Investigating Companies for Dropshipping

After you have identified companies you want to do business with you need to investigate these companies. There are so many scams and near-scams out there that it can be quite tricky to find a legitimate dropshipper that isn’t going to scam you. Even if you find a legitimate dropshipper, you still have to make sure they have prices that will allow you to make a decent profit, and will provide fast shipping and quality service to you and your customers.

It’s vital to check a company out thoroughly before doing business with them. The first step, of course, is to check for online reviews and check their Better Business Bureau report (if they have one).

To check for online reviews, try searching for things like:

  1. [Company name] scam
  2. [Company name] reviews
  3. [Company name] legitimate

Replace [Company name] with the name of the company you’re investigating. These searches should pull up information about the company. If not, it probably either means they aren’t bad enough to have a lot of complaints, OR they are so new that no one has filed any complaints online, yet. Remember, every company eventually has some complaints. Amazon has been touted as having some of the best customer service there is via many sources, but they have thousands and thousands of complaints.

No company is perfect.Complaints may not even be founded. Sometimes it’s the shipping company that causes the problem, and even when the company goes above and beyond to rectify the problem, the customer still insists it’s the company’s fault and that they are “scammers”. Sometimes the customer misunderstands some element of the ordering process, or even makes a mistake like forgetting to order expedited shipping.

They try to blame the company, and the company’s reputation suffers. So you should expect there to be some complaints about any company. It happens to every company. But if there are far more complaints than there are positive experiences, it’s a red flag for sure.You should also speak with someone at the company directly before doing business with them.

This accomplishes two things:

  • It confirms that the company actually does respond to customers, and that they are easy to get in touch with.
  • It lets you ask the company important questions.

Here are some questions you can ask companies before you decide to do business with them:

  1. How long have they been in business? The longer they have been in business, the more likely it is that they are a legitimate company that will be reliable.
  2. Which company do they use for shipping? You want to make sure they use a reliable company like UPS or FedEx for shipping, because some of the smaller shipping carriers may be cheaper, but much less reliable.
  3. Who are their clients? They may not be willing to divulge this information, but if they have some major companies using them, they’re probably a legitimate company.
  4. What is their return policy? You need to know their return policy inside and out. What happens if the item doesn’t fit, or the customer doesn’t like it? What about defective merchandise? How do they handle returns? Who pays for shipping? These are all questions you need to know, because if a customer wants to return a product and the company won’t help, you will be responsible for handling it.
  5. What types of payment do they accept? You need to know when payment is expected, and what forms of payment they accept. Some companies may offer net-30 terms, which means payment is due 30 days after purchase, while others may require immediate payment.
  6. Do they send shipping notifications? The company should send notification emails to your customers when their items ship. This prevents you from having to do it. While this isn’t a deal-breaker, it’s a very nice thing to have.
  7. Do they offer custom packing materials? You may want to have your own shipping labels on the products, as well as your own packing slip, coupons, etc. This is a very helpful feature.
  8. What are their prices like, and are there any fees? You need to know how much they charge for products, as well as whether or not they charge any fees for “membership”. Legitimate dropshipping companies will rarely charge a membership fee or participation fee. A few do, but this is rare.
  9. Do they sell to the general public? If so, chances are their prices are too high to make a decent profit. True dropshippers will not sell directly to the public, and they will usually require a business license and/or tax ID number before you can access their system.
  10. Can they integrate with your platform? It’s important to be able to have your inventory sync with theirs so customers don’t order products that the company doesn’t have in stock. Some companies have inventory systems that can integrate directly with popular shopping cart platforms, saving you big headaches down the road.