Those of you who have been reading my blog for a while will already know that I am not a huge fan of the whole dropshipping business model (you can read my thoughts on it here if you haven’t already – Dropshipping – The Ideal Business Model?).
But despite its drawbacks, I still get COUNTLESS messages every week about dropshipping, mainly from people looking for that perfect dropshipping company.
And really that’s understandable; the whole idea of dropshipping is so tempting – particularly for newbie sellers and while it is NOT anywhere near as easy as people think, it can sometimes be profitable – IF you work directly with a manufacturer or find a terrific dropshipping company.
So with that in mind, today I want to review one company in particular as I’ve had a few questions come in asking me about them.
The company is called Droptec.net and they are an all-in-one stock management and dropshipping company.
Okay, so first things first, let’s find out exactly what Droptec is and what they do as from their site, droptec.net, it’s all a bit unclear.
Droptec is not an actual supplier and doesn’t seem to hold any stock themselves. They only supply Inventory Software and Data Feeds and all orders have to go through the actual supplier.
So how it works is that you pay a one-off license fee to use the stock manager and then a monthly subscription based on how many suppliers you’re using within the software.
It’s not very easy to find on their site, but from contacting them I found the cost is £147 initially and then £5 per supplier per month after that BUT the first 12 months’ subscription is included in the initial £147 fee.
Basically that means – £149 for year 1 and then £60 per year per supplier after that for their Software Only package.
And here’s what features you get with the stock manager:
- Product Import – add thousands of new products with all details such as pricing, images etc. in just a few clicks.
- Real-Time Price Adjustments.
- Automatic Inventory Synchronisation.
- Support Multiple Suppliers.
- One Click Back Up.
- 10 Supported Shopping Carts.
While that all sounds good – really they are all features you’d expect from such a service; things like importing products to your site in bulk, supporting multiple suppliers and shopping carts, and real-time inventory synchronisation are all pretty much mandatory if you want to create an online store selling products via dropshipping.
So what else do they offer? What about their suppliers and pricing? After all, the whole idea is a non-starter if their pricing isn’t competitive!
Pricing and Supplier Comparison
As of this point, Droptec currently have 8 different suppliers, one from each of the following categories:
- Adult Toys
- Cuff Links / Wedding
- Mixed Industries
- Home Electrical
- Fancy Dress
- Electrical (China)
- Fashion Bags and Scarves
Looking over their supplier list, I am immediately quite worried as they use the exact same description for 4 of their 9 suppliers!
Clearly it’s meant for the mixed supplier (no. 3) but for some reason it’s also used for the electrical supplier (no. 7), the giftware supplier (no. 5) and the adult toys supplier (no. 1)!
I’m not too sure what’s going on there but I’ll ignore it for the moment and delve into one of the categories so we can take a look at what sort of profit margins are achievable.
I’ve chosen the Cufflinks/Wedding supplier for this as they describe this dropshipper as offering “over 3000 cuff links that have 100% markup”.
Let’s take a look!
Unfortunately the confusion doesn’t end there though – as the first page of products from the cufflinks and wedding supplier is nearly completely full of smoking pipes. And to add to that – they’re all for sets of 12 or 24…not exactly the usual dropshipping quantity.
I’ll have to just assume that the suppliers are all pretty much a mix of products rather than specific niches and persevere with my research.
I’ve selected cufflinks from the category menu on the left and found this product:
So £0.82 with an RRP of £1.50, which is actually fairly accurate as I found the exact same product on eBay, selling for £1.50 including shipping:
Initially this seems really good and gives a profit margin of about 45% (before fees)!
But digging a little deeper shows that this isn’t the case at all, as one hugely important cost hasn’t been mentioned…SHIPPING!
Doing some more research, I finally find it on the supplier profile page, which shows that there is a shipping cost charged – £3.50+VAT per order.
And while that is fairly reasonable for larger orders, it of course also means that selling single cufflinks is completely out of the question!
Next let’s check one or two products from the mixed supplier; and for this comparison I randomly choose this product – a Bestway Inflatable Pool:
It’s advertised with a dropship price of £14.98 so let’s see how that compares to eBay.
From a quick search it seems the cheapest on eBay is at about £20 + shipping (£5).
According to the supplier profile page on Droptec, the mixed supplier charges shipping based on weight, with it costing between £3.18 and £4.97 for the RM tracked option. I’m going to assume £4.97 for this as it’s a large item.
That means a total cost to you of £14.98 + £4.97 = £19.95 which would give you about £1 or so of profit selling at £25 including shipping.
So while that’s not terrible (usually with dropshipping I expect to see a loss on eBay), it’s still only a 4% gross margin…
Let’s look at one final product from this mixed supplier as it seems like there might be some more potential here.
This time, to give Droptec the best chance possible, I’ve sorted the products from the mixed industry supplier by profit level. Obviously the claimed profit potential is always wildly inaccurate, but testing the product which they say will give the most profit seems like a good way to judge their overall product line.
Alright, so sorted by profit, this is the no.1 product from the mixed supplier:
A Roadster Pet Stroller by Pet Gear, with a dropship price of £98.98 + shipping.
As the listing prices vary quite a bit for this item on eBay, I’m only going to look at sold listings to give the most accurate answer possible.
And here’s what I got:
So as you can see, there have actually been a number of sales, ranging from just over £100 to £175+.
Ignoring the auction format listings, which you wouldn’t use when dropshipping, then the average sale price is at about £155+ including shipping.
If we assume that it costs £4.97 to post this from the supplier, then that leaves you with about £30 of profit from each sale, which is excellent!
As to be expected with such a huge variation of products, the profit level differs a lot depending on the supplier and category.
Overall, my conclusion is that I don’t really see a lot that makes me want to give Droptec the thumbs up and to recommend it to others.
There seems to be a number of small bugs with their own site and it just gives off a very new and unpolished feel in general. They also describe themselves as the “The UK’s #1 Dropshipping Solution” which I found hard to believe, considering I’d never heard of them before until very recently.
And after a little research, I found out that they’ve only actually launched very recently.
In terms of the suppliers they use, there are only 8 and I imagine it would be very easy to find them for yourself (I did in about 5 minutes on Google).
That just leaves the software, which is really their main selling focus anyway.
In conclusion to all those who have emailed me asking about Droptec, unfortunately I haven’t seen anything that makes me change my stance towards dropshipping as a whole.
While I believe it can work, that’s only in specific niches or if you can create an individual agreement with manufacturers who you’ve worked with and get them to ship directly to your customers for you.
If only it was so easy as signing up to a dropshipper and listing thousands upon thousands of products in every category!
Sorry to disappoint, but that’s just not the way to make money selling on eBay. Droptec and dropshipping in general may be more suitable for Online Shop owners where you have 100% control on pricing, delivery times, customer support but on eBay, I really think it’s too risky as just one mistake can get your TRS badge removed or account banned in worst case scenario.
Until next time!
All the best,
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Just discovered your blogs and I have to thank you as they provide a wealth of information and sound advice.
I am creating an online store in the UK and was planning to dropship the products as I am starting on a tiny budget. However, after reading your blog and doing some additional research I have decided to target customers in US and plan to dropship products using US dropshippers.
At the same time I will use your guidance on selling on ebay starting with very little. If I can make money from either I will be able to launch a UK version of my website (as I own the co.uk domain too) using my own stock paid for with the money I’ve made from eBay and US online store.
I do not expect that it will be plain sailing or easy and may not go to plan, but I feel that being flexible will maximise my chances of success.
Nothing ventured, nothing gained!
Yes, in the USA dropshipping is far more popular and easier to work with.
So good luck with your new venture!
I am so glad to have found your blog around one week back. Tried getting through various articles. I have been selling stuff on ebay since last 1 year. Have been selling low cost products like 5-10 USD on Indian Site. Manually doing everything (Getting stock, packing, handing over to shipping company, maintaining inventory, entering shipping details, taking calls, emails, handling ebay claims and everything else) and above all, also doing my day job in a software firm. I must say it was very learning and I had tough time handling all this. Now, 2 months back, I somehow started selling high cost products (100-200 USD) as well.
These products are mainly dropshipped from China to India. I am currently working on getting good suppliers. Also, I keep stock (10-20 pieces) of a product which is hot selling. Going like that. I am currently selling around 50 products in my store. High cost products have started giving me good return though since many orders are dropshipped, frustration is high. Anyways, I am now going to follow this blog and your website forever and will ask my questions eventually and slowly since I am setting up and want to slowly hire employees and automate my business as my as possible.
2 weeks back, I kind of hired one employee who is managing my low cost business + High cost business for which we maintain stock. Its like entire inventory is with him. Now since I was afraid, I didnot give access of my ebay account to him. I at the end of everyday send him mail with product name and address. This person ships the product and next day, mails back with tracking details. Then, I manually enter shipping details on ebay. Along with it, I am still managing other daily chores and getting tired and stressed. Due to this, I am not able to freely expand my product portfolio or making connections with more reliable suppliers. Rather I am stressed with handing over delivery addresses, marking shipping details, handling emails, calls, ebay claims etc etc. I am feeling as I want to automate these tasks but not getting anywhere. Today, I thought of doing it one step a time. I was thinking to give this person who works for me the ebay login. He should himself see all orders, packs the one which we keep stock of and mark shipping details on ebay. He gets comission for me per order apart from shipping and other charges. But I am little hesitant. Shall I give him login ..?
How shall I proceed with automating my daily tasks so that I get time to expand my business, add other things rather then putting my energy and getting tired..?
Also, regaring email and phone support, I am very good at it myself. Also, I have customers who I beleive became my customers in the way I talk to them and give them confidence of after sales support. Also, my emailing writing skills are excellent. All in all, please guide me on how shall I getr rid of these things based on your experience
Thanks in advance Andrew. I might ask you quite many questions in near time one by one:)
Love and Regards
Thanks for sharing your experience with us.
Unfortunately you didn’t mention how many orders per day you process but if you haven’t done it already, I would first recommend streamlining every process in your business first, before you share your login details with your employee.
* Perfect warehouse/inventory system (http://andrewminalto.com/warehousing-guide-for-ebay-sellers/)
* Automated listing tool (such as Turbo Lister, Linnworks)
* Automated feedbacks, customer emails (Selling Manager pro, Linnworks)
* Bulk order processing, invoice, shipping label printing (Selling Manager Pro, Linnworks)
If you have all this already integrated into your business, you’ll have no choice but to start trust your employee as otherwise there’s no way you can grow your business in future when it grows bigger and bigger.
Of course, you want to be 100% sure you can trust that person and first few weeks, watch over his shoulder very carefully to not mess up anything.
Hope this helps Manjot & Good luck with your business! 🙂
Thanks for another great blog Andrew.
I looked at dropshipping working with individual suppliers, in fact one of my suppliers offers dropshipping but the added cost of shipping doesn’t make it feasible. The only exception to this is high value items which means I can still list these items and not have to carry the risk of having them in stock.
Overall though I found dropshipping companies just not worth it, the main problem being tiny profits for products with huge competition (basically everyone is after the low hanging fruit!).
One question I have though, in the USA dropshipping seems to be far more workable than here, why is that?
As we always seem to be around 10 years behind USA trends in the UK, do you think dropshipping will eventually be workable here?
Yes, in USA dropshipping is more popular business concept, hence there’s more competition and stronger players in the market.
In future, I also hope that dropshipping will grow in UK & Europe as it’s a great way to expand inventory in your eCommerce shop (not eBay_ without huge investment and risk.
Time will tell how it all turns out.