Dropshipping: Scammers Make Millions Of Goods They Never Handle

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Gabriel Beltran

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Gabriel Beltran says he was able to buy sports cars with his dropshipping income


Gabriel Beltran left Uruguay for Miami with the dream of becoming a drummer.

Five years ago, he was struggling to pay his rent and live on his girlfriend’s student loan.

Then, he made over $ 20million (£ 15million) from a little-known online sales technique: dropshipping.

And in bedrooms all over the world, other savvy people are getting richer as well.

Salespeople never see their products. They generally remain completely anonymous. And their marketing reaches hundreds of millions of people.

Chinese products

The process is simple: the dropshipper goes to a Chinese online marketplace and identifies a cheap product.

The seller sets up a flashy website, suggesting the product is made in the US or Europe, and adds a huge markup.

The dropshipper uses social media for promotion, often paying influencers to add legitimacy.

When an order is received, the seller collects the customer’s money, and only then does he purchase the product.

Finally, the product is shipped directly to the customer from China.

In practice, sellers act as virtual middlemen or women.

All of this is legal and often well done.

But the anonymity it confers means that there are also abuses. The sale of counterfeit products is common and customers often do not receive their orders.

Gabriel started selling fake NFL products and made $ 50,000 in just one month. He says he has not sold any counterfeit products since.

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Gabriel Beltran

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Gabriel posted YouTube videos that describe how dropshipping is done


“Shops come and go, and they literally steal money from people,” he told the BBC.

“These stores make millions of dollars in a month and then disappear and don’t even ship a product. ”

Sometimes products are not genuine fakes, but can still infringe the intellectual property rights of technology companies whose designs have, in fact, been cloned, even though the product is sold under a different brand and uses its own packaging.

Kevin David is a dropshipper who does not engage in the sale of such products. But he says some of his friends have made “hundreds of thousands of sales per month from counterfeit AirPods.”

“It’s very easy to take the moral high ground, but if a lot of people had the skills and were making tens of thousands of dollars in profit a day, then they would probably think quite differently,” he says.

Fake products

Dropshipping isn’t new, but the rise of social media celebrities has boosted the model.

Sellers previously marketed their products through eBay and / or Facebook ads. But the rise of “influencer marketing” has given them access to many more gullible clients.

Sarah Mebarki worked for a dropshipping operation, Magnetic SL, which sells her own brand products.

She told BBC Click she paid Kourtney Kardashian – who has nearly 100 million Instagram followers – € 170,000 ($ 203,000, £ 156,000) to promote false eyelashes and other beauty products and reinvest several time.

“Influencer marketing is enough today to create the image of a strong and influential brand,” she explained.

Legend

Kourtney Kardashian’s Instagram account posted a video promoting a product sold by dropshippers


“People think you have to be an internationally renowned brand to hire influencers like Kourtney Kardashian, but that’s completely wrong. Influencers who care about the quality of the product they promote are rare, if not nonexistent. ”

Magnetic SL has attracted over 1,000 complaints online. They include stories about the undelivered product or about months to arrive.

However, there are an equal number of rave reviews.

Sarah told BBC Click that the dropshippers she worked for flooded Trustpilot, a leading consumer reviews website, with fake messages.

»Almost 70% of their customers wrote one star reviews… So basically they just bought fake reviews [to counteract them] and created fake accounts in order to make fake reviews. ”

Glenn Manoff, Director of Communications at Trustpilot, states that he is aware of Magnetic SL’s practices and has added a warning banner to the company page.

“Consumers can see that we have full transparency on the platform and can see how many reviews are flagged. “

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Trustpilot

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Trustpilot placed a big warning on the Magnetic SL page earlier this year


BBC Click emailed representatives for Kourtney Kardashian to brief them on the company’s practices and highlight the complaints. Ms Kardashian declined to comment and her promotional video is still live on the dropshipper’s Instagram page.

Magnetic SL did not respond to the charges against them.

Pandemic spending

Influencer marketing isn’t just for celebrities.

Thousands of lesser-known influencers have also gotten involved in dropshipping paid promotions.

The vast majority are “independent traders” and can make a living with just 100,000 followers, a relatively small number.

And the mix of closed High Street stores and people trapped at home during coronavirus lockdowns has benefited the trade.

Charli Paton, director of influencer Zara McDermott, told BBC Click her email inbox was flooded with offers from dropshippers asking her client to promote what she believed to be counterfeit products.

“I think these companies prey on the fact that influencers and management companies don’t always do their due diligence,” she says.

In such circumstances, it may be a case where the buyer is suspicious.

“Anyone can source products online with some degree of anonymity, quickly sell a bunch of dangerous or counterfeit goods, and then exit the system,” says Mike Andrews, UK National Trading Standards eCrimes team. .

Until recently, Metisha Schafer sold counterfeit Apple products. Her clients often complained that they didn’t work.

Since then, she has reimbursed all the followers who made contact.

“There are a lot of ‘fraudulent’ companies out there, but honestly, I didn’t experience anything like this before the pandemic,” she says.

“It was my responsibility to make sure this business was legitimate and I didn’t.

“People get mad because they ask why people like us are actually doing this kind of promotion without looking at it. And they are absolutely right. “

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