What is Dropshipping and why is it so fashionable in Spain?

dropshipping what is it works scam

Tens, hundreds and even thousands of ads related to the term 'Dropshipping' are flooding applications such as Instagram, Facebook and YouTube. Dropshipping courses, masters, magic formulas ... And although it may seem relatively new, the truth is that this term has been on the Internet for a few years now. Currently, many influencers  are choosing to promote this business model that promises gold to an audience that probably does not have the means to follow this type of practice. What is dropshipping really? Does it work, or is it just a scam? We see it.

What is Dropshipping

As the name itself indicates (Drop from falling and Shipping from shipping), Dropshipping refers to a business model based on the sale of products through an online store in which, unlike a traditional store, there is no No product in stock : all products are shipped from the warehouse in China or the country of origin of the catalog. The advantage of not having an initial stock is clear: we will not need to invest large amounts of money to start the business, although shipping times are significantly longer.

aliexpress vs aliexpress plaza espana 3

But where do these products come from and where can they be purchased? As a general rule, these types of articles usually come from pages such as Gearbest, Aliexpress or Alibaba. The online store, often designed with platforms such as Shopify or WooCommerce in WordPress , acts as an intermediary between the end customer and the distributor to sell the product beyond the Aliexpress website itself or any other page that offers wholesale of products . The profit margin is obtained precisely from setting a price several times higher than the price at which the product can be found on the source page.

What most don't tell you: legality, product returns and long-term investment

Courses like Bruno Sanders' are the bible in the world of Dropshipping . The well-known influencer , famous precisely for his Dropshipping courses, talks about issues related to legality when establishing as an online business, paying taxes, investing in Facebook ads and managing the return of products.

In the shadow of Sanders there are hundreds of gurus who, beyond selling a course related to this business model, omit this type of information to make their followers go on an adventure. If we talk about legal obligations, any obtaining of income derived from a regular activity requires registration in the Self-Employed Regime and Social Security , which assumes a monthly fee that is close to 300 euros if we do not comply with the conditions of the Flat rate currently offered by the Treasury to new self-employed and young unemployed people.

If we talk about the rest of legal obligations, we can mention the creation of a guide describing the return and guarantee policies of the store , as well as those related to the European Data Protection Law. In terms of promotion, most of these businesses are based on SEM models, that is, visits by ads, often coming from Facebook Ads or Google Adwords.

facebook ads dropshipping

Appearance of an ad on Facebook scheduled by Facebook Ads.

The problem with this type of promotion is that to receive a high conversion rate, that is, a considerable amount of sales, the investment value has to be high. Sanders speaks of figures that are around 25 euros a day, which means a cost of about 800 euros a month .

To this is added, of course, the cost of the course itself, which can range from 300 to 800 and even 1,000 euros and the cost of the sales platform itself and its plugins, which in the case of Shopify is around 30 euros per month . Adding up the entire investment cost, we find a figure that initially means paying more than 2,000 euros .

The Dangers of Dropshipping: The Target Audience

Any user who shows interest in this type of income earning is liable to receive advertising from this type of course, even if they are a minor. Ads of people showing off fake tickets, sports cars for rent, stunning women and  screenshots with millions of euros invoiced in Shopify .

In Tuexperto.com we have tried to focus searches to obtain income through the Internet and the number of advertising received in applications such as Instagram has been overwhelming. Also on platforms such as YouTube as an advertising spot. The problem is that, as we have indicated previously, a relatively high economic capacity is required to start this business model , something that is not always mentioned in this type of course.

And the quality of the final product

Last March, El Confidencial collected the testimony of Lidia, a 19-year-old girl from Cordoba who had followed this business model and had obtained a product return rate that was close to 40% , probably due to a poor choice of the product, some Dropshipping gurus mention. Remember that as we do not have the product in stock, we cannot be sure of its quality: the only way to know data about its quality is based on the comments and evaluations of other users.

Another obstacle to exporting products that come directly from China has to do with European Certification. Although the purchase of products from China does not require this type of certification, the truth is that it can be a problem if it causes some type of physical or fatal damage . Batteries or electronic devices that catch fire, moving parts susceptible to being swallowed by infants or any other situation that may pose a risk to the health of the user.

As an intermediary between the warehouse and the end customer, we will have to respond as a single entity, which can lead to legal problems that go beyond the simple return of a product.

So, does dropshipping work? Is a gotcha?

It works, as certified by some of the users who have contracted this type of course . What we can conclude is that, like any business, it is not for all audiences: only for those who have a savings base that exceeds 2,000 euros during the first month if you want to achieve a number of sales high enough to not having to worry about the initial investment for the rest of the year.

Even more important is compliance with current legislation and the assumption that earning income through Dropshipping is not something that can be done overnight . In addition to economic effort, it requires knowledge of digital marketing and web design. Also of luck and dynamism when looking for products that work and that do not present any risk to the health of end customers. It is not a scam, but it is not the panacea for making money on the Internet: even more so when there are thousands of competitors offering similar products, a probably lower price and a web design that transmits seriousness and confidence.