Protecting your business is important. In this post, we will talk about the top five tricks suppliers will use to try and take advantage of people who are using the dropshipping business model.
Before we start, we should make something clear. The purpose of this article is not to bad-mouth suppliers or paint them as a villain. Instead, this article should educate you on some of the behind-the-scenes logistics that your suppliers work in, which should help you protect your business the best way you can.
Many of our customers used dropshipping methods when first starting out. It’s a common way to get started in the eCommerce space, due to its low barriers to entry. At one point, it seemed anyone with a Shopify store connected to AliExpress could become a millionaire!
Unfortunately, the dropshipping arena is fraught with difficulties. And it does seem like dropship suppliers can frequently be dishonest. Why is that?
Prefer to watch the video? We have our in-depth discussion posted here on our YouTube channel.
Why Do Dropshipping Suppliers Seem So Dishonest?
It can be frustrating to work with suppliers when it seems like they are dishonest about their capacity to meet your business needs. There are several reasons a supplier may seem dishonest (even when they aren’t!)
Supply and Logistics Are Very Complex
This is not meant to give suppliers an easy out for not meeting expectations. Rather, it is an objective view of the world they operate in. There are multiple players in the supply chain and a huge number of moving pieces. Nothing is perfect all the time, so even if you establish a great relationship with a supplier or seller, sometimes things just go wrong, like with the COVID19 outbreak.
Suppliers are Resource-Constrained
Being a supplier or seller is a very, very low margin business, which means they may not have the resources to work as smoothly as they otherwise could. They may not be able to hire employees to dedicate to customer service, resolving supply issues, or maintaining consistent contact with a large number of factories. With most suppliers operating with a small team and a shoe-string budget, issues are likely to, at some point, occur.
Language Barriers Can Cause All Kinds of Problems
You may run into an instance where it seems like the supplier was dishonest, but they simply didn’t understand your expectations or were unable to properly communicate their abilities. This is especially a problem with initial communication, where suppliers can appear to be fluent in English. However, as more complex questions are presented (especially with problems), the language barrier definitely starts to show.
Suppliers Operate in a Crowded, Competitive Marketplace
On top of working in a low-margin operation, the supplier space is fiercely competitive. Think about how many suppliers there are just on AliExpress! Suppliers are pressured into doing whatever they can to try and win paying clients, which sometimes leads to over-promising and under-delivering. They may even feel pressured by clients to make promises they likely can’t keep, which leads us to our final point.
Unrealistic Expectations from Clients (i.e. you), Can Pressure Suppliers to Make Promises They Can’t Keep
Think about how competitive the supplier place is, on top of how important each and every paying client is, and then couple that with potential clients who have unreasonable expectations for inventory or shipping. Many suppliers will feel the pressure to say that they can meet your expectations, wait for you to pay, and then deliver the bad news about restocking inventory or shipping delays.
Suppliers See Relationships with Dropshippers Are Purely Transactional
From the supplier’s perspective, the vast majority of dropshippers are not going to stick around to build a long-term business relationship. Most dropshippers interact with suppliers in a completely transactional way, and suppliers will assume you will move on as soon as you find a slightly cheaper competitor or that you will move on once you begin to scale.
There are a lot of reasons that suppliers may seem dishonest, and the only way to protect your business is to be well-informed about why suppliers act this way and what you can do to protect yourself. Below, you will find the top five tricks suppliers will use to try to take advantage of dropshippers, as well as what you can do to protect yourself (and even prevent suppliers from feeling like they have to use tricks at all!)
Supplier Trick 1: Giving Inaccurate Shipping Speeds
When using Chinese fulfillment, you are going to find a huge variance in shipping speeds, regardless of line and shipping method. This is true for ePacket, YunExpress, and other shipping methods. However, suppliers know that shipping speeds are one of the key factors in securing clients. So, what do they do to tweak their numbers?
- They don’t include shipping times. The shipping speeds may look great, but the supplier may be excluding several days’ worth of processing time. While the actual shipping may be accurate, your customers are going to see this as a shipping delay.
- They cherry-pick the fastest range of trackings. The shipping speeds you see may be what happens 80% of the time. However, you can’t operate your business assuming the best-case scenario. You need to be sure you are prepared for worst-case shipping scenarios (like Q4 or crisis like COVID19). You need to know what might cause extreme shipping delays, which most suppliers won’t provide unless you specifically ask.
We have seen suppliers say a 5-10 day shipping time with ePacket, and, while that may be true during the slowest times, if there is any disruption in the supply chain, ePacket has huge delays.
What Can You Do About It?
The first thing to do is to realize one simple fact: some suppliers will never be honest about their shipping times. This is especially true for smaller suppliers that may be desperate for business. With that in mind, there are direct actions you can take to mitigate the problems from a supplier being less than forthright.
- Confirm with the supplier how long it takes to process orders. Even if they aren’t forthcoming about their honest shipping time, knowing their processing time can help you give an honest estimate to customers.
- Ask what percentage of orders fall within their estimated range of shipping times. The higher percentage, the better for shipping times. Be wary of a supplier who guarantees a quick shipping time 100% of the time.
- Educate yourself on how long certain couriers take to ship. If you have a supplier promising five-day shipping through ePacket in Q4, this should trip numerous red flags.
- Leave plenty of room when conveying expectations to customers. Give yourself a cushion of time when telling customers the anticipated shipping time.
Supplier Trick 2: Pretending They Use USPS or Other Local Fulfillment
Regardless of what a supplier tells you, USPS does not operate outside of the USA. How the supply chain works is that the product is shipped from China using a service like ePacket or YunExpress, and once that package reaches the USA, it is transferred to USPS. So, when the customer receives the package, it appears to have been shipped from USPS. A tracking number with USPS is generated once the package is transferred to USPS, which gives the appearance that the product is being shipped from a warehouse within the USA.
While transferring to USPS from ePacket or YuniExpress is quite common, it can cause problems for you if your supplier has given you the impression that they ship from a local warehouse in the USA. While business is slow, your shipping times may be fine, but as soon as there is any kind of crunch, it will quickly become apparent that your package is being shipped from China, which can cause huge shipping delays and upset customers.
What Can You Do About It?
It can be a challenge to research whether or not a supplier is actually shipping from a local warehouse, so our advice is simple: unless you have direct, undeniable evidence that a warehouse is local, operate your business as though they are not. This will help you prepare for shipping delays or problems. On the off chance that they are local, you will be under-promising and over-delivering for customers, which creates a great customer experience!
However, if you really want to know whether or not a supplier has a local warehouse, there is an easy test you can do. Ask to see tracking numbers of evidence of shipping during Chinese New Year. Most of the country of China shuts down during Chinese New Year, and that includes fulfillment and shipping. This pause in business can be as long as two weeks, so if a supplier has evidence that they ship business as usual during Chinese New Year, they likely do have a local warehouse. However, if they claim to be local but have a sudden drop off in shipping during Chinese New Year, it is safe to assume that they are trying to pull a fast one on you.
Supplier Trick 3: Telling You They Have Enough Inventory to Scale
Remember when we talked about how getting a client is important to suppliers? A supplier has little incentive to be honest with you about their ability to scale if lying means getting your initial business. They assume you will likely move on to scale anyway!
The truth is that most suppliers do not have the inventory on hand you will need to scale, and honestly, why would they? Expecting them to makes the supplier assume all the business risk. Do you think a supplier is going to stick around long if they were able to scale with most customers that ask?
Granted, we are not saying it is impossible. There are instances where a supplier does happen to have the inventory you need to quickly scale, but these instances are few and far between. What usually happens is the supplier will say they can scale with you, you will start getting the orders to scale, and suddenly the supplier is out of inventory. They will give you several weeks of delay for fulfillment and will likely fight you on providing any kind of refund.
What Can You Do About It?
There are several steps you can take to be able to properly scale without running into inventory issues:
- Don’t scale with Aliexpress. Just don’t. The suppliers there will rarely be honest about their inventory, and all you are doing is setting yourself up for headaches down the road.
- Use AliExpress just enough to justify an agent. An agent can take on the role of making sure inventory is secured. Once they confirm and pre-stock inventory, you can safely scale without inventory issues.
- Be willing to pay upfront. We mentioned this earlier. It doesn’t make sense to assume the supplier or agent are going to take all the business risk of securing inventory. Paying upfront is a great way to quickly secure inventory for scaling.
- Communicate with your agent about scaling plans. Being open and honest about your scaling plans can help your agent make sure your inventory is sitting and ready to be sold. Working with your agent to secure inventory can avoid shipping delays, inventory issues, and customer dissatisfaction.
- Stop dropshipping entirely and built a sustainable supply chain with EcommOps. Get in touch with us here to learn how we can help you scale.
Supplier Trick 4: Promising They Will Have a Hot-Selling Item in Stock within a Designated Time Frame
This may even be a problem you are familiar with. You are working with a supplier, trying to get a hot-selling item in stock. They tell you “Oh, don’t worry, we’ll have that in three days. Go ahead and pay us now and we will start fulfilling orders as soon as they are ready.”
So you pay, and the third day passes. Then they say there are factory issues and that fulfillment will not start for another several weeks or months. Of course, they are reluctant to give a refund for what you have paid, and you have customers that were expecting to get their order in days, not weeks or months.
This problem comes from the fact that many suppliers do not have personal relationships with factories. They order their inventory online, essentially becoming the dropshippers for dropshippers. However, the lead time given on a website can be vastly different than what the lead time actually is, especially for hot selling items.
A good real-world example of this is bidets. During the COVID19 crisis, there was a sudden, unexpected shortage of toilet paper, which led to a huge demand for bidets. We found a listing for a bidet on Alibaba with an advertised 1-day lead time. For a hot, in-demand item, that sounds good, right?
We contacted the factories of this item to confirm what the lead time for the bidet actually was. We were told that the bidets were delayed until at least July. Imagine promising customers normal processing time for a hot item only to later have to tell them that it will not ship for two months. This is the problem that many AliExpress suppliers have since they lack relationships with factories.
What Can You Do About It?
One option would be to get an agent. Having a dedicated agent can mitigate so many of the problems that may result from this problem in a number of ways, as long as they have the right connections:
- Your agent should have direct relationships with factories. You are much more likely to get accurate information if you can communicate directly with the factory instead of relying on consumer websites with outdated information.
- If your agent says to act quickly, get your payment in ASAP. The lead-time for hot-selling items can change quickly. If your agent tells you that you need your payment in fast, get it in fast. If you wait too long, you may miss your window for quick processing and be stuck waiting weeks for the factory to restock.
- Tell your agent to establish a production plan with a factory. Guaranteeing production space for your hot-selling item is a great way to guarantee inventory. However, most factories won’t do this unless they have a personal relationship with the agent.
- Communicate with your agent and listen if there are issues. Unfortunately, factories are run by people. You and your agent could do everything right, but the factory could decide to be dishonest or sell to a higher bidder, even after confirming inventory. Always listen and work with your agent to sort through problems that arise, and don’t pin all the blame for problems on your agent. A new agent does not resolve the issue of dishonest factories.
Another option is to stop dropshipping entirely. Many EcommOps clients are former dropshippers who decided it was time to build a more reliable supply chain. We are a full-service fulfillment center located in China. Get in touch with our team today to see if we are a fit for your needs.
Supplier Trick 5: Provides You Tracking Numbers Before Shipping
We can’t be more clear about the following fact: instant tracking numbers mean nothing and have no impact on shipping in any way. Couriers are not going to factories every hour just to be able to start the shipping process and create a tracking number. A quick tracking number is nothing but a gimmick to make either you or your customers feel good about the product shipping.
When we work with clients, we don’t provide a tracking number until the order has actually been fulfilled. This provides a more realistic idea of the shipping time, which makes a better experience for customers. Providing a tracking number instantly gives the impression that fulfillment has occurred, which can cause problems if customers think a package was in transit when it hasn’t even left the factory yet.
There are a lot of reasons why a supplier provides an instant/fake tracking number, all of which you should keep an eye out for:
- Suppliers may be out of stock and not want to tell you. Providing an instant tracking number gives them time to try to get inventory in stock without having to admit they don’t have inventory on hand.
- Hot products have a long lead time, but suppliers feel like they need to give you a tracking number to keep your business. It is better for them to think you have the item in stock as opposed to admitting to months-long lead time.
- The supplier has slower than advertised shipping time and is attempting to conceal it. If you get an instant tracking number, you may not realize how long their processing time is.
- The supplier believes that, unless you believe an order is instantly fulfilled, they will lose your business. This is another good reason to not have unrealistic expectations given to your suppliers.
What Can You Do About It?
This can be quite a hurdle, especially in regard to providing your customers with clear expectations about their order. The following tips can reduce the probability of being given fake tracking numbers:
- Tell your supplier you prefer tracking numbers after fulfillment. If the supplier doesn’t feel pressure to provide an instant tracking number, they very likely will not.
- Have an honest conversation about processing times. Having an open and honest conversation with your supplier about inventory problems or other delays. Make sure that you don’t make the supplier feel pressured into providing an instant tracking number.
- Be ok with tracking numbers coming later. We have had to retrain a lot of our clients that were accustomed to quick tracking numbers. Remember, a quick tracking number has no impact on shipping times.
There is, however, one scenario where you may want an instant tracking number: in order to appease your customers. Talk with your supplier about providing tracking numbers a bit earlier before processing so customers have an idea of when delayed orders might be getting shipped. How exactly this is done will depend on your specific situation, but whatever you do, make sure you are completely in control of the process.
Conclusion: Don’t Forget Suppliers Are People!
It can be easy when trying to educate yourself and protect your business from getting taken advantage of to forget that suppliers are people. They are flesh and blood, just like you and me, who are also working hard to protect their business and make a living for themselves and their families.
If you have been struggling to forge solid relationships with suppliers, remember that respect goes a long way. If you don’t want a supplier to treat you like a simple transaction, then you need to also not treat them as a simple transaction. You both are on the same team!
Have more questions, or getting interested in leveling up your supply chain with EcommOps? If you have 50 or more daily orders, we would love to work with you! Reach out to us and let’s work together to build your business.