Retailers are shopping with your money. And you can save by cutting out the middle man.

Who would buy a cheesecake from Staples, a fire pit from Best Buy, or a jewelry box  from Home Depot?

You might be – even though these retailers don’t really sell them.

These companies and many others are doing something called drop shipping, a sneaky way retailers can turn a profit selling you things they don’t actually have.

Many retailers offer items online that are both unrelated to their brand and unavailable in their stores. Because they won’t sell much of these items, they don’t stock them. But somebody will buy them, so they drop ship.

Not making sense yet? Watch this video to see how it works…

The ups and down of drop shipping

Stores use drop shipping because they save on stocking and inventory costs. Is that helpful to you?

Maybe those savings get passed on to consumers but don’t count on it. And sometimes identical products get drop shipped by multiple retailers at different price points. Meaning you can easily get ripped off.

Don’t let this confuse you. Just because something is drop shipped does not mean you shouldn’t buy it. Just that you shouldn’t assume it’s the cheapest option.

Jaxon Nagel, a content analyst for e-commerce site Grainger.com, says drop shipping can actually make your online shopping experience better.

He learned that drop shipping techniques while working for Sears.com, before making the switch to his current position.

“Drop shipping gives retailers the flexibility to focus their resources beyond inventory,” Nagel says. “It’s easier for retailers to offer better customer service and a wider breadth of products for the customer to choose from.”

How to tell when drop shipping is worth it

Next time you see a camping chair online and think to yourself, “$85, that must be a really nice chair!” you should think again. Follow these steps to make sure you know what’s behind the listing …

  • See if you’re buying from the manufacturer: Check the store’s website or page to see if it’s a retailer or a manufacturer selling their product directly. If it’s the manufacturer, you probably won’t find it cheaper elsewhere unless it’s up for resale.
  • Google the exact product name: It seems obvious, but never skip this step. For example: this camping chair is listed at $85 dollars from a nice website, but after Googling it I found it for $25 on Amazon.
  • Pay attention to similar product images: Sometimes products that are drop shipped are private labeled, which means you will find the same exact product with a different brand name stamped on it. The two most likely still come from the same manufacturer, branded by different retailers. You can tell if the product images look the same.
  • Amazon isn’t always the cheapest: You should check, but don’t assume Amazon always wins. This $18 dress on Amazon is $5 on Aliexpress.
  • Check for cart discounts: Don’t be put off by the term “Add to Cart for Price.” Sometimes drop shippers will add discounts to your cart, but aren’t allowed to advertise the product below a certain price. If you see that phrase, the item might end up cheaper than the lowest list price you’ve seen. You can always remove the item from your cart after you look at the price.
  • It’s not all in the listed price: Some drop shippers list low prices on a product but gouge you on shipping and service fees. Some offer manufacturer warranties, others don’t. Some drop ship stores donate profits to a cause, others only care about sales. If it’s obvious a product is drop shipped and listed by multiple stores, look for other benefits that can tip your decision in one store’s favor.

Now you know how to pull back the curtain while you shop. Maybe it’s time to think about getting into drop shipping yourself.

Meet the Author

Kelsey Bell

Kelsey Bell

Illustrator and Animator

Bell was an illustrator and animator for Debt.com.

Career and Business, Tech

income, self-employment, shop online

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Article last modified on September 19, 2018 Published by Debt.com, LLC . Mobile users may also access the AMP Version: What is Drop Shipping? If You Don't Know, It's Costing You - AMP.