Drop Shippers and All That Stuff

For most of you, you read this in the guide. But this question comes up so much, that I decided to run it again.

I don’t think any company in this industry drop ships authentic, legitimate designer apparel and handbags. I mean, why would they? If you were selling them, would you drop ship them? You can sell one at a time at discounted prices. You can sell bulk at a “wholesale” price. But why would you sell one at a time slightly above wholesale price? Most people don’t understand the nature of drop shipping and how it came to be. Drop shipping doesn’t exist to serve money hungry wanna-be eBay sellers and internet merchants. Drop shipping exists as a fulfillment model for ecommerce businesses and businesses that need the flexibility in stock to be able to provide single-unit fulfillment. So it leans towards industries where this is likely to be the case.

Most of the drop shippers are manufacturers, authorized distributors or distributors that build the drop shipping model to serve a specific line of businesses. Designer apparel just isn’t one of them because there are no distributors (in the US), just manufacturers/sales reps (selling at full wholesale) and jobbers (selling at below wholesale prices). Manufacturers/sales reps are in business to sell to retailers that stock merchandise and jobbers want to move a lot of stock quickly, not one at a time. There are some types of garments that can be drop-shipped (directly from the manufacturer), but most are branded and you might not be familiar with those brands (if you must know what it is, it’s usually stuff like kinky-erotic lingerie, beachwear, clubwear and things like that).

Another thing people must realize about drop shipping is that it is highly saturated. If you would normally have a few competitors for a product that you stock, you are going to have ten times as many for a drop shipped product. And those competitors will range from crappy fly by night to professional, yet another reason many companies don’t want to tarnish their name by drop shipping merchandise. Most designers are already highly selective about the internet merchants they sell to (if they sell to internet merchants at all).

Now people think I am wrong because they find a site that defies logic and drop ships designer bags. They are, most likely, counterfeit, or unauthorized production/unauthorized sales, what some people call “back door goods” because they literally snuck out the back door.

I talk to designer showrooms, sales reps and companies all the time. None of them have any interest whatsoever in drop shipping. Remember, these companies sell to retailers that put up the cash to stock their merchandise. You cannot make an argument as to why it would be lucrative to incur the higher costs of providing single unit fulfillment to people who do not want to invest in their own business and who will probably be out of business in a few months. Not to mention the fact that they can even take weeks to turnaround a regular order, they are not set up for shipping within a matter of 1-3 days.

That’s not to say that I think drop shipping is bad. I believe it is a perfectly legitimate business model for specific categories of merchandise. If you are smart, you know why this will and will not work in certain industries. If you are not bright, you can’t see why someone won’t drop ship because you want to make money that way.

Bottom line- if this is the industry you want to be in, be prepared to stock merchandise.

I also want to add something because I was talking to a colleague about this. She mentioned that there are several eBay sellers that sell handbags and they all ship from Italy but the sellers are not in Italy, so possibly there is an Italian company that drop ships. That’s possible. BUT, what is more likely is this: there are very smart eBay sellers out there that know how to take advantage of price differences. They scour websites and find a low priced item and sell it eBay. When they get a winning bidder, they then buy the merchandise from the website and have it shipped directly to the bidder. This is more likely than an international drop shippper.

Years ago, when Sony Mavica digital cameras were really hot, many sellers found them on sale at certain websites where they could buy them for $100-$300 less than the average eBay closing bid. And this is exactly what they did. Things like this happen all the time where people bid higher than the going price. If you really want to find out, invest the money to buy the bag (or other item) and see where it comes from. That will tell you whether it’s drop shipped or not.

Most drop shippers use a method that’s called “Blind Drop Shipping” where all markings on the invoice/packing slip and shipping label indicate that it comes from your seller/retailer OR has no indication of the company it comes from. If the bag comes like this, then you can be sure that there is a drop shipper. If not, then you have just found the source of the merchandise. It’s easier to track a domestic company than an international company because when a US based company ships something to you via UPS, FedEx, Airborne or whatever, you can call their customer service center and ask for the shipper’s information. What they will give you is the shipper’s name and address as registered on their account. For example, I have a UPS account and on my shipping label, I can put whatever I want. I can put Acme Incorporated, 515 Main Street, Nowehere CA and whatever telephone number I want. But, when you call UPS, they will give you my actual address and telephone number that is registered with that account. Another way of locating a source if you actually find something that is drop shipped.

If you truly believe that someone is drop shipping authentic merchandise, then the price to pay to have an item sent to you is worth the knowledge and the potential profit you can make from that information.