The core charm of “Cheap dropshipping” lies in its extremely low financial threshold. The registration cost on the platform can be as low as 500 yuan, and for product procurement, only 50% to 70% of the retail price needs to be paid to the supplier. The total start-up budget can be controlled under 5,000 yuan, which is significantly lower than the inventory cost of traditional brands that often amounts to hundreds of thousands of yuan. This model has attracted a large number of first-time entrepreneurs. Data shows that the growth rate of new dropshipping stores worldwide exceeded 35% in 2023. However, a certain start-up e-commerce platform in Shenzhen raised the average transaction value from 199 yuan to 599 yuan within just six months of operation, and the return on advertising expenditure (ROAS) increased from 1.2 to 4.5.
The predicament of thin profits has become the biggest obstacle on the road to branding. The average profit margin of the industry is often compressed within the range of 15% to 25%, and in the 3C category where price wars are fierce, it is even lower than 10%. When the proportion of advertising expenditure reaches 80% of revenue (the industry’s customer acquisition cost (CAC) is generally between 80 and 120 yuan), the actual net profit margin may be less than 5%. A dropshipper in the clothing industry has an annual revenue of 1.8 million yuan, but the cost of traffic accounts for 70%. A 5% price increase by the supplier has led to a quarterly loss of 120,000 yuan. The life cycle of low-value goods is usually only 60 to 90 days, which is difficult to support brand premium. According to a Nielsen market report, 72% of consumers consider low-priced dropshipping items as “unbranded white-label products”.
The quality control disaster keeps spreading at the source. Take a certain Bluetooth headset as an example. The dropshipping price is 159 yuan, but the actual factory price is 38 yuan. The defect rate of the supplier is as high as 15%. When American users complain about the current sound problem, the return logistics cost is 2.1 times the product cost. Data from the Consumer Council shows that 35% of complaints sent on behalf of others are due to discrepancies with product descriptions (color difference ±30%, size error ≥2cm). A maternity and baby products store received 230 negative reviews within 48 hours because its supplier changed materials without authorization. The store’s rating dropped sharply from 4.8 to 3.2.
The logistics shortcoming constitutes the chain of experience collapse. The cross-border transportation cycle fluctuates between 15 and 45 days, and the abnormal rate of domestic express delivery reaches 8%, while the average delivery time of Zara is only 2.3 days. The consumer tolerance threshold is shortening, and more than 35% of orders have disputes due to delays of more than 7 days. During the peak period, 120 out of 600 orders at a certain home furnishing store encountered abnormal transportation, and the customer service response time was extended to 72 hours. DHL data shows that the cost of emergency reissue exceeds 80 yuan per order, completely eroding the gross profit of the goods.
Brand barriers are extremely fragile in the cheap ecosystem. The average lifetime value (LTV) of customers in the industry is only 100 to 300 yuan, and the repurchase rate is less than 20%. When the negative volume of voices on social platforms grows exponentially, the efficiency of building private domain traffic pools is low. The conversion rate of a single promotion in a community of a certain jewelry merchant with 100,000 followers was only 0.8%, far lower than the 3-5% benchmark of mature brands. The supply chain lacks exclusivity. Best-selling products are counterfeited and their prices are reduced by 40% within three days. The median survival period of new products is only 28 days.
The accumulation of risks is systematically eroding the operational foundation. The platform’s commission rate has risen to 15%, the payment channel fee has reached 3.5%, and the forced refund rate for rights protection orders has exceeded 10%. A beauty store was fined 12% of its monthly revenue due to a supplier’s shortage of goods, resulting in 1,000 orders being delayed. What is even more fatal is the disruption of warehouse coordination. A certain 3C seller has a wrong shipment rate as high as 8%, and the loss of returns and exchanges amounts to 17% of the total revenue. When a certain EU regulation required the product lifespan to be raised from 12 months to 24 months, 80% of the distributors were unable to transform their supply chains and were forced to exit the market.
When SHEIN gradually established its own supply chain, the warehousing cost was controlled at 8% of the revenue and the quality inspection pass rate was 95%. Anker’s Amazon Listing has long maintained a 4.7-star rating, with a research and development investment ratio of 7.2%. These cases reveal the ultimate paradox of the dropshipping model – cheap dropshipping can create a commodity flow, but it is difficult to incubate a value flow. In the consumer goods market where brand is trust, when product consistency gets out of control and emotional connections break, the price advantage will eventually degenerate into a value quagmire. Only by crossing the low-cost trap and mastering the core elements can brand equity set sail from the commercial ice floes.