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Dropshipping In a Post COVID World

Dropshipping In a Post COVID World

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It’s been a wild ride in the world of eCommerce for these past 15 months with the world getting flipped upside down due to COVID… but the future's looking bright.

With the hopes of everything being back to “normal” within the coming months, Anton shares how dropshipping will be different in a “post COVID” world.

The podcast is also available on all major podcast players including, Stitcher and Spotify.

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Transcript

What's up everybody? Anton Kraly here. And it has been well over a year since COVID first started and disrupted everything. When it comes to e-commerce in general and definitely with our primary businesses which are drop shipping. Now it seems like COVID is finally on its last legs at least in many countries seems to be on its way out, fingers crossed, we keep moving that way. But that brings up the question and the concern, what does drop shipping look like in a post COVID world? How are things going to change? What are the predictions? What can we do to set ourselves up for success and how can we know what to expect?

Well, that's what I'm going to cover in today's podcast. Also, I want to mention if you for some reason weren't around last year when we were talking about how things changed, I actually did a four part series that covered everything from how we increased the amount of products we were selling as COVID picked up, how we increased conversions and offered all different benefits and creative ways to get sales, how we increased our return on ad spend and how we planned for the future.

So if you missed any of that, I will link it up in the podcast description. Even though, again, the good news is that COVID is in my opinion on the way out, there still is a lot you can gain if you did not already see or listen to that four-part series. So definitely, check it out. Now with that being said, right now where are we in the world, specifically in the States, because this is where I primarily do business? While the numbers that literally just came out in terms of inflation show that it is the highest it has been since 2008. For anybody that remembers 2008, it was not a fun time. Things got really expensive really fast, and the economy was basically crashing. Now, is this permanent? Is it temporary? I don't really know, but this is something I just want to share with you because at this point where we are today, it does look like we are going to see increases in prices, just in general consumer goods.

As we continue to move in through the rest of this year, into next year, I personally don't think we're going to see some type of hyperinflation, but I do think it's realistic to expect that prices of consumer goods are going to go up, which means if you're drop shipping, which you most likely are if you're listening to this, that you're going to have products that sell for higher prices. Now the good news is, if you follow what I teach at Drop Ship Lifestyle and you sell for suppliers who enforce minimum advertised price policies, if prices do go up because the cost of goods to manufacture the products go up that doesn't mean that you suddenly have to raise your prices and nobody else does. It means in general prices would see an increase throughout pretty much everything. Again, I don't want this to happen, but based on data, I do think it will.

It might be short term, but the problem is whenever prices go up anywhere, you almost never see them rolled back. Again, good news is, stick with what we do, work with MAP suppliers, minimum advertised price, and keep your margin safe so you don't have to be selling for more than your competitors to make money. If the manufacturers have to charge more then your suppliers have to raise wholesale costs. Again, that also means that MAP will go up, minimum advertised price. Now, next thing I wanted to mention is what's going on now with the labor force. This came out, I think last week at the time I'm recording this, where we saw the amount of employment increase, basically people that got back into the workforce increased by 266,000 people in April which was well, well, well under the estimates, and basically we have almost 10 million people right now in the States at least, that are eligible to work that aren't working.

Now, this seems really bad and it definitely is. But the thing that I think is important to note is that jobs are available. So it's not like companies aren't in business. It's not like companies aren't growing. In fact, many companies are really, really struggling to bring people on to get employees. I think this is important to note because if you live in the States and you do business here, I'm sure you've heard about this because it's literally everywhere, everybody's talking about this and you might be thinking like, "Wow, why is nobody working? Are companies not growing? Are there not jobs out there? How are people going to be able to afford my stuff that I sell on my store if they don't have work?" Now, the thing is, is there are jobs available and there's actually a surplus of jobs available. This is where things get really tricky.

And the companies that have, I would say jobs that are either more skilled, whether that be something that requires more of a degree or something that is just more technical that people are good at, those jobs are there. They are underfilled right now. And those companies are desperately trying to hire. The jobs, this is what I think, again, just reading news and looking into this, most of the jobs that aren't being filled are the ones that have lower pay. So minimum wage or close to. I saw this article it was crazy, but there's actually a McDonald's in Tampa that is offering people $50 just to show up for an interview. You don't have to get a job, just show up and they give you 50 bucks. But again, this is one of those jobs that is I'm don't know if it's minimum wage, I'm sure they bumped it up from what they normally offer. But it's still very, very, very low.

So just keep that in mind that a lot of the jobs that aren't being filled are ones where the pay isn't that great. And I don't mean to sound insensitive here at all. But what you have to realize is that with the type of stores that we build and hopefully you build as well if you're getting into drop shipping, appeal to the upper middle class. Households that are earning a combined income of $150,000 plus, and those people are either working or there's jobs for them to be had. So we're not seeing our customers. And again, this is the future. This is as we move out of COVID, we're not seeing our customers have a decrease in their buying power because they are either working already, they were able to work remote, or there's jobs available for them that they can get into right away. Again, there's millions and millions of jobs open right now.

Now, when it comes to COVID and why I'm saying as we're coming out of this, we really are at the lows compared to about a year ago. We're trending down. It may be seasonal. And maybe because of the vaccine, I got it because I want to go to Portugal for our retreat. But this is good news. So you would think everything was booming. You would think people would want to get back to work. But again, in my opinion, it's a lot of those lower paying jobs that people just aren't ready to go back to for at least through September. Now, when we look at the gas situation that I was talking about, I noticed this on the way in to our studio here today in North Carolina, that there were actually two out of four gas stations that I drove past while taking my son to school then coming to the office that were closed because they don't have gas.

That's scary. The two that were open had massive lines. Now, the reason I'm sharing this is because this will affect shipping rates and it will affect shipping rates sooner rather than later, especially if this maintains for even another week or so, we're going to see shipments cost more money because gas costs more money and because shipping takes gas to move. Right? So hopefully this is resolved sooner rather than later. This isn't about inflation. This is about the Colonial Pipeline hack. Again, I did want to mention it because it's relevant and it's happening now. So just plan on this, you might see an increase in your shipping costs in the near future. This is one though that I do think is temporary because hopefully, the pipeline company can get their act together, fix their software and not have this happen again. If it happens again, it's going to be even more of an issue, but something to be paying attention to over the coming weeks and just keep an eye on your shipping prices and see how much they're trending up.

Now let's get onto the good news. I've been talking about some of the bad and some of the ways to deal with it. The good news is that e-commerce in general is a totally different beast than it was even a year ago. And I'll just pull this up here. In 2019, e-commerce sales in the US were $598 billion. In 2020 e-commerce sales in the US rose 44% and we're $861 billion. A 44% increase and an already massive number. And the reason I want to share this, again, on the positive side is because all of these new people that came online to buy and all of these new people that started buying more online, because maybe their stores were closed that they normally shop at, or they just didn't feel safe going there. Well, now all of these people are used to buying online. And if you're treating customers right like you should be, then your customers are having good experiences and other online store's customers are having good experiences.

So even now when tons of stuff is open again, you can, at least in the places I live in I visited, you pretty much go wherever you want. People are now more comfortable going online. Even my wife who before the whole COVID thing started always liked shopping at the mall so she could see things, and try them on and check it out. We went back to the mall maybe a month ago. And after she's been shopping online for a year and she's like, "I'm never coming back here." Not because it wasn't safe from COVID, but because it's just such a better experience buying online. And now that there are so many more people, enough to jump e-commerce up 44% in a year, a lot of them are going to stick and keep buying online. So the future of e-commerce growth, the future of e-commerce as a whole definitely looks bright.

And again, there's just more money there in the e-commerce game than ever before for you to capture if you build a niche specific store, if you target the right type of people, you work with the right type of suppliers, you sell to the upper middle-class like we do and you take care of your customers. Just a massive increase. Also, I wanted to share this because I mentioned inflation. It's definitely real. Again, I don't think hyper inflation is happening. But I wanted to pull this up that shares the 12 month percent change in real average hourly and weekly earnings. And if you're watching this as a video, you could see that this year it's the highest it's ever been. So again, people are making more money. The people that are going to work are now earning more money. So if inflation sticks and it maintains at a high rate, and if costs of goods continues to go up and, again, you're selling it more at MAP and maybe a standup desk that you used to sell for $750 now has to sell for $850.

Yeah, that's bad. But at the same time, people are also earning more money in their jobs and they... what's the final number they gave here as a percentage, a 4.1% increase in the real average weekly earnings over the year. So it is about keeping up with inflation. So again, things cost more, but the people that are working, especially in the upper middle class are earning more per hour and per week. So things kind of level out. Now, the next thing that I think is really important to call attention to and what I see happening in the future, like how drop shipping looks coming out of COVID. This isn't directly related to an impact of COVID, but it's something that ties into this, it's happening at the same time. And as I'm sure you're aware, if you run a drop shipping store, advertising on Facebook changed and changed a lot, thanks to Apple and iOS tracking.

This started to release, what was it maybe a few weeks ago now at the time I'm recording this and we are still seeing great results from Facebook, but people are definitely scared. Conversions are not tracking as well as they used to. Audiences for remarketing are not filling up as fast as they normally did. And this is because a ton of people, I think it was 96% of iPhone users that updated to the newest operating system for iOS opted out of ad tracking. So it's definitely changing the way Facebook ads work. Again, they still work great. I still recommend them for remarketing like I teach in the Dropship Blueprint, but this is changing for, I would say the way a lot of direct response marketers run ads on Facebook, where it was traditionally put an ad for a product in front of them that they might like, and then make the offer and then they can go buy it.

Now, it's not as easy to do that because Facebook can't get as much data on people. Now, here's where things get tricky. When this first came out this news, everybody was praising Apple, "Oh, thank you, Apple. Now Facebook can track us. Everybody for some reason hates Facebook now. They're evil." So blah, blah, blah, blah, blah. A bunch of people so happy about that. Well, Facebook just hired one of the people that had a huge role in building Facebook and in Facebook's growth, especially on their ad platform. Antonio Garcia Martinez, he wrote a book called Chaos Monkeys. I actually haven't read that book. So I'm definitely going to pick it up. I'm interested to hear the behind the scenes story over there on Facebook. But the interesting thing is that he is now going to be a big part of Apple ads. And for those of you that don't know Apple ads isn't a new thing.

They allow advertising in their app store. They have different places you can advertise, but it's not something that is, right now at least, good for e-commerce store owners. It's not something people use for direct response type ads. But what I think is going to happen in the very near future, especially because there's a bunch of job boards now where Apple is hiring a ton of people to join their ads team. I think basically they're going to dominate the ads market moving forward. Outside of Google, I think they basically have all the data on everybody that uses iOS. They know more about you than Facebook does. And I think they're going to have a really built out ad platform that allows you to advertise to Apple users, which is a lot of shoppers. So something to keep an eye on. Again, it's not available yet. At least not in a form that we would use it. But in my opinion, it is coming and it is coming soon.

Now, kind of a lot that we went through in this episode. Right? The main thing that I think you should take away from this is that to be successful in business, whether it's drop shipping or literally any business, you need to pay attention to what is happening within your niche, and within the economy and within your buyer's demographic. You need to be on top of things so that you can pivot. I have been building e-commerce stores since 2007. And what I do today is not what I did then. What I did in 2012 is not what I do today. What I did in 2010 is not what I did in 2012. The point is things change we need to adapt and not only try to adapt where we're grasping for straws and just trying to hold on. No, we need to look at what is new, what's changing and how do we capitalize on that.

Not to maintain, but to break through to a whole new level. So one thing I am monitoring closely is Apple ads to see what happens in the next three, six, nine months with that. I think there's going to be huge opportunities there, something that is going to change as we come out of COVID. And again, overall, if you just read the news you would think things don't look that great. But the main things that I think are important to note is that while inflation is real, hope it's limited, hope it doesn't continue. And prices may go up for the products we sell. Again, it would be MAP.

So everybody has to sell at the new prices. Our customers are making more money because we sell it to the upper middle-class. So if you want to know more about what it is I do, how we build highly profitable semi-automated stores, be sure to go check out dropshipwebinar.com. I'm going to link that up in this podcast description. And as always, if you have any questions, feel free to go to ecommercelifestyle.com, click on episodes. You can ask a question there. And as always, if you got value from this episode, I would really appreciate it if you can give it a like, or leave a review over on Apple Podcasts. So thank you everybody. I appreciate you. And I'll talk to you next Monday for the next episode of the eCommerce Lifestyle Podcast. See you, everybody.

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