[thelist] Online Shop with 3rd party provisioning

Nadeem Hosenbokus nadeem at multigraphics.biz
Sat Oct 17 14:16:42 CDT 2009

Hi Simon,

This kind of logistics is called 'drop shipping' and, as far as I know, is a
legitimate solution for delivering products to a customer via online
shopping. I believe that Sears in America use this for their online store.

There have been a few scams based on this kind of setup in the past though.
The scam generally involves setting up a site that offers products and then
allowing people to sign-up as resellers. They are told that they have to pay
a recurrent fee to be registered to sell the products but then either the
products are not delivered or the reseller is given only a tiny part of the
profit. The latter sounds more unfair than illegal but if the reseller is
told that they'll get 10% but all the prices are hidden from them then it's
a different issue.

If you're building/implementing the site then you should have full access to
the user-flow and contents which means that you can check the terms and
conditions and whatever 'contract' may be in place for the end-user.  Look
for things that describe payment based on delivery date.

If you see things on the site that indicate that people should sign-up to
'work from home' for a 'small fee' that they will quickly recover via their
own sales then you should seriously consider backing away. You should also
be able to check the transparency of the transactions to see if resellers
are provided with an account of their sales and returns in real prices
rather than percentages and that the product prices actually do match the
real prices.

It's also worth looking at the geographic scope of his operation. If he's
using local wholesalers who say only deliver within the UK then how will the
site handle overseas customers? Is the product delivered to him and then
shipped off? Or is it likely that his wholesalers would deliver something
like a bathtub to anywhere in the world? 

Check out his wholesalers too if you can get the information. Admittedly
it's unlikely that he'll just give up that information: if he's legitimate
then his business contacts and relations would be a business asset. You want
to check their delivery conditions.

My guess though is that if you're being hired to build or implement the site
then it's probably legal and above board simply because it would probably
involve your co-operation to build a scam site. 

Unless it's a new kind of drop shipping scam...

Anyway, just my thoughts, I've never actually dealt with a drop shipping
operation before.

Nadeem Hosenbokus
Exocet Studios - a brand of Multigraphics Ltd
Office:  (+230) 212 6390 / 208 6499
Mobile: (+230) 254 8221
Fax:     (+230) 212 6789
24 St. Georges Street, Port Louis
-----Original Message-----

Date: Sat, 17 Oct 2009 14:48:57 +0100
From: "Simon MacDonald" <simonmacdonald at uk2.net>
Subject: [thelist] Online Shop with 3rd party provisioning
To: <thelist at lists.evolt.org>
Message-ID: <007f01ca4f30$92d4bb00$b87e3100$@net>
Content-Type: text/plain;	charset="us-ascii"

A client wants me to set up a (UK based) online shop for him. His intention
is to hold little or no product stock (these are items like baths and
showers) but to get then delivered direct to the client from the supplier.

I am sure I have seen some issues reading this form of online trading - I've
tried google but can't come up with anything. Anyone got any advice
regarding the legality/ethics of doing this?

I may be wrong but something about this makes me twitchy!



Simon MacDonald


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