Wednesday, May 11, 2011

Who is Responsible for Drop-Shipper Problems?

Dear Rich: I sell computer accessories online and use a drop-shipper to fulfill online orders for wireless routers. I ran into problem with one drop-shipper who sold some defective items and then wouldn't correct the problem. I got rid of him but now I have some angry customers who are leaving negative feedback and I don't have any way to fix the problem.  Your question reminded us of all the problems we used to have with wireless routers until we bought our Zyxel. It's so great when you actually forget you have an appliance ... y'know when it's just quietly working away TCB-style. I hope that's going to be the case with the new computer that's supposed to arrive today.
Right, you had a question. Drop-shipping is a process in which your business sells items you don’t keep in stock. Instead, you collect the money and forward the order to a distributor or manufacturer, who ships to the customer, often using your business's packaging. The drop-shipper bills you for the sale.
Who's responsible? Short answer dept. The short answer is that, according to the FTC,  you (the person taking the order) are responsible for fixing errors. So even though you may have a contract in which the drop-shipper promises to correct errors, ultimately, you, not the drop-shipper are responsible.  So, we're sorry to report that you're the one who will have to either refund the money or supply a working product.
The downside of drop-shipping. As you can guess, we're not wild about drop-shipping and here are some more reasons why:
  • You may be required to pay expensive setup fees — always avoid any drop-shipper who requests this.
  • You may have to make monthly minimum orders regardless of your sales — watch out for this requirement.
  • You will have little control over an item's price The drop-shipper may suddenly mark up an item, cutting into your profits.
  • Drop-shippers are often in long lines of distribution, so that if any step along the way has a problem — manufacturer, wholesaler, middleman — you will suffer.
  • You will unlikely have any warning before the drop-shipper runs out of stock — again, more negative feedback.
  • Drop-shipping sometimes triggers additional legal requirements.