Earlier this year, I came across an interesting business called Simplx.com.
They claim to be “The Next Generation in Dropshipping.” That’s a pretty bold claim.
(At the time, I was considering adding my own inventory to ShoeSniper and using dropship suppliers to mail the products.)
Quick Definition: Dropshipping is when the perceived seller of the product online doesn’t actually have the product on hand; instead it’s shipped directly from the manufacturer or a wholesale supplier.
It’s an attractive model for retailers because they don’t have to inventory anything and really don’t have to even buy the product until it’s already sold.
The downside is customer service issues can come up between data discrepancies, shipping delays, and processing returns.
So, Is Simplx a Scam?
Simplx isn’t exactly a scam, because they’re fairly upfront about how their process works, but more importantly, it’s probably not something that will ever make you money.
Because the service is somewhat oversold on their site, I can see why some people consider it a scam.
Here’s what I found.
Simplx is careful not to advertise they can get you wholesale prices.
Why? Because they can’t.
Instead, you can buy at “up to 65% off retail.” What they don’t tell you is their “supplier” is really just an ecommerce store and their price is only a tiny bit lower than the price the store is selling to general public.
Let’s look at an example. Sorry it’s going to be shoes; that’s what I know.
Simplx was kind enough to grant me trial access to their supplier database.
If you wanted to sell some Dr. Martens, Simplx has a supplier for you. Because of their super-insider hookup, you can get these $110 Docs for the low low price of $108.
I’m no mathematician, but that doesn’t leave much profit margin to play with.
How Does Simplx Work?
So how did they arrive at that “Member Price”?
First, know that the $110 is the exact price their “supplier” Sears.com is charging to the public. (at the time of this writing)
Second, Simplx is a member of the Sears.com affiliate program, which pays a 4% commission on Men’s Shoes. They keep 2.25% of that for themselves and “give” their members 1.75% as their dropship price.
So if you were to actually go through with this deal, you would actually have to buy the shoes from Sears yourself, for full price, with your billing information, and have them shipped to whoever your customer is.
Then, you’d have to wait 2-3 months for your $1.92 profit margin to be deposited into your Simplx account, because that’s how long it will take Sears to verify the sale, pay the Google Affiliate Network and for them to pay Simplx, so they can pay you.
But all that might be moot. I think you’d have a hard time making that sale in the first place, since the same shoes are already $20 less, with free shipping, from far more reputable sellers. (at the time of this writing)
I’ll hand it to Simplx for running a pretty ballsy business. They charge $69.95 for access to their “supplier network” (otherwise known as the “the Internet”).
On top of that, they make money on every sale that flows through their system, and they never have to touch any products.
It’s kind of beautiful, in a way.
As an affiliate, I was pretty excited when the lightbulb went off and I figured out their business model.
But what’s to stop would-be resellers from simply joining the affiliate programs of these various stores themselves, and keeping the whole commission? Or working out some actual wholesale/dropship relationships?
I’m sure there are people making good money using Simplx, otherwise they wouldn’t still be in business after 10 years. But it’s hard to see how exactly that would happen…
If you’re a Simplx member, please share your experience with the company!
Want to learn more about drop shipping? Check out my conversation with drop shipping pro, Anton Kraly.