Dropshipping Wholesalers Scam
by admin
Filed under Wholesale dropship Tips
I’ve been noticing a recent increase in the number of questions asking about dropshipping and wholesale supply scams. This is an important issue because legitimate products sources are vital to running a home based Internet business that relies on sale of physical products.
At present time, there is, in my opinion, a great deal of misunderstanding about dropshipping and wholesale products, and I believe this misunderstanding leads many to believe that they are the victim of scammers. There are, of course, many people willing to fleece the innocent, but all to often the accusation of fraud results from lack of correct information.
I’d like to address three area of confusion:
- how to identify a true wholesaler
- what a dropshipper is
- what a wholesale dropshipper is
First, in the United States, a legitimate wholesale business is an authorized distributor of products from one or more manufacturers. A true wholesale business is licensed by its state of residence to do business as a wholesaler and to sell products without charging sales tax to licensed retail businesses. As such, a true wholesaler must require proof of your sales tax permit in order to sell to you. A wholesale business sets its wholesale prices, so although wholesale prices are generally lower than the retail prices you see in shops, it is up to the wholesaler to determine prices. There isn’t one generic price. Usually, wholesalers give the lowest price when products are purchased in bulk quantities. The greater the quantity, the lower the price per unit.
A dropshipper, on the other hand, is a business that warehouses products and ships them out under your business name. In this scenario, you sell the products and collect payment from your customer, and then place your order(s) with the dropshipper, who handles the warehousing and shipping.
Many of the dropshippers you find advertising on the Internet are retail businesses selling goods to you at a discount. As such they are a sort of “middleman” between you and the real wholesaler. Unless your dropshipper requires you to have a sales tax permit in order to business, it is not a true wholesaler. That does not make them a scam or fraud, however. Many dropshippers advertise “wholesale prices” or “below wholesale prices” or “wholesale to the public.” While this wording may be a little misleading, it is not dishonest because it doesn’t explictly state that it is a wholesale business.
But it is up to you to determine whether or not a dropshipper or any other discount business is a true wholesaler. The way to do that is to look for the sales tax permit requirement. If the business sells to anyone regardless of sales tax permit, it is not a true wholesaler.
A true wholesale dropshipper is a wholesale business who also dropships products. WYNIT and DBL would be a good examples of this. WYNIT andDBL are two of the larget wholesalers in the U.S. of commercial electronics products, and they also dropship for you. In order to business with them, you must set up an account and also fax in proof of your sales tax permit or other authorization from your state to sell retail goods.
I hope this clarifies some of the questions regarding wholesalers and dropshippers and how to avoid scams, frauds, and misunderstandings.
