Dropshipping, CMS this easy?

[woopwoop]

This morning I started out looking for a new external HD and found the WD 1TB passport external HD on google shopping at $90-160.

I thought what a huge range of prices so checked out the stores and found that the range of prices was really $130-160 and that the $90 deal was through 1 store only elecstore.org (which was the only store without a rating)

I was a bit suspicious and although the price was a lot cheaper I started to research them.

They seemed to be undercutting the competition by a big margin on a lot of products and were usually the only unrated business. I then found that they had a Flippa listing ( https://flippa.com/2689350-premium-dropshipping-ecommerce-business-w-100k-in-annual-revenue ), and they had an auction for their website which ends...
in 1 hour and 15 minutes

In their listing they pointed to a video which explains how their drop shipping business works:
http://www.youtube.com/watch?v=tobELD6HelQ

Wondered what people think about this. I'm trying to figure out :
1. how they could be undercutting the price of the competition by so much, and be the only company that is undercutting so much
2. about the coincidence of me stumbling onto this mystery today
3. can all of their traffic be organic through their seo campaign (as stated in their video)?
4. can they achieve this without any PPC
5. are they using correct pricing or something more sinister in google shopping to help their SEO?
6. is their setup (as described in the video) how dropshipping works?
7. what about returns/complaints/undelivered items? I always thought that dropshipping was the same as being an affiliate?
8. what's the best 1tb external portable harddrive that I should get?

update: I see a lot of results for a scam on this website and fraud warnings, but am still interested in how dropshipping works and how google shopping is possibly being manipulated for this.

 

[Edwin]

The domain elecstore.org was registered on the 18th of December 2011 so that's a huge, massive football-field-sized red flag. Could it perhaps be that they're not entirely legit, and therefore their "prices" are irrelevant?

 

[woopwoop]

Yep, I saw the registration date a few minutes ago too.

I would have thought that it would be more difficult for companies to get into Google shopping results though. That's the most surprising thing for me out of all of this. If it's that easy then I'd have thought they'd be manipulated more.

The guy went to a lot of trouble making the video !

 

[aZooZa]

The guy's apparently from the UK:

Country: United Kingdom
Verified fixed line phone number



Looks fishy to me given that he hasn't offered his fixed line number to anyone in the comments. Whois privacy is also a big red flag. It'll be interesting to watch this one.

 

[GreyWing]

UK fixed line numbers can be bought for £10, diverted to India and shut down a week later nowadays.............

Very hard to verify these things now, bloody impossible in fact.

 

[woopwoop]

Yep this guy's website/auction seems very fishy. Why give up the goldmine?

Am interested in the dropshipping biz though. Just to understand it and how it's different from an affiliate website. I'm guessing that you are more involved with the transaction and appearing to sell the product yourself (but a bit weird to the customer when returns go no to you but the company sending it out if they were unaware).

Also seeing dropshipping domains sell over the last year for decent amount(s) is a bit confusing. I'm unaware of this whole biz.

 

[Skinner]

With drop shipping there are pre/post pay options with most, both are the same apart from when you pay for the stock you sell.

Generally you work as a virtual shop, you are provided a stock level list with available items, which you then advertise to sell, you handle the transaction service (paypal/worldpay etc), you take their money from the customer, you provide the invoice to the customer via email, handle all aftersales support, deal with returns, etc its all on you.

You then send the order to the drop shipper, who ships it out with your details on the invoice in the package.

Some drop shippers require you to pay at this point you pass them the order, others ask you to invoice them at the end of the month, some offer you a discount if you buy 5-10 off them, which is fine for single stock items, so you'll pay for the 5-10 upfront they ship as and when you sell.

But thats the basic idea, the drop shipper acts purely as a order picking and shipping, everything else is on your head.

 

[woopwoop]

...But thats the basic idea, the drop shipper acts purely as a order picking and shipping, everything else is on your head.

Sounds like a lot of work! And possibly a lot of risk depending on the relationships you build with the dropshipper - yet no risk for them?

Why is there a craze for this at the moment? Are the margins/£ that much bigger in dropshipping compared to affiliate income? If they are equivalent then surely the affiliate route takes all the risk and hassle out of it...

 

[VSC]

Sounds like a lot of work! And possibly a lot of risk depending on the relationships you build with the dropshipper - yet no risk for them?

Why is there a craze for this at the moment? Are the margins/£ that much bigger in dropshipping compared to affiliate income? If they are equivalent then surely the affiliate route takes all the risk and hassle out of it...

Dropshipping has been going on for ages, nothing really new. And most dropshipping companies are legit.

Why bother? Well generally markup is better, and there are some products only available that way. A lot of stuff on ebay is dropship, even though I believe it's against ebay's TOS.

Plus you are creating your own customer base - not creating a bigger business for someone else.

 

[iamrofe]

the main advantage of dropshipping is that the customer is yours, and they are likely to make repeat purchases (assuming you provide a good service). Generally with affiliate marketing once you send the user to the merchant, you tend to get the commission once, and then that user will go direct to the merchant for future purchases. - however this isn't true for all AM sites.

 

[Skinner]

Most of the mobile phone accessories on ebay are drop shipped hmo in Hong Kong do massive amounts of drop shipping, many sport supplements are drop shipped also, the list is endless.

Sports Supplement, there is a factory in Manchester, on affiliate they pay out around 6-10% depending on the volume of sales. Drop Shipping post pay is closer to 25%, and regular deals of 50% on random products.

One thing I have noticed tho and I have since adopted this myself, is people protect their drop shippers better than they protect their first born, they really don't wanna share them at all! Obviously more people with the same drop shipper = more competition at similar prices hence being so protective .