Things to Know Before You Start Dropshipping in 2020
Video transcript: You’ve heard about dropshipping. You’ve read about it and you think you have what it takes to build a business and run it from a beach in Thailand. But you have doubts. You’ve never started a business before and you can’t tell if this is too good to be true. You’ve never run a Facebook ad and you have no idea how much money you should expect to spend on them. You’ve never even bought a domain before and you’re not sure why anyone would come to your domain and not Amazon.
If you’ve had thoughts like these then this is for you. We’re going to cover every fear, worry, question, and insecurity you have about getting started with dropshipping so you can start dropshipping with a peace of mind. And we’re taking them straight from the comments that you’ve left under our videos.
A word of warning before we get started. Some of you just want a convenient excuse not to start your online business. After all, the prospect of failure is really, really frightening. It’s more comfortable to write off dropshipping as a scam or claim that it’s saturated, and to go back to your nine to five job than to start dropshipping. Nobody in your fluorescent-lit office will blame you. After all, misery loves company. But if you’re the black sheep in the herd and you just want to get some answers before you get started, then let’s get cracking.
Dropshipping is an Ecommerce Business Model
Before you start dropshipping, the first fear that I want to touch on is that dropshipping is a scam. Dropshipping is actually just an ecommerce business model. And a quick recap of that for you. So in the dropshipping business model, you create a store, you import products from suppliers, invest your own money in marketing those products and then you sell those products to the customers only when you get orders. In other words, you go to the supplier one at a time and place the orders that the customers have already placed with you, the supplier then ships those products directly to your customers.
Now, this is a business model that a lot of other retailers use. Even big-box retailers like Walmart use this business model to make sure that they’re only buying as much supply as they need to meet customer demand for products. The difference between you and Walmart is, well, you’re an individual and you’re getting your products from AliExpress, which is an ecommerce website that other people can shop on.
Dropshipping Adds Value to Customer Experience
That’s what leads some people to think that dropshipping is a scam. One of our viewers asked what stops people from going to AliExpress and purchasing products themselves? That viewer even raised the issue that family and friends might think that they’re being scammed. Well, dropshippers add value to the customer experience that they don’t get when they go directly to AliExpress. Remember, AliExpress is not easy to navigate. There are lots of suppliers selling the same products, and their descriptions aren’t English.
On top of that, there are endless shipping options which can feel really foreign to people shopping on AliExpress. But even if you don’t take the customer experience into account, dropshipping still isn’t a scam, and that’s because entrepreneurs are not obligated to sell products to customers at the lowest possible price. They’re only obligated to sell the products they say they’re selling. So if you sell dog costumes for three times markup and somebody buys that costume from your store, you didn’t scam them, you offered them a product and the customer determined that it was worth $25 to buy that dog costume from a trustworthy store right then and there. The customer validated your trustworthiness with their wallets.
By the way, I expect this to unleash a firestorm of comments, and I welcome them. Leave your thoughts below. We’re not trying to hide anything about this business model, we’ve seen it work for hundreds of thousands of entrepreneurs. So the more we can start a conversation about what dropshipping actually is the better.
Running a Dropshipping Business Requires Hard Work
The other thing we hear a lot about dropshipping is that it’s a get-rich-quick scheme. If you’ve gotten this impression from us, please let me know. Because we’ve tried to portray dropshipping as something anyone can succeed in as long as they work hard and persevere in the face of setbacks. In fact, on YouTube, we only work with affiliates who do the same. Our affiliate agreement states the following:
One of the most important parts of the Partner Program Agreement is that as a Shopify affiliate you aren’t permitted to make deceptive or misleading claims, guarantee earnings or promise prospective merchants success.
So if you see YouTubers promising that you’ll make seven figures in a week after you take their course know this, they are not our affiliates. We don’t believe it’s true that you can make a certain amount of money in a set amount of time, and we don’t want you to think that’s true either. When we do talk to dropshippers about making six figures in a year, we’re not talking about their first store. We’re usually talking about their fifth or even 50th store.
The thing is, once these dropshippers fail and learn they develop the courage and the know-how to do things right. And scaling a successful store can happen fast after you’ve had all of those learnings. Some things are easy about dropshipping, for example, importing products is easy. But getting customers to actually buy those products is hard and it takes practice. A good analogy here is watching people play soccer or football. Anyone can kick around a ball, but to be a professional you really need to practice and hone your skills.
On the topic of dropshipping, YouTubers, I also want to address this question. If dropshipping works, why do so many people sell dropshipping courses? You might think, dropshipping actually doesn’t work because of all the dropshipping YouTubers selling courses, but many of these dropshippers sell courses because dropshipping is hard and they know that they can make money on the side by teaching others how to be as successful as they have been. The other thing you have to remember is that these dropshippers are hustlers, they love finding new income streams. Some of them are fine running multiple dropshipping stores, but others prefer to run a single dropshipping store and then sell their expertise.
Product Saturation Does Not Exist
I’ve interviewed Chris Wayne, Beast of Ecom, Scott Hilse, and others who sell courses, and I can tell you from experience, they are doing just fine with their dropshipping stores. Here’s something I hear a lot, “It’s 2020, dropshipping is saturated.” Oh boy, I have been excited to address this claim. I don’t wanna get all nerdy and explain market saturation, but you leave me no choice. Market saturation arises when the volume of a product in a given marketplace has been maximized. At that point of saturation, an entrepreneur can only grow their business with new products, by taking market share from competitors or from a rise in customer demand. dropshipping is not saturated. It can’t be because it’s neither a product nor a market, it’s just an ecommerce business model.
Remember back in the 70s, the founder of Nike was buying sneakers individually from Japan and selling them as he got orders in the US. Dropshipping has been around for decades, but it’s taken shape in different mediums as the times and technology have progressed. So that covers whether dropshipping is saturated. It can’t be, it’s impossible. But I know what you’re thinking, there are still so many products out there to dropship and those products are all saturated. Here’s the thing, a product can only be saturated in a given market.
So these scrubbing gloves, for example, they cannot in themselves be saturated, they can only be saturated in, for example, the US or Florida. And only then if they’ve been marketed and sold to everyone who could possibly want these gloves. So before you leave a comment telling me that a product is saturated, make sure you tell me where it’s saturated. Is it saturated in Canada, the United Kingdom, Spain, Denmark? What about in the US? And if a product got 10,000 orders on AliExpress and there are 230 million online shoppers in the US, there are probably a few buyers left to sell to in the United States. In fact, there are probably thousands.
And one more thing, people are lazy. I say that because every time we publish a new product recommendation video, we get comments about how the products that we’ve now recommended must be saturated. No, guys, I wish, but we can track this stuff. Most people watch our videos and do nothing. They don’t start their stores, they don’t start marketing, they don’t start making dropshipping mistakes and learning. The few who do are delighted to find that, “No, these products aren’t saturated,” at least not in the 35 ePacket countries that they can sell to.
Consider the Biggest Variables Before You Start Dropshipping
There are new products and new markets and new trends to be sold to every day. Ecommerce is booming. And now is still the perfect time to jump in. Okay, so hopefully now I’ve addressed some doubts about the fact that dropshipping can work. But I know there are still some big concerns before you start dropshipping, and one of them is that you’re going to need a huge budget. People will give you different advice as to how to budget for your first dropshipping business. Some people will say you need only $200 and other people will say you need at least $2,000. If you want our advice on what budget to start dropshipping with, check out this video. Other than the basic costs, the biggest variable in your budget will be marketing. Marketing is what can change your initial budget from $200 to $2,000. But that depends on the marketing channel you choose to try. For example, Instagram influencers will be cheaper than Facebook ads when you’re just getting started.
Another variable in your budget is apps. This might include apps that create urgency like countdown timers or apps that help you change the language or currency of your store. The cost of these apps vary, and you can operate a store without any apps at all, or you can load your store up on apps if you think they are worth it. By the way, you can definitely build a business without spending a lot on advertising. But you’ll need to pay with time. You can start a store with no marketing budget if you take the time to grow an Instagram community or a Facebook group beforehand. It’s not easy and it’s not fast, but it does work. Realistically you’ll need somewhere between $300 and $1,000 to start dropshipping, but do not spend the last $500 in your bank account to get started with this business. If this is your first business, you’re going to experience some dropshipping failures and you’re probably not going to see an immediate return on that investment.
Save up for this venture. Cut back on your daily lattes or lunches to save at least $5 a day that you can put towards your Facebook ads in the New Year. By the way, if you’re looking for more help on budgeting for your business and start dropshipping, make sure to follow us on Instagram. But we’re always publishing content that lets you see really quickly what you could do to spend your money wisely on your new business to start dropshipping sooner rather than later.
Long Shipping Times Is an Outdated Rumor
Another big fear among new dropshippers is that shipping products from China takes months. This isn’t true. This is an outdated rumor and it’s really solved by ePacket shipping. EPacket shipping takes about two to three weeks and comes with free tracking. But best of all, it’s really cheap. If shipping from China really did take months, other dropshippers would not be able to have sustainable businesses. Some suppliers on AliExpress even have US or European warehouses that let them ship to local customers within five to seven days. By the way, if you’re interested in shipping products from the US to American customers, here’s our list of products that come from US warehouses.
I also wanna take the time to address something a little bit more sensitive than shipping times. US-China relations have been all over the news. And you may start seeing headlines or have seen headlines that make you worry that you won’t be able to start your business based on the state of those relations. There are no definitive answers as to what is happening yet. So our advice now is not to let these headlines scare you away from starting your business. When any major changes occur, we will be the first to let you know.
The Amazon Fear
Another huge fear that we’ve got to talk about is this, “Customers will just buy from Amazon instead.” This is one of the biggest fears new dropshippers have when they’re thinking about getting started. Yes, Amazon has one to two-day Prime shipping available. However, that does not mean that you can’t run a successful business, because the majority of our purchases are impulse buys. Your customers aren’t looking for those products yet, and therefore they’re not going to Amazon to look for them. When customers see something unique they’re willing to wait for that unique product whereas they’re a lot less likely to wait for say paper towels. Customers go to Amazon when they already know what they’re looking for, but your goal is to grab the attention of those customers before they know what they want and show them what they want. Hint: It’s your products.
Even if some customers do go to Amazon, that’s okay. Multi-million dollar businesses are built on the back of a 2 percent conversion rate, meaning 98 percent of people who visit these successful businesses bounce. That’s okay, that is still enough for you to grow your business. So don’t worry too much about dropshipping vs Amazon and focus on maximizing the good numbers of your business.
You Don’t Need to Be a Facebook Ads Expert
And a big roadblock for beginners is the belief that they need to be Facebook ads geniuses to succeed with dropshipping. Nobody is born an expert in anything, and that includes Facebook ads. It takes time and it takes money and it takes failure to really learn how Facebook marketing works. Keep this in mind when you’re spending money on Facebook ads, especially in the beginning, you’re spending money on your ecommerce education. It’s by spending money that you learn what works and what doesn’t. And it’s by spending money that your Facebook pixel learns what customers like, and what customers don’t.
The more you invest in Facebook advertising, the closer you’ll get to finding your ideal customer. By the way, if you’re looking for a complete step-by-step hand-holding guide to Facebook ads from start to sale, check out Oberlo 101. If you’re still scared about Facebook ads, no problem. You can advertise all over the internet. Facebook ads are just the most popular advertising method because they’re very easy to scale once you get it right. If you don’t have the budget for Facebook ads consider hiring Instagram influencers, or on other social media sites such as Snapchat or TikTok. You can also build a social media following for free and then advertise to that following. If you can’t find traffic with money, you’ll need to pay for it with time, but that is completely within your skillset. If you need a little inspiration, check out our interview with Mandie and Aubrey, they built a six-figure business without spending a single cent on ads.
Okay, and with that, we’ve covered the biggest doubts, fears, and concerns of those looking to start dropshipping. What did I leave off this list? What do you disagree with me on? We owe it to ourselves to have a really good robust conversation about this. So leave your thoughts below, and I will jump in with my comments.
Until the next time, learn often, market better, and sell more.