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Is Dropshipping Dead?

goodguude

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Hello fellow fastlaners,

currently looking to get into eCommerce and already found a niche that I think has potential.

However, I now have to decide on the business model: dropshipping versus storing and shipping the products myself.

I read a few guides about dropshipping. And they all say how great dropshipping is for getting started with eCommerce. But, what most guides only mention on the side: typical shipping time is 20-30 days. Wow.

I mean, when dropshipping, I would basically sell generic, unbranded products, which people have to wait several weeks for.
At the same time, those same people can go on amazon, buy a similar product there and get it in less than three days.

How is this supposed to work?

Other pain points that really devalue your (customer) service / the perceived value of your products I have in mind are:
- the quality of the packaging your supplier delivers (I guess this can be really horrible)
- the chinese address of the supplier being shown on the package (people most of the time probably think chinese products = low quality products)
- refunds


I would love to get some opinions from you, guys and girls. Anybody here still operating a dropshipping business?

Thank you in advance.
 
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Scot

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Look at this from the point of view of your customers. In 2017, would you want to wait 20-30 on shipping for anything? We live in an instant gratification culture where I can get 90% of the things I want online through Amazon Prime.

Also, more importantly, the items you'd be selling, would you wait 20-30 days for that?

You mentioned it's just generic private label stuff, so you're probably going to say no.

In my opinion, drop shipping in 2017 really only makes sense for highly customized items or items that are difficult/bulky to manufacture. If I'm ordering a custome embroidered pillow, yeah, Ivan see 20-30 days. If I'm ordering a trailer smoker for my bbq's, I also can see 20-30 days. But if I'm ordering a Chinese made t-shirt, no way.
 

alan3wilson

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maybe btw I see these shopify gurus everywhere selling their coursers lol

don't know but I see that if you got a good supplier they can ship to people in few days or better to partner with amazon and a supplier
 
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ZeroTo100

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It really depends. I've seen dropshipping stores and just in time delivery for sale in the 1m+ range. Some of them even sell their own products and also dropship others. Personally, I would never dropship from china like many site owners do - that's just crazy.

I've also seen companies making the inc500 that dropship huge items where they work with the brands individually through private deals.

I don't believe it's totally dead and I do think it's a good place to start. You can start small with like 25 products and learn a little bit with it.

Read @biophase posts...like all of them!
 

Scot

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maybe btw I see these shopify gurus everywhere selling their coursers lol

Do you think they're making more money off their courses or their shops?

Do you think they'd share their "secrets" and invite competition if the business was still viable? Or would they let everyone into their secrets once they knew the market was dying?
 

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You could always find something, setup a drop ship page, and see what the click-through-to-checkout is like, before they see shipping times.

If you have a lot of clicks into checkout but not a lot of complete sales, you may have found something worth actually holding inventory for.

There are tools like Oberlo (which I've never used) that supposedly make setting up the drop shipping part easy. Find a niche, track your metrics, and when you find a winner consider buying it in bulk and cutting out the drop shipping part.

Just a thought. I've never done drop shipping before though.
 

goodguude

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You could always find something, setup a drop ship page, and see what the click-through-to-checkout is like, before they see shipping times.

If you have a lot of clicks into checkout but not a lot of complete sales, you may have found something worth actually holding inventory for.

There are tools like Oberlo (which I've never used) that supposedly make setting up the drop shipping part easy. Find a niche, track your metrics, and when you find a winner consider buying it in bulk and cutting out the drop shipping part.

Just a thought. I've never done drop shipping before though.

That was what I initially thought about. Setting up a dropship-page, sending traffic to it, analyze the data and then decide if I should go further with it or stop it.
Seems to make more sense than dropping 5k on inventory and storage room without validating the business idea first, potentially burning all that cash.

Thanks for all your posts, guys. Now it's up for me to see if it works out.
 
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SquatchMan

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You can dropship with wholesalers/manufacturers in the US (or whatever country you're in). All the ones I use offer it, but their MOQ is also usually under $500 so I don't see the point.
 

SYK

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Have seen people make tons of money with the Chinese drop shipping model. Like $200-300k revenue a month.

Not a great business model though.

1. Super long deliver times (and plenty of items not getting there at all)= shitty customers.
2. No oversight of product quality.
3. High charge back and refund rate due to 1 & 2.
4. Massive issues with payment processors because of 3.
5. FB ad accounts getting banned because of negative feedback.

From what I've seen, it's definitely not dead. Just be prepared for what you're getting yourself into. It comes without much control.
 

Walter Hay

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Have seen people make tons of money with the Chinese drop shipping model. Like
That was what I initially thought about. Setting up a dropship-page, sending traffic to it, analyze the data and then decide if I should go further with it or stop it.
Seems to make more sense then dropping 5k on inventory and storage room without validating the business idea first, potentially burning all that cash.

Thanks for all your posts, guys. Now it's up for me to see if it works out.

$200-300k revenue a month.

Not a great business model though.

1. Super long deliver times (and plenty of items not getting there at all)= shitty customers.
2. No oversight of product quality.
3. High charge back and refund rate due to 1 & 2.
4. Massive issues with payment processors because of 3.
5. FB ad accounts getting banned because of negative feedback.

From what I've seen, it's definitely not dead. Just be prepared for what you're getting yourself into. It comes without much control.
I have seen plenty of people claim to be making those huge sums by following the Chinese dropshipping model, but........
  • Proof always takes the form of screenshots that are too easy to photoshop.
  • The ones making the claims are almost invariably selling courses on how to make a fortune by following their version of the Chinese dropshipping model.
  • The ones that I might believe, are the ones who are illegally selling fakes, knockoffs, and supposedly genuine big brand products. They can make a lot of money until the brand owners close down their websites and sue them into bankruptcy.
  • They set up their businesses in Russia or some other jurisdiction where Intellectual Property rights are not protected, but their websites still get shut down so they are continually having to start up again.
Walter
 
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Walter Hay

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That was what I initially thought about. Setting up a dropship-page, sending traffic to it, analyze the data and then decide if I should go further with it or stop it.
Seems to make more sense then dropping 5k on inventory and storage room without validating the business idea first, potentially burning all that cash.

Thanks for all your posts, guys. Now it's up for me to see if it works out.
Dropshipping could sometimes be a good way to test the market, but you would have to be sure you could then buy the identical product from the real manufacturer rather than from the retailers on Aliexpress, which is the site of choice for dropshipping from China. Otherwise you have to start the sourcing process over again, because buying from suppliers on Aliexpress is a risky business model.

I would prefer to first find a good, genuine manufacturer, then buy a small quantity of your chosen product and test market those. Search for my AMA for some help on the sourcing process.

The way you intend to market physical products is up to you, but there are thousands of people, including quite a few Fastlane members that are selling on Amazon USA although they are not US residents. I have recommended a low cost Amazon course to some of them who are now doing that, but I can't post the link here.

The US market is not only huge, but US citizens are far more likely to buy online than those in most EU countries.

You certainly don't need anywhere near $5K to get started.

Walter
 

Mac

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I'm going to play Devil's advocate here, because there's a lot of misconceptions about dropshipping.

I've met people that are doing $40k-$50K+ profit per month doing dropshipping from AliExpress... with charge backs and complaint rates below 1%. (I saw it with my own eyes - been in the same room with them looking at their screen).

(And they just started their business).

A lot of people actually don't complain about the shipping times.

I feel like a lot of people here are coming from the mindset that if you have a website you're competing with Amazon.

Sure, it's true on a macro level...

...but on a micro level you're not competing with Amazon because you've already won your prospects attention.

If they landed on your page, they have shown interest in the product.

They're likely not to price shop because they come from a social network (like Facebook, Pinterest, etc)...

It's more of an impulse buy.

You see it all the time on Amazon, too. People get drunk on the weekends and decide to order random crap off Amazon.

With that being said, yes there are people that infringe on IP. Yes there are people that neglect their customer service.

But if you look at it like a business and not a Shopify "store"... then you have the potential to turn it into something worthwhile.

And like JAJT said, you can OEM the product and import it after you have tested the market.
 

biophase

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I'm going to play Devil's advocate here, because there's a lot of misconceptions about dropshipping.

I've met people that are doing $40k-$50K+ profit per month doing dropshipping from AliExpress... with charge backs and complaint rates below 1%. (I saw it with my own eyes - been in the same room with them looking at their screen).

They're likely not to price shop because they come from a social network (like Facebook, Pinterest, etc)...

Most of these people are running a ton of ads. They are usually running a decent, converting ad, with the product being free + shipping, or a overpriced product with a 50% off coupon in the ads.

I'm guessing they are profitable by the number of times I've seen their ads and by the number of views. Many of the products are pump and dump. But I've seen some niche sites do very well. They are my competitors so I look at their sites, and they are selling very cheap bottom of the barrel products.

For example, one product they list at $80 with a 60% off FB ad coupon. The product cost $8. I sell for $30. But I'm sure they get good conversions on their overprice + huge sale model.
 
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goodguude

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Thanks a lot for your answers. Didn't expect to attract such a lot of information. Nice little discussion here.

I will read through Walter's AMA and then decide which route is the best for me to go.
 
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The-J

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or all these people make money from shopify coursers ?

That one.

What they do is sell 2 or 3 year old information, stuff that (at best) worked for them for a short time but doesn't quite work for them anymore.

At worst, they straight up lie.
 

Esoteric Wealth

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You can dropship with wholesalers/manufacturers in the US (or whatever country you're in). All the ones I use offer it, but their MOQ is also usually under $500 so I don't see the point.
Why is a low MOQ a bad thing? Sorry, I just really don't know
 

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I have seen plenty of people claim to be making those huge sums by following the Chinese dropshipping model, but........
  • Proof always takes the form of screenshots that are too easy to photoshop.
  • The ones making the claims are almost invariably selling courses on how to make a fortune by following their version of the Chinese dropshipping model.
  • The ones that I might believe, are the ones who are illegally selling fakes, knockoffs, and supposedly genuine big brand products. They can make a lot of money until the brand owners close down their websites and sue them into bankruptcy.
  • They set up their businesses in Russia or some other jurisdiction where Intellectual Property rights are not protected, but their websites still get shut down so they are continually having to start up again.
Walter
Trust me, I'm as skeptical and disbelieving as anyone when it comes to the BS IM scene, having seen behind the curtain. But these are people I know first hand.
 

Walter Hay

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Trust me, I'm as skeptical and disbelieving as anyone when it comes to the BS IM scene, having seen behind the curtain. But these are people I know first hand.
Having seen it first hand, can you tell us a few things:
  1. What margin are they working on?
  2. Are they selling fakes, counterfeits, knockoffs, or big brand name items?
  3. What level of returns or chargebacks are they getting?
  4. How good is their feedback?
  5. Are they buying from suppliers on Aliexpress?
Walter
 
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mclaren

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Having seen it first hand, can you tell us a few things:
  1. What margin are they working on?
  2. Are they selling fakes, counterfeits, knockoffs, or big brand name items?
  3. What level of returns or chargebacks are the getting?
  4. How good is their feedback?
  5. Are they buying from suppliers on Aliexpress?
Walter
Buy Delasor - Website For Sale - Health and beauty Business
Buy The Muggle - Website For Sale - Gifts and collectibles Business

just two examples i found while quickly browsing the shopify exchange. as far as i know, the numbers come from shopify's database so you can't really BS those.

not sure why so many people despise dropshipping, especially if they've never done it nor ever had any interest in doing it. it's like affiliate marketing imo. ton of people bash it and say it's dead, while there are guys out there doing 7 figures/year and keeping quiet.

that being said, it's definitely NOT the best business model. but if done correctly, you can make some decent cash, learn extremely valuable skills (ads/products/etc), and without having all of your accounts banned. seriously, there are a ton of shitty dropshipping websites and they're so easy to spot. people spend 5 minutes on 'em, buy some traffic and expect the money to pour in... then they treat their customers like shit, not aware them of shipping times, etc. recipe for disaster.

anyway, the point i'm trying to make is to avoid asking questions like the one in your original post (talking to the OP here). theres money being made everywhere... i cant remember what thread it was on here that i read, but somebody made a great post saying how you should think for yourself and not follow what others are doing. if you let others think for you, you'll constantly be chasing new business models after seeing someone else's success thinking their endeavor is some guaranteed path to success.
 

Walter Hay

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Buy Delasor - Website For Sale - Health and beauty Business
Buy The Muggle - Website For Sale - Gifts and collectibles Business

just two examples i found while quickly browsing the shopify exchange. as far as i know, the numbers come from shopify's database so you can't really BS those.

not sure why so many people despise dropshipping, especially if they've never done it nor ever had any interest in doing it. it's like affiliate marketing imo. ton of people bash it and say it's dead, while there are guys out there doing 7 figures/year and keeping quiet.

that being said, it's definitely NOT the best business model. but if done correctly, you can make some decent cash, learn extremely valuable skills (ads/products/etc), and without having all of your accounts banned. seriously, there are a ton of shitty dropshipping websites and they're so easy to spot. people spend 5 minutes on 'em, buy some traffic and expect the money to pour in... then they treat their customers like shit, not aware them of shipping times, etc. recipe for disaster.

anyway, the point i'm trying to make is to avoid asking questions like the one in your original post (talking to the OP here). theres money being made everywhere... i cant remember what thread it was on here that i read, but somebody made a great post saying how you should think for yourself and not follow what others are doing. if you let others think for you, you'll constantly be chasing new business models after seeing someone else's success thinking their endeavor is some guaranteed path to success.
As an experienced and ethical businessman, I would not even think of buying such a business as the two websites for sale that you linked to.

Both illegally sell fakes, counterfeits, knockoffs, and big brand name items. No wonder they are selling. They want to get out before they get shut down and sued.

Check out the brands they are offering. They are all someone else's intellectual property. They are obviously following the business plan operated by the Russian who is making a killing selling a course on how to dropship from Aliexpress.

Walter
 

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As an experienced and ethical businessman, I would not even think of buying such a business as the two websites for sale that you linked to.

Both illegally sell fakes, counterfeits, knockoffs, and big brand name items. No wonder they are selling. They want to get out before they get shut down and sued.

Check out the brands they are offering. They are all someone else's intellectual property. They are obviously following the business plan operated by the Russian who is making a killing selling a course on how to dropship from Aliexpress.

Walter
i don't see any big brand items on there. the brand logos you see in the images are brands on aliexpress. selling branded items and counterfeits is obviously not sustainable at all, and people still do it, but it never lasts.

if dropshipping were truly dead, websites like lightinthebox (which is listed on the NYSE) and wish (gets over 100mm views a month) wouldn't exist. afaik, they source their products from aliexpress.

to be honest, i'm sure we see eye to eye on this for the most part. dropshipping from china wouldn't be the most sustainable business model in the long run. but if you're just getting started in ecommerce, it's a great way to learn the fundamentals and many of the skills you pickup from it can be applied to other ecommerce business models. just be smart about it.
 
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Walter Hay

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i don't see any big brand items on there. the brand logos you see in the images are brands on aliexpress. selling branded items and counterfeits is obviously not sustainable at all, and people still do it, but it never lasts.

if dropshipping were truly dead, websites like lightinthebox (which is listed on the NYSE) and wish (gets over 100mm views a month) wouldn't exist. afaik, they source their products from aliexpress.

to be honest, i'm sure we see eye to eye on this for the most part. dropshipping from china wouldn't be the most sustainable business model in the long run. but if you're just getting started in ecommerce, it's a great way to learn the fundamentals and many of the skills you pickup from it can be applied to other ecommerce business models. just be smart about it.
You have assumed that I agree that dropshipping is dead. It clearly is not. I know the system works very well for some people. The best dropshipping model IMO is to dropship from local suppliers within the country where you are selling. What does not work well for people who are ethical and don't want to run an illegal business is the dropship from Aliexpress model.

The brands are there on the home page of Delasor.com. If they don't sell those brands, why display them on their site? Is it just to mislead customers?

The entire website TheMuggelClub.com is devoted to the Harry Potter brand.

You need to check your facts. They are both trading illegally.

The two examples of successful dropshipping businesses that you give this time are like chalk and cheese. There is absolutely no comparison.
Lightinthebox sell good quality, including branded items, legitimately. If you can find any of their products on Aliexpress rather than just say "afaik, they source their products from aliexpress." you might be saying something worth paying attention to. This is an example of a successful dropshipping business.

Wish sell cheap Chinese goods, very likely sourced from suppliers on Aliexpress and they have developed a massively bad reputation. See here: https://www.sitejabber.com/reviews/www.wish.com With 2224 reviews so far, their rating is 2 stars, with 1404 of those rating only 1 star. Many of those wish they could rate less than 1 star! This is an example of a successful dropshipping business that is based on continually sucking in new gullible customers, not on getting repeat business.

Walter
 

biophase

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Ugh, those 2 sites are horrible.

The first site doesn't tell you it's profit margin. $400k in revenue is great, but they don't mention that advertising expenses. He's asking a low price because he's dumping because I think he's not profitable anymore.

Also wtf their banner lists biking companies and they sell a few beauty products. Site looks shady as shit.

You don't get to 100k Facebook likes in 9 months without pumping serious money into ads.

The second site says it did $21k profit last month and asking $20k. Hmmm. A site doing $20k/no should be asking $750k.

These are not sustainable which is why they are selling their so called "moneymakers".
 

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