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If you're a younger entrepreneur like me, you might be drawn to start a dropshipping business. With how easy it is, and how many videos there are online about it, it seems like a strong candidate for your first entrepreneurial venture. This post will be about why I would strongly recommend against getting into it.
I'm going to write this as if it were a letter to my younger self.
Quick background:
To write this post, I totaled up all of the profit that I made from sales across all of my projects. With all of the work I put in, and all the recognition my brands got, I should have gotten a pretty decent yield, right?
Wrong.
I didn't even make one thousand dollars.
Why? Because dropshipping cheap products you don't own is a fundamentally flawed money-making vehicle. I'll go into each of the issues I ran into with it.
1. It breaks THREE of the CENTS commandments
C (control) - To get website visitors, you need to either post ads or make your own posts in the hope of going viral. If you're young and broke like me, the second option is the only one available. However, the biggest issue with it is that you have zero control over the videos you post once they're out of your hands. My most viral video was taken down by TikTok for zero reason. I couldn't even post during the three-day period that it took to appeal the strike! I got it back up, but by that point, it was too late. The video was dead. Imagine all the possible sales that I lost! Additionally, if you're sourcing your products from Aliexpress, etc. you only get to hope that everything goes through without issues. The customer wants his product in your guaranteed 14-day shipping period? Sucks to suck! Your provider just decided to take a week-long vacation, and according to the tracking, the package is somewhere in Astana, Kazakhstan.
E (entry) - Dropshipping is easy right? Wrong. I was misled to this conclusion, too, by the gurus. The reality is that the competition is simply so fierce that to get any traction, you need to be in it for the long game. Expect at least a month of daily 5x posts to pass by before you make your first sale. This is a major downfall of any "easy" business. Not only does your website need to be one of the best, but out of TikTok's thousands of ads posted daily, yours needs to be at the top too. Good luck.
N (need) - The supply of dropshippers to the demand for their products is vastly asymmetrical. Either you can hop on the train of a "proven" product, and clean up the crumbs of those who came before you, or you can try and find a new winning product. Chances are, though, that this new product won't perform--and you won't figure that out until a month of grueling ad production has passed. You just have to hope that the algorithm picks it up and that you're in the right place at the right time.
Hope, hope, hope! Are you starting to see the pattern?
2. The Margins
As with any dropshipped product, margins are going to be slim. You aren't ordering these items in bulk, and your supplier needs to make money too. Be prepared to jump for joy when you see your gross revenue in Shopify, only to get on your knees and cry after you subtract product, subscription, and advertising costs. The Millionaire Fastlane 's Law of Effection states that if you effect millions you'll make millions. This is true--unless you're a dropshipper.
3. The Customers
The people who will buy your product aren't exactly the cream of the crop kind of customers. They scrolled on TikTok for hours, saw your video pop up, and decided it would be a wise choice to purchase from a company they have never heard of before off of a poorly built Shopify website. Unfortunately for us, this means that they are also the type of people to constantly refund, scam, and otherwise screw you over. Recently I've started working with much higher-paying clients (upwards of several hundred dollars per transaction) and I've personally found that they are 10x easier to work with. My recommendation would be to work with a handful of businesses and high-ticket clients over hundreds/thousands of small-paying customers.
Conclusion
I hope that I've been able to convince my fellow young, aspiring entrepreneurs to avoid making the same mistake as I did. Understand that dropshipping is not impossible. If you genuinely believe that you have a market-breaking edge over your competitors, I fully support your decision to enter the industry. Even though my ventures didn't make me much money, they taught me almost everything I currently know about business, instilled in me a sense of entrepreneurial confidence, and gave me skills that I'm currently using in the next step of my entrepreneurial journey.
That being said, I strongly recommend steering clear of dropshipping and investing your valuable time in something else.
I'm going to write this as if it were a letter to my younger self.
Quick background:
- I've started four dropshipping businesses and worked with one other
- I went viral on TikTok many times, with the most successful video gaining 2.5 million views
- I've studied and taken notes on countless dropshipping books, courses, and YouTube videos
To write this post, I totaled up all of the profit that I made from sales across all of my projects. With all of the work I put in, and all the recognition my brands got, I should have gotten a pretty decent yield, right?
Wrong.
I didn't even make one thousand dollars.
Why? Because dropshipping cheap products you don't own is a fundamentally flawed money-making vehicle. I'll go into each of the issues I ran into with it.
1. It breaks THREE of the CENTS commandments
C (control) - To get website visitors, you need to either post ads or make your own posts in the hope of going viral. If you're young and broke like me, the second option is the only one available. However, the biggest issue with it is that you have zero control over the videos you post once they're out of your hands. My most viral video was taken down by TikTok for zero reason. I couldn't even post during the three-day period that it took to appeal the strike! I got it back up, but by that point, it was too late. The video was dead. Imagine all the possible sales that I lost! Additionally, if you're sourcing your products from Aliexpress, etc. you only get to hope that everything goes through without issues. The customer wants his product in your guaranteed 14-day shipping period? Sucks to suck! Your provider just decided to take a week-long vacation, and according to the tracking, the package is somewhere in Astana, Kazakhstan.
E (entry) - Dropshipping is easy right? Wrong. I was misled to this conclusion, too, by the gurus. The reality is that the competition is simply so fierce that to get any traction, you need to be in it for the long game. Expect at least a month of daily 5x posts to pass by before you make your first sale. This is a major downfall of any "easy" business. Not only does your website need to be one of the best, but out of TikTok's thousands of ads posted daily, yours needs to be at the top too. Good luck.
N (need) - The supply of dropshippers to the demand for their products is vastly asymmetrical. Either you can hop on the train of a "proven" product, and clean up the crumbs of those who came before you, or you can try and find a new winning product. Chances are, though, that this new product won't perform--and you won't figure that out until a month of grueling ad production has passed. You just have to hope that the algorithm picks it up and that you're in the right place at the right time.
Hope, hope, hope! Are you starting to see the pattern?
2. The Margins
As with any dropshipped product, margins are going to be slim. You aren't ordering these items in bulk, and your supplier needs to make money too. Be prepared to jump for joy when you see your gross revenue in Shopify, only to get on your knees and cry after you subtract product, subscription, and advertising costs. The Millionaire Fastlane 's Law of Effection states that if you effect millions you'll make millions. This is true--unless you're a dropshipper.
3. The Customers
The people who will buy your product aren't exactly the cream of the crop kind of customers. They scrolled on TikTok for hours, saw your video pop up, and decided it would be a wise choice to purchase from a company they have never heard of before off of a poorly built Shopify website. Unfortunately for us, this means that they are also the type of people to constantly refund, scam, and otherwise screw you over. Recently I've started working with much higher-paying clients (upwards of several hundred dollars per transaction) and I've personally found that they are 10x easier to work with. My recommendation would be to work with a handful of businesses and high-ticket clients over hundreds/thousands of small-paying customers.
Conclusion
I hope that I've been able to convince my fellow young, aspiring entrepreneurs to avoid making the same mistake as I did. Understand that dropshipping is not impossible. If you genuinely believe that you have a market-breaking edge over your competitors, I fully support your decision to enter the industry. Even though my ventures didn't make me much money, they taught me almost everything I currently know about business, instilled in me a sense of entrepreneurial confidence, and gave me skills that I'm currently using in the next step of my entrepreneurial journey.
That being said, I strongly recommend steering clear of dropshipping and investing your valuable time in something else.
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