"Dropshipping" is a system of online sales that has become popular in the era of online shopping (although similar businesses have probably existed for a very long time in one way or another) where an online website acts as a kind of intermediate between several online shops and customers. In other words, the "dropshipping" website essentially acts as a marketplace where several smaller businesses can sell their products in one centralized place. The website itself doesn't handle the products, doesn't have any sort of stock of them, or even gets the products themselves at any point. Instead, they just list products from online shops and take purchase orders from customers, transfer the order to the actual shops and have them ship the product directly to the customer. Obviously the price of the product will be slightly higher for the customer, because the "dropshipping" website will take a cut. On the other hand, it's much easier for the customers to find products in this manner, and especially it's much easier for small online shops to get visibility and customers, if they get into a big dropshipping website.
There's nothing illegitimate in this form of business itself, especially when the website is completely open about the actual manufacturer/seller of the product, and makes it clear that they are just an intermediate between the customer and the shop. There are many such legitimate online websites out there, and in fact some of the biggest online shops pretty much engage in this business model, such as Amazon. (While Amazon does manufacture and sell some products of their own, by far and large they are a reseller of products of other companies, that have a reselling contract with them.)
Of course some such "dropshipping" websites can be a bit more on the gray area, especially when we are talking about China, but sometimes even elsewhere. That's because these websites are very popular among counterfeiters, hardware (and software) pirates, scammers and manufacturers of knock-off products. (Sometimes even the biggest stores, such as Amazon, aren't free of this. However, some such stores, such as Ali Express, are infamous for being popular among shady product manufacturers and scammers.)
But this blog post isn't about those. It's about a different sort of "dropshipping". One that's outright fraudulent.
Normally "dropshipping" websites are completely open about them simply being intermediates between the customer and the actual manufacturer, as they should be. This, however, becomes fraudulent when someone claims to be selling a product as their own, with its own branding, when in actuality they are just delivering orders to some other company behind the scenes, without telling the customer, and getting a big cut from the sale (without even having to do any investment themselves).
A very infamous case of this has popped up recently, because a famous rapper (of all people) seems to be doing exactly this. He claims to be selling his own brand game console, named "Soulja Game Console":
The problem? It's actually directly a product by another company, which is selling it for much cheaper:
This rapper is getting a $45 profit from each sale. He's selling someone else's product as his own branded product, without telling the customers that this is the case, and getting a hefty cut from each sale.
There's nothing illegitimate in this form of business itself, especially when the website is completely open about the actual manufacturer/seller of the product, and makes it clear that they are just an intermediate between the customer and the shop. There are many such legitimate online websites out there, and in fact some of the biggest online shops pretty much engage in this business model, such as Amazon. (While Amazon does manufacture and sell some products of their own, by far and large they are a reseller of products of other companies, that have a reselling contract with them.)
Of course some such "dropshipping" websites can be a bit more on the gray area, especially when we are talking about China, but sometimes even elsewhere. That's because these websites are very popular among counterfeiters, hardware (and software) pirates, scammers and manufacturers of knock-off products. (Sometimes even the biggest stores, such as Amazon, aren't free of this. However, some such stores, such as Ali Express, are infamous for being popular among shady product manufacturers and scammers.)
But this blog post isn't about those. It's about a different sort of "dropshipping". One that's outright fraudulent.
Normally "dropshipping" websites are completely open about them simply being intermediates between the customer and the actual manufacturer, as they should be. This, however, becomes fraudulent when someone claims to be selling a product as their own, with its own branding, when in actuality they are just delivering orders to some other company behind the scenes, without telling the customer, and getting a big cut from the sale (without even having to do any investment themselves).
A very infamous case of this has popped up recently, because a famous rapper (of all people) seems to be doing exactly this. He claims to be selling his own brand game console, named "Soulja Game Console":
The problem? It's actually directly a product by another company, which is selling it for much cheaper:
This rapper is getting a $45 profit from each sale. He's selling someone else's product as his own branded product, without telling the customers that this is the case, and getting a hefty cut from each sale.
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