Why You Should Refrain From Drop Shipping | Pros and Cons To A Dropshipping Business| How Drop Shipping Works
for those of you that are just getting into the e-commerce game, you started googling some stuff, you started looking around, you may have noticed a lot of these people starting popping up all over your Facebook feeds your Google feeds about how they make hundreds of thousands of dollars with their drop shipping services or their drop shipping strategy or secret. you know sure you guys have heard of it I’m sure you guys are seeing it around maybe an ad or something popped up on my channel about it.
So I want to let you guys all know what exactly that is all about, so you know exactly what you’re getting yourself into. Because last thing you really want to do is spend thousands of dollars on some of these program and then be like what the hell I got for it. I just want to make sure you guys know exactly what this is. Now you may be wondering all right you keep saying drop shipping I’ve heard about it what the hell is this thing. Drop shipping really is ultimately a way to resell products that are either directly from the manufacturer or provided by a wholesaler or some type of trade that brings products into the US. You’re a drop shipping business if you’re not holding any inventory and you’re just selecting among thousands and thousands of products that you could resell on your own website. Now Shopify makes it super easy to get started on a drop shipping business and there’s a lot of different apps and plugins to manage your orders. There’s a lot of manufacturers that are also setting themselves up so that you can easily import the products that they’re providing and making overseas. You’re you’re able to sell out a margin here in the US. It’s an extremely lucrative business model because you’re not holding any inventory and you’re reselling products that people are probably looking for. For example, you could drop ship bags you could drop ship clothing you could drop ship dresses you could drop ship electronics you could drop ship jewelry. It sounds like a really lucrative business model because you’re pretty much a retailer of all kinds of products. Sounds like a really good deal and I’m sure a lot of these videos that people are sharing about you buying into their system saying invest in my system today and I’ll show you how to make thousands of dollars online. It sounds very lucrative and it could be very lucrative, but you got to really take it with a grain of salt.
The way for your store to really be profitable in a drop shipping business model is that you find a niche product that is in demand and that not a lot of people are selling. Pretty much what you’re creating is you’re creating your own market and you’re testing your own ads against the different demographics available on Facebook on Google. Like if somebody’s interested in a backpack for instance. let’s say that my company started drop shipping bags for other for other sellers pretty much I’d provide you with imagery I provided with some content that you can use to advertise and start advertising on behalf of the manufacturer. then you’re selling the product to a consumer what ends up happening though is that say for instance the manufacturer charges you $12 for a bag and then you can go ahead and sell it for 50 right that’s a crazy good niche that you can get yourself into, and you could be making some money drop shipping because now you have that spread that you can advertise on right. But then what happens is as soon as everybody else starts learning about this bag and everybody else starts saying oh shit I can buy this bag from the manufacturer for 12 bucks this guy selling it for 50 so let me sell it for 25. What happens is your original business model of buying something for 12 retailing it for 50 now you have to bring it down to 25, and then a lot of people don’t really consider how much money they’re spending on ads on their overhead things to keep the lights on. So before you know it your drop shipping business maybe is making a couple hundred thousand but in reality is making very very very small margins. If you messed up on an order or something happens you’re done you’re out of business. And that’s the reason why I just wanted to put that out there real quickly for you guys to know exactly what drop shipping entails. because there’s a lot of people out there selling you the information of how they’ve made hundreds of thousands of dollars online drop shipping but to be completely honest with you guys a lot of those people that are selling those systems are now making the majority of their money on selling you the system. All right so you really got it, you got to figure out where exactly you want to go about and what exactly you want to do and that’s the whole reason why I continue preaching to really know what direction you’re going. What ends up happening is after you join these different programs that somebody’s telling you. You end up like you might have success with a few products and then everybody else will start competing against you. So you’ll have to drop your margins and you have to look for another product. I could replace it to make more money and then it’s always a cat and mouse type of game because you’re not controlling the market. I mean it’s very easy for people to get into the same industry you’re in because they’re simply doing the same thing you’re doing. That’s where it becomes very difficult to scale a business. the reason why I just want to give you the pros is that you can make a lot of money very quickly, the cons is your margins can be very tight and you could potentially go out of business very fast. I’ve met so many people personally that I’ve personally known who were literally showing me they’re freaking their statements. Look this month I made 100k the next month I made 100k and then I’m like all right cool, how long have you been doing it and they’re like four months. Next month they met, they may have made 10,000 and that’s still cool because 10,000 is a good spread. but then the worst thing that can happen normally always happens is, if their store is so hot they’re getting so many sales and people are loving what they’re selling and they’re not having to carry any inventory. what could potentially happen is the manufacturer all of a sudden runs out of inventory and then you have all of these orders you have a hundred thousand dollars’ worth of orders to fulfill and you’re not able to shift the product because the manufacturers stopped producing that item or either hey they want to start increasing their prices. and then it is pretty much they are stuck with, so with that is the biggest thing that could happen is that a manufacturer can’t fulfill the item so then your store gets reported to PayPal, it gets reported to Shopify. You get on the BBC then you’re pretty much forced to close shop. Alright so all the money that you would have done gets refunded and then any of the margins that you would have made can potentially go down the drain. there really is no get rich scheme guys that’s what I’m pretty much trying to sum it all up today and tell you guys is that if you’re going to get into the drop shipping business just know that it takes a lot of adjustments. It takes finding the right suppliers. It takes finding the right product. It takes money to advertise. Money to spend that you’re not going to get back if it fails. You need to make sure that you got to get out of cushion of cash flow around for you to test an idea, sell it, reinvest in it and pretty much continue growing it. for the most part a lot of these guys that are making good money just drop shipping products meaning that they’re not designing or creating anything on their own, they don’t control their inventory, they don’t control the process, what ends up happening is they realize there’s a cap to each website, right there’s a cap to each store that they own. So then they open up additional shops and they continue replicating the process. So that’s always something you can do and you just got to treat that as a full-time job. If you’re going to be in a drop shipping business model then just know what the drop shipping business world entails. Do some research on it and also realize that a lot of this information these people and these gurus are selling you are readily available online. Don’t necessarily buy their $500 program promising you to make six figures in five months, if you invest with them. Because in reality it’s out there for your view you just need to know what to look up. I just wanted to inform everybody out there who are starting to get into the game of it, I don’t want you to fall for any of that if you’re serious about starting a clothing line or starting a consumer peril brand, it takes a lot of work guys either way that you’re going to do it it’s going to take work. But just know what your ultimate outcome is and just know what exactly you want. There’s a lot of content on the internet there’s a lot of resources out there that are doing it for a hidden agenda and it’s normally to take your money and make you feel good about what you just spent with them.