When I tell some friends who don’t really understand business and retail about drop shipping, some of them say it sounds like a rip off because people can buy the items on Aliexpress themselves.
So the question arises: Is drop shipping ethical or not?
This is a super interesting question.
Drop shipping is the process of selling wholesale products on your store, adding your own price markup and then shipping the item directly from the warehouse or supplier to the customer. You don’t have your own physical stock and you don’t own a warehouse.
If you look at the way the capitalist economy works, then this is essentially what everyone is doing. Except that most retail businesses have their own stock or a local store with a physical location.
But the basic model is the same.
People buy items at wholesale prices or manufacture them for dirt-cheap in China. Then they add their own price markup and then resell the items in more expensive countries and earning a nice profit margin. Every retail chain, big retail store or small retail store works this way.
If you go to H&M and buy a T-shirt, it was produced in China for maybe two dollars. But you’re buying it for $15 in your country.
If you go to Ikea and buy a kitchen table, the material of the table is dirt-cheap. You could make a deal with a wood manufacturer and get the same table elements for a lot cheaper than buying it in Ikea.
Go to your local supermarket. The meat and vegetables you buy have been bought by the supermarket from suppliers and food chains for a lot cheaper. The supermarket has added its own price markup and you are paying more than if you would go directly to the food supplier or a wholesale food chain to buy the items there.
For example, in Switzerland there’s a wholesale food chain for restaurant owners. You can easily get a membership card and go buying meat and alcohol in bulk for dirt-cheap in these stores.
And yet most people decide to go to the supermarket instead and pay more money for meat and alcohol despite wholesale food stores.
In essence, drop shipping form Aliexpress is no different.
You are reselling wholesale products and adding your own price markup. The price markup can be justified by many things, including your basic right to earn a profit without having to justify it at all.
Hint: That’s what’s known as capitalism in history books.
Also you are paying for marketing and advertising to reach thousands and potentially millions of people who wouldn’t find a product they like and want on Aliexpress. Spending money on advertising means you are making a relevant product available to a consumer who’s likely interested in it, but would likely not find the product on his or her own.
Further, you are offering a service along with the product. This includes secure and safe payment options such as PayPal, Apple Pay or other things Aliexpress doesn’t allow. You are providing good customer support in the local language of the customer.
On AliExpress you get no customer support at all. You probably get some Chinese person responding to you in broken English.
And some suppliers on AliExpress engage in fraud.
You are also preselecting the right products, providing quality control for the customer and reduce the risk. If a customer buys an item by himself on Aliexpress he might end up being seriously ripped off.
You are also researching, preselecting and negotiating the best delivery options for your customers. If those customers go to Aliexpress and order from a supplier, the shipping time could be significantly longer than with the supplier you preselected.
Furthermore, you have monthly overhead costs you need to pay for including software, advertising and virtual assistants among other.
Build any store without adding a price markup is impossible.
In essence, having a drop shipping store is no different than any other retail store in the world. The only difference is that you don’t have your own warehouse or stock. Everything else is literally identical.
So if you think drop shipping isn’t ethical, we have to get into a a whole discussion about the ethics of capitalism as an economy.
You can’t say drop shipping is unethical without saying the entire capitalist economy is flawed. You can’t bash the drop shipping business model and then go buying clothes in H&M or go to your local supermarket and buy mean and fruits when you could get everything a lot cheaper in a wholesale food chain close by.
At the end of the day you can make your own decision about these things. But I felt like people who think drop shipping is a rip off simply a bit stupid and uneducated when it comes to how the world works.
Probably half of the jewellery and stuff they bought in local shops costs a few dollars combined and can be found on Aliexpress.
So maybe it’s time for a little reality check 
🙂
All Posts
Website
Jamie
What about the ethics of making a profit from goods produced most likely by child labour and in sweat shops?
Jared
I have to agree with this. Human rights I feel is a far more ethical issue than if you are justifing a mark up. Can you justify buying something at a bargain rate at the cost of someone working ungodly hours for little to no pay or a child being forced into labor just.
There are a lot of ethical issues that are at play in using dropshippers from places like AliExpress. Luckily there are ethical dropshippers around it just takes a heck of a lot more work to find them and the mark up might not be as insane high for you.
Fortytwo
I don’t think it’s unethical because you are paying for marketing to expose a set of choice products to people who might never see them otherwise, and you provide customer service to some degree. But to say that’s the same, ethically, as a supermarket or clothing store is a false equivalence. As you pointed out, supermarkets and clothing stores have stock. That’s kind of a big deal. They charge a mark up, but they provide convenience and speed. The fact that they have items in stock prevents you from having to drive around to local suppliers, if they even at all sell what a supermarket has. Ordering from a dropshipper takes just as long as it does when ordering directly from aliexpress.
Till Boadella
What’s up, makes sense! Don’t disagree with what you said there 🙂
Arbel
Isn’t providing support, picking the right seller, offering PayPal for transaction, as much convenience and speed as what supermarkets deliver? What is so special in stock?
Deb Schneider
Hi, Thank you for this thoughtful post. I currently live in Switzerland, and I would be delighted if you could share the name of the wholesale food chain. Thank you, Deb
Jourdan Wee
Hello, please do correct me if i’m wrong. I feel that I’m on the minority side that feels it’s just a little unethical (not as bad as scamming/fraud/etc). The main reason I disagree would be because of 1 difference between any retailer and a dropshipper. From what I know, suppliers usually won’t entertain normal consumers like you and I as they sell in bulk, hence it’s okay for retailers to mark up their price because consumers rely on them to be able to buy off it. But for dropshipping, there is little to no bulk buying in general. Whatever products you choose for the customer, they can do it themselves, so from my perspective, I don’t see any reason for dropshippers . Although I do agree the time and effort to pre-select and research products does deserve a portion of profit, I don’t think it’s ethical for people to be buying a $1.50 product and marking it up to $18 which I saw on an ad that teaches dropshipping.
Again, I am not experienced in this field, hence I’m not firm in my answer. Perhaps there’s a key element I’m missing, and if so, please correct me. Thank you