someone already in the business

If you have a good UK/EU based one, id love a pm

S

[edited by: firstconversion at 10:08 am (utc) on Aug 17, 2010]

[firstconversion]

is there a edit button?

I see it now

[JohnRoy]

Maybe because there is an intuitive feeling by those ecommerce operators that the income is being earned without an accompanying effort to work for it and that makes them feel uneasy deep inside?

Depends what you define "accompanying effort".

Running a good online operation in terms of detailed informative item descriptions, providing exceptional customer service, can take a great effort to accomplish.