An illustration from Shopify showing what dropshipping is not.

Published: March 8th, 2018

Many Canadians might have heard of Ottawa-based Shopify as a successful ecommerce software startup that’s attracted a large international client base, but the most recent episode of Gimlet Media’s Reply All mentioned Shopify in a more critical context.

Episode #117 of Reply All, described as “a podcast about the Internet,” starts by telling the story of a man who follows an ad from Instagram and orders a free watch and follows it down the rabbit hole into the world of dropshipping. The retail technique, in which operators set up a system to sell goods to buyers directly from an original provider without having it in stock themselves, is criticized by the hosts.

“When people talk about dropshippers they’re talking about these less than reputable folks that work with AliExpress,” says host Alex Goldman says in this episode. “And there are a lot of them.”

The episode continues to describe Shopify as the platform for dropshippers, and Shopify subsidiary and extension Oberlo as the main mechanism used to import inventory represented on AliExpress. Shopify is characterized by Goldman as “WordPress for online stores.” As the show progresses, the hosts criticize dropshipping not only as a “scheme” that often sells cheap products at a big markup, but also as unprofitable for those trying to run such operations. Rather, the real money lies in selling instructional courses in how to operate a dropshipping business.

It’s common those instructions include education on Shopify’s platform.

Shopify has made its own efforts to create educational materials around dropshipping. Google “what is drop shipping” and you’ll find content from Shopify as the top result. From there, you can register for webinars on how to do dropshipping yourself.

IT World Canada asked Shopify for a response to the Reply All episode. Here’s what it sent back over email. Responses edited for length and clarity.

ITWC: The Reply All hosts characterize drop shipping businesses as “dodgy websites” and points to Shopify as the software that enables this. How does Shopify view its own drop shipping clients?

Shopify: Shopify believes entrepreneurship should be accessible to everyone. There are a variety of business models available to entrepreneurs to sell on Shopify, they range from making products by hand to curating products produced by others.

Dropshipping has made it easier to start a business by lowering some of the barriers to entry. For instance, dropshipping lowers the upfront investment required and enables entrepreneurs who have no product of their own, to sell.

Dropshipping is also part of a largely invisible supply chain where many major retailers and marketplaces use dropshipping to source and ship goods. Many large, established businesses, currently use a dropshipping business model, and many consumers actually own products that have been dropshipped and don’t even know it.

ITWC: Reply All characterizes drop shippers as “middleman” businesses that aren’t very successful, but that more often the people in this community make money by charging for education courses on how to become a drop shipper. Does Shopify have any way to know how successful its drop shipping clients are?

Shopify: At Shopify, our job is to make commerce better for everyone, and one way we do this is by lowering the barriers to entry for entrepreneurs to start a business on our platform. Just as in any business, not every merchant is going to be successful, but dropshipping reduces some of the risk, time and money entrepreneurs face when starting out.

ITWC: Does Shopify have any codes of conduct in regards to using its software for drop shipping, in particular, those working with Ali Express?

Shopify: We created the Shopify Acceptable Use Policy to clearly state what activities are not permitted on our platform. If we receive a complaint or otherwise become aware of a possible violation, we will investigate and take the site down if it is in violation of our policy. Buyers also have the ability to report merchants to Shopify who they think are infringing on our Acceptable Use Policy for us to investigate.

Many payment methods also have a dispute resolution method if a buyer feels they have been wronged. At the end of the day, consumers should do their research and look into what they see or want to buy online. Just as in life, if something seems too good to be true, it probably is.

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