E-commerce: the mirage of direct delivery

For years, videos and sites have promised you that you will earn money by building your e-commerce site, working from home and without having to manage stock. On paper, go into dropshipping, or dropshipping, is attractive, but the reality is more complicated and the customer is in danger of losing. Here’s what every good consumer should know.

Published on 1eh Dis. 2019

Chloe Marriault

Chloe Marriault
The Press

“A year ago, we started to have a lot of Quebecers calling us for information about dropshipping, with the goal of getting started, ”said Philippe Martin, boss of Shopify Factory. His company, based in Montreal, trains novices and professionals to use the Shopify sales platform to launch or build their online store.

“Most don’t have a business plan and don’t know what they want to sell,” continued Mr. Martin, who says he has never worked with these entrepreneurs. They just heard an urban legend that says you can start an online store and earn easy money. »

The principle of direct delivery? A merchant sells products through his website: watches, gadgets, clothing … Unlike a traditional merchant, he has no stock. When a customer orders on their site, the merchant buys the merchandise from a supplier. The latter sends the product directly to the customer.

The practice is not new: merchants sell products without them in inventory for many years. What is innovative is the way it is done.

Philippe Denis, lecturer at the ESG UQAM School of Fashion

This way of doing things is quite controversial today. Some believe that wholesale intermediaries (dropshippers) deceive their customers and take advantage of their naivety to buy them products at a price higher than what they can find elsewhere.

The rise of Chinese platforms

In fact, in recent years, platforms have emerged for the purchase of cheap products: Wish, Vova, Joom, etc. Among them, Chinese giant AliExpress (subsidiary of Chinese group Alibaba) is the most used by intermediaries. On this site, mainly provided by Chinese suppliers, individuals can find everything at unbeatable prices. A slimming girdle at $ 9, sunglasses at $ 8, earrings at $ 3 … And this, plus shipping costs! If the prices are very low, it is also because the delivery times are long (several weeks) and the quality is not always present.

So, some had an idea: resell products that come directly from these platforms. This was the case of Jean, a 29-year-old Montrealer, who agreed to talk The Press provided that his last name is not published so as not to harm his business. After studying business, he quit his job to do direct delivery last year. He found out about this business model on YouTube, where some explained that “you can create a real money machine.”

A pretty easy launch

He then created a merchant site on the Canadian platform Shopify, to sell jewelry. “It’s very easy. The platform offers a turnkey solution to automatically add products found on AliExpress.»

Jean sells products that her customers can buy directly, without going through her, by going to the AliExpress site … and paying cheaper. To prevent his customers from knowing that the product is from AliExpress, the trader chooses Chinese suppliers who agree to remove invoices from packages.

I sold on average three times more expensive [que sur AliExpress]. This is not a problem, Chinese suppliers are accustomed to cooperating dropshippers.

Jean, Montréal wholesale intermediary

“The dropshipping attracted because it seemed to require very little investment: no inventory to store, a website at $ 30 per month with no commitment to Shopify … But the entrepreneur forgot that he would need to invest thousands of dollars in advertising to generate sales! “, explains David Grégoire, director of the company Monsieur eCommerce, which specializes in product photography for e-commerce.

Push to buy

In fact, the creators of their site must introduce themselves. “I advertise on Instagram and Facebook, trying to target communities that are likely to buy,” Jean says.

And most importantly, when the Internet user is on the site, he should be encouraged to buy. “I put fictitious promotions on my site, with a number stating for example“ only 2 hours left to take advantage of this discount, ”said Jean, who closed her jewelry site to launch a specializes in sunglasses, then in gadgets.

“The goal is to give the customer the illusion of getting a good deal. These marketing strategies are similar to those done on other platforms in other industries. Travel platforms, for example, often state: “this is the last room available” at this price ”, observes Philippe Denis.

A very competitive sector

In September, Jean made $ 8,000 in sales, but found himself in the red, at – $ 200. “I made sales with a minimum margin of $ 15 per product, but I had to continue to invest in advertising. Coincidentally I spent $ 400 on three days advertising on Facebook so that’s it [en fin de compte], no one buys any of my products. »After eight months of non -profit activity, Jean had to be reluctant to stop her activity as a wholesale intermediary.

“Getting started is easy, but progress is another story! There’s a lot of competition,” David Grégoire learns.

“It will not be possible for a long time. There is no need for customer loyalty in these businesses and you need to always keep an eye on new customers, ”confirmed Sylvain Sénécal, marketing professor, holder of the RBC Financial Group Chair in E-commerce at HEC Montréal.

Romano, drop shipper The 20-year-old Frenchman who also asked to hide his last name confirmed: “Some, like me, have abandoned AliExpress to do dropshipping more efficient, there are serious suppliers. We must satisfy our customers with fair price and quality products, otherwise it will not survive. »

Merchant Challenges dropshippers

Be known

One of the biggest challenges: being known. “I contacted small influencers with 50,000 or 100,000 subscribers,” says Jean, who has successively launched three direct delivery sites. I sent them one of the products sold on my site. for free and they posted a photo on Instagram, recommending it to their community. Sometimes you have to pay them a little money to promote our product. »

Overcome the controversy

“When we talk dropshippingeveryone thinks we are scammer who sell low-end Chinese products at exorbitant prices to exaggerate, Romain laments, drop shipper French for 20 years. But we have costs, like a traditional trader: we pay taxes, duties, merchandise, advertising. »

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