For a while I’ve been interested in the proliferation of fly-by-night Shopify dropshipping stores and Amazon FBA sellers. Now that the Atlantic has published an article exposing just a few of the course sellers that promote these business models, more people are starting to learn about this industry.
First off, the whole business model is terrible. The premise is that you’re just arbitraging until some better product comes along or a cheaper option is available. Arbitrage doesn’t work forever. You’re just picking a random niche like horse brushes and seeing that the ones on Amazon could be improved slightly. Then you’re contracting with a factory in China to make a slightly improved horse brush and hoping the quality is decent enough that people won’t return the product.
Some people aren’t even improving the products. They’re just finding an item (in the article a couple bought a huge amount of wine decanters) and trying to sell them. But why? Why are you wanting to do this?
The simple answer is to make easy money. At least that’s what the course sellers try to tell you. “It’s easy!” “You only have to work a few hours a week!”
Nothing is that easy. Sure, FBA was hugely profitable a few years back and I’m sure there are still a lot of sellers doing well. But as the landscape gets more crowded and Amazon starts coming in with their own branded products, you have to wonder how long it will last until you’re just competing on price.
If you’re selling random stuff from a factory with the intent to make a quick buck, you’re not going to have a competitive advantage. When another seller comes on the platform with the same product at a lower price, you’re going to lose out if there isn’t a good reason that customers should spend a little more to buy from you.
Is it ethical?
The whole point of this article is to consider whether this dropship model is really even ethical.
I had thought about it last night. The couple buying with wine decanters didn’t sell them all and I believe they had to pay Amazon to destroy their stock. That couple is worried about trying to save as much of their investment as possible, but what about the environmental effects?
Their huge stock of wine decanters are now trash. They’re sitting in a landfill, likely never to be used or recycled.
A lot of these courses tell you to just pick a niche or product, find a factory, ship it to Amazon’s warehouses (or another fulfillment center) and sell.
But are those products really necessary? Are they really going to improve someone’s life?
I have seen an ad on YouTube quite a bit from a course seller saying they made a ton on Amazon selling “quirky” things. I can’t recall the ad, I never finished the whole thing, but I remember seeing the products (some random kitchen stuff) and noticing that they’re really unnecessary (think octopus spatula or something similar).
This gets into a whole debate on what is necessary and unnecessary. If people are buying it then they must really want it because nobody is forcing them to buy it. But I think there are just certain items that really don’t need to be on the market.
These items being on the market eventually become waste. The quality of a lot of products manufactured overseas are so poor (and cheap) that you use it for a year, it breaks, and you just buy another. There isn’t much thought about what happens once you don’t need that product anymore.
I have bluetooth headphones I bought on Amazon for $35. Two pairs have broken already in less than a year (I got a free replacement). I won’t buy another pair. After that, I haven’t bought from Amazon except for brand name items (a board game).
The dropship model relies on cheap manufacturing which results in low quality products that eventually break or get discarded because they’re not used and they end up just sitting in a landfill.
So is it ethical to dropship? I would say no. I wouldn’t use this particular business model even if I knew I could make a quick buck. I would rather create a product or service that is actually useful and not just another dog hat or graphic tee that has no significant impact on someone’s life. I don’t want to keep contributing to the amount of waste in the world, there’s already enough of it.