When setting up your online business you might realize that it is difficult to differentiate between trustworthy wholesalers and unscrupulous businesses on the Internet.  The bad news is that it is becoming increasingly to tell the difference, as scam artist become better at putting up a fake front. So the question is how can you tell whether the wholesaler you have located on the Internet is for real?

An important thing to keep in mind when separating the genuine wholesalers from the conmen is not to jump to conclusions. For example, just because a supplier from China is selling imitations of branded goods, does not mean he is out to cheat you of your money.  As long as he makes it clear that his goods are fakes, he could very well have a genuine market in certain parts of the world.

Another often advocated tip in the past to spot unscrupulous buyers is if they only accept insecure payment methods such as wire transfers or Western Union. This is no longer necessarily true, since people in some third world countries such as China may find it difficult to obtain credit cards or other more secure payment options. However, it is a good idea to exercise caution when dealing with a wholesaler who only accepts such insecure payment methods. A good strategy to protect yourself is to order only a small amount when dealing with such wholesalers for the first time.

Since both of these points above no longer necessarily point to unscrupulous wholesalers, these are newer tips and strategies which you can use to identify potential conmen:

1. You notice their website does not include any contact information.

2. The person who picks up the phone does not identify himself or the business when you call.

3. You notice that some or all parts of their website resembles other similar sites on the Internet.

4. When performing a transaction, the wholesaler does not ask you for a business or tax number.

5. When you ask for a product sample, the supplier tends to avoid your request.

6. Invalid address – The supplier provides you with an address which either in a residential area or is non-existent.

7. The company informs you that they do not have stock of the product you ordered and will need to receive the money from you before they can order their stock.

8. You notice that the company stops responding to your correspondences.

How to Protect Yourself

These are several more tips to identify a shady dropshipper, including finding out how long they have been in business. Some of them are:

1. Use a whois service such as coolwhois.com to make a search on their domain name. You will be able to see how long ago this name was registered and this should be consistent with the number of years the business has been around. Additionally, the whois service will also be able to tell you when the domain record will expire. A legitimate business will want to ensure their domain name is reserved for at least another three to five years.

2. Look through the website to ensure that the full company name and registration number is provided. Also call the listed phone number to ensure that it is valid, and not a mobile number. A legitimate business should at least have a fixed phone number.

3. Compare some of the text from their website with other websites on the Internet. A search engine, such as Google can be used to do this easily. If you discover other websites with the same text, you will know that the content has been copied.

4. When ordering a product, you can request that the dropshipper sends you a photo of the goods with their company logo or other easily identifiable object in the background.

5. When possible, avoid the use of insecure payment methods, and insist on using payment methods such as Escrow, Cod and Paypal Verified which are known to be more secure..

6. Get an opinion on the wholesaler from other sellers on forums and newsgroups.

If you take heed of the advice above, you will be well on your way to establishing a successful online dropshipping business. If you find that there are too many factors involved in determining if a wholesaler is genuine, you can enlist the services of a company which can do this for you, or at the very least provide you with a list of reputable dropshipping wholesalers.