Many companies that offer dropshipping on the internet are middlemen, not real dropshippers. One thing you will see a lot of is upfront fees. Personally I do not understand why anyone would want to pay upfront fees to buy something. It's a bit like going to your newsagents and being stopped at the door to pay an entrance fee! For what? So you can go in the shop to see if he has anything of interest. And then when you pay the entrance fee, you go in and find the paper you wanted was sold out. Newsagent is happy you just paid him to find out that he did not have what you want, and now you have to go to another shop.
It's a bit like this with some of these drop shipping companies. They charge you a fee and after you paid to get in and get access you find that they do not have what you want or they are selling goods for more than your local shop. You have no chance of selling these and making a profit.
The problem is that drop shipping and e commerce is growing. And you are getting people jumping on the bandwagon.
Someone will come along and find a genuine drop shipping company, and then they will put together a fancy website with lots of bells and whistles, and advertise themselves as a dropshipper. They will charge you a fee to become a customer, after paying their fee you will put the stock they are advertising on your website or eBay when you get a sale and forward the details to your new dropshipper. They will then intern pass the details on to the genuine dropshipper. Who will complete the sale. Basically your dropshipper is a middle man. Your goods will be overpriced as they are taking a cut out for themselves. Also you will find customer service slow. Every time you have a problem and ask your supplier he then has to go to the original dropshipper to get the answer.
Most genuine dropshipping companies are an offshoot of a wholesaler or manufacturer. A genuine wholesaler will carry large stocks of items.
Think about the supply chain for a moment.
A typical factory is geared up to produce hundreds if not thousands of the same item. They would find it very hard to keep selling these one at a time to the public, as they only want one item.
The same goes for most of the high street shops they sell single items to the public, could you imagine your corner shop with 100s of each item. His store room would have to be 10 times the size of the shop. Shop owners tend to buy stock in by the dozen usually. He has a nice fancy shop as he needs to attract passing customers and his store room is out of site.
This is where the wholesaler fits in. They can buy in hundreds or thousands as they are selling a dozen at a time to the shops. They usually supply many shops thus they need plenty of stock to keep them supplied. They do not have passing trade like the shop. So an attractive premise is not as important, they just want to shift goods out by the carton to the shopkeeper. The shop keeper in turn wants the goods at the best possible price so he can make a reasonable profit
How does this relate to dropshipping?
Well with dropshiping you have two types of dropshippers setting up.
The first does not have a warehouse full of stock; usually it is just an office or even a spare room in their house. They will spend their time making a nice fancy website that will get your attention. They will then make their money in two ways. First they will charge you an upfront fee. Multiply that fee by the thousands of people coming to their fancy site and you will see they make a good living just from the fee alone. Then when you order from them say you buy an item let's call it a widget at £ 5.00 in the hope of selling it £ 10 for. They will then go to the dropshipping company and pay them £ 3.00 for the item making £ 2.00 for just passing your email along. You will find that the shops are selling the widget at £ 5.99 so you are left with making 99p per sale less your overheads.
The second type of dropshipper is the warehouse. Over the years their customers have started to have a web presence, so to keep up they have introduced a dropshipping department. As this is an add on to their core business it may not have all the fancy bells and whistles of some websites. It is used to just moving stock out. There will not be any fancy office just a computer in the warehouse office, they do not need to charge you a fee to buy from them as they make their money from the wholesale trade. Say you buy the same widget at £ 3.00. You can now sell the widget at £ 5.99 making £ 2.99 per sale.
So how do you find the real wholesaler / dropshipper and not the middleman?
It takes time and legwork but the best place to start is by contacting wholesalers and asking if they drop ship. Or if you contact dropshippers ask if they carry the stock they sell in their own warehouse. Even ask to visit. There are plenty of genuine wholesalers out there that do drop ship now and they do not charge a fee!