HELP! Dropshipper is also selling retail at the same price!

Portici
New Member
3 0 0

So I went with dropshipping because, like many people here, I'm a startup and I don't have a lot of money to invest in upfront inventory.

I tested out a couple of women's apparel dropshippers and everything checked out. Then I was able to make some sales. The dropshipper shipped everything in their packaging, with their big logo. So when my customers received their package they naturally got curious as to why the invoice had my shop's name but another company's logo. So they went online and found out the same items were selling for a lot less on their website.

To be honest it did not occur to me to check whether this wholesaler/dropshipper also had a retail website because they usually don't. I mean, when they do also sell direct they usually have a MSRP so you can at least compete fairly. Now, their retail prices are much lower than anything I could afford because they probably also buy directly from other manufacturers so they still make a profit. But their retail prices are very close to what they charge me for dropshipping/wholesale. So clearly I cannot compete with that.

Then I found out, actually through one of these Shopify forums, they also have a couple of different websites where they also sell retail at different prices. And they have the wholesale/dropshipping menu for info. Sketchy.

So, aside from the fact that I feel duped, has anyone had the same issue and what did you do? I still can't afford a physical retail location (rent in the NW is through the roof) and I can't invest in enough inventory to have enough variety on my site. Suggestions? Thoughts?

 

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Denise_Rosentha
Excursionist
33 0 6

People other then you are going to sell the same thing ..Even your vendors . See if they have a program where they will put your label on their products for you

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PaulNewton
Shopify Partner
2579 134 440

I am not a laywer. If you signed anything ,careful about what you discuss. Anything business critical like this always have a lawyer go over things with you. The dropshippers very model could be predicated on you having brick and mortar and not being an online competitor.

Feeling duped is natural, but you need to examine the process that led you here where there was a lack of due diligence to avoid it in the future. Resentment is rarely productive.

Go through shopify's guides on dropshipping, and revisit your shortlist of dropshippers for ones that "whitelabel" or whatever individual dropshippers call it where thier branding is not involved or minimized.

Also look through this specific forum(wholesale and drop shipping) post history to get a feel for when it's most active, then reach out.

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Portici
New Member
3 0 0

Hi Denise, they don't do white label but, in any case, that would work if you have a physical location and can store inventory, otherwise time to market would be impacted significantly (and no-one does white labels on an individual basis).

Paul, thank you for your input. This is in no way a legal issue. I was just curious how other sites may have handled this. When it comes to women's fashion dropshippers, there is really just a handful out there. Most big dropshippers are located in China and their sites/merchandise are shockingly awful to say the least. Not to mention that poor communications on their side (and on their site) scared me enough to not even remotely consider doing business with them. I signed up for a trial version of Doba and cancelled immediately. I am not interested in the least in what they sell. So my list is already streamlined to a bare minimum.

I did go throughy the other forums and many other people are looking for reliable fashion dropshippers, so me thinks other people have had the same issue, although not explicitaly put this way. Mind you, my problem is NOT that the dropshipper is not reliable, they are reliable and their clothes are also of realtively good quality. My only issue is that by doing business with them, once the merchandise I order is delivered to MY clients, all I'm doing is free advertising for them. I am aware that many labels also sell retail, but that is the reason why their MSRP prices are high enough that if you buy wholesale you can still sell at MSRP with a fair competition and still make a profit.

In other words if you buy something wholesale at $15 and sell it at MSRP of $50 you can still cover your costs and make a profit.

If you buy something at $15, pay $10 for shipping, and then you find out they sell it reatail for $25-30 on their site, then obviously there is no margin for you.

 

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PaulNewton
Shopify Partner
2579 134 440

*edited typo

Without a new arrangment with current dropshipper, someone else providing a key insight, or finding a new company. Just consider what you can do now, as is:

My only issue is that by doing business with them, once the merchandise I order is delivered to MY clients, all I'm doing is free advertising for them.

Don't the product have tags|labels so this will happen anyway? The arrangement vs business model seems off here.

When you setup these processes the first thing you should be doing is vetting the entire fulfillment process by being your own customer, so you know what it looks like from the outside. Secret shop yourself

And advertising can't be the only issue, as your first post noted about authenticity:

So when my customers received their package they naturally got curious as to why the invoice had my shop's name but another company's logo.

This is generally a problem of omission and presentation, if your not setup to be whitelabel, customers feeling that way shouldn't be happening. If your positioning the product as your brand , but you don't control the brand that's the problem.
If you can't have your branding included in packaging|shipping, your a reseller. Own it.

After all they found you first but not the direct manufacture so that's value.

Also them finding the direct manufacturers is a non-issue as long as your providing value they want. This can be customer-care,expedited shipping,shear ease of buying, community any number of things, but yes if your just a clone and they find the original that's not a fight to have. Is your model based on immediate repeat sales? Do have single sales meeting CaC,etc?

To put this cynically: Does the logo on the shipping insert in any way say to use them and not you?

In other words if you buy something wholesale at $15 and sell it at MSRP of $50 you can still cover your costs and make a profit.

Conversly if there is no MSRP just sell it a price point that works for the value you provide. Surge pricing apps are good here. 

If you buy something at $15, pay $10 for shipping, and then you find out they sell it reatail for $25-30 on their site, then obviously there is no margin for you.

That's only an issue if they include free shipping and your trying to price match. If the product is good and people want it, make sure your not confusing a competitive mindset for a monetary race to the bottom.

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Buy me a coffee ☕ paypal.me/paulnewton or donate to eff.org
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Portici
New Member
3 0 0

You've got some valid points, Paul. Thank you.

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Nick_Brooks
Tourist
30 0 1

You might benefit from our services.  We are a whitelabel dropshipper of single garments...check us out at americancoatcompany.com  We manufacture made in USA technical outerwear and midlayers for men and women.  We plan to broaden our base of styles in the coming months.   We brand our garments with your name and or logo.   Our fulfillment center is in Englewood, Colorado and have full embroidery, labeling and heat press capability to apply your logo.  If you don't have a logo, we can affordably help with that as well.   Take a look and feel free to email me nick@americancoatcompany.com   Thanks for your time and consideration

americancoatcompany.com nick@americancoatcompany.com
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Nick_Brooks
Tourist
30 0 1

Posting again to check the box to receive email when people post to this thread. could not go back to edit post to attain this result...Nick

americancoatcompany.com nick@americancoatcompany.com
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jamminbutter
New Member
2 0 0

We understand your frustration. We are so completely different than other companies and ACTUALLY GIVE YOU REASONABLE PRICES :) Just email me dropship@jamminbutter.com

-Chad

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