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is dropshipping dead 2020

Is Dropshipping Dead in 2020?

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​“Is dropshipping dead?” was a popular question back when I first started dropshipping. ​And it’s still a popular question more than a decade later.   


In this episode of The eCommerce Lifestyle podcast, I’m going to go through all the common misconceptions about whether dropshipping is worth it these days. 


Listen in ​for the real answers and I'll show you exactly how alive and well dropshipping still is in 2020


Click ‘Play’ below to start watching. Make sure to subscribe to our YouTube Channel for weekly updates and insights!

If you liked today’s show, please subscribe on iTunes to The eCommerce Lifestyle Podcast! The podcast is also available on all major podcast players including, Stitcher and Spotify.

Is Dropshipping Dead? 

No. 

But before I go more in-depth on that, some background.

Dropshipping Is Still In Its Infancy

Dropshipping in the United States is nothing new.

But many countries are just now finally starting to learn about it. 

Some of my most successful students dropship outside of the United States. 

We have several students in Australia that are absolutely killing it right now. Same with the UK and Germany.

So in many ways, Dropshipping isn't dead - it's just being born!

But, Dropshipping Will Die at Some Point, Right?

This is a common misconception. Dropshipping is a mutually beneficial relationship

Benefits to Dropshippers

The dropshipper only has to worry about the sales and marketing side of eCommerce.

They can add on new products without adjusting their facilities 

Benefits to Manufacturers

The manufacturer just has to concern themselves with producing quality products and shipping them.

They can add on new quality vendors with little additional effort and increase the amount of sales they're able to get. 

All without having to worry about building and maintaining a site, advertising, or dealing with retail customers. 

Is Dropshipping Dead Because the Costs of Advertising are Higher Than They Used to Be?

So, people that ask this are usually referring to the fact that the average cost of pay-per-click ads is higher than it was 10 years ago.

But that doesn't mean that advertising costs are astronomical. 

The Average Cost-Per-Click for Google Ads is 1 to 2 American dollars.

If you're dropshipping cheap products from China, you will probably find it difficult to make much in the way of profits when dropshipping. 

But if you're selling more expensive items domestically, it's not difficult to make healthy margins. Especially when you're being selective with your targeting. 

Isn't Every Product Niche Full at This Point?

First of all, no.

There are plenty of niches out there that could stand to have a few more competitors.

Second of all, that's not the the point. 

You want to find a niche with competition.

You want to find a niche worth breaking into.

Don't forget you're building a real business.

It's about learning how to shine in your niche and get your products noticed by the right customers.

Doesn't Amazon (Or Google Ads, Or Stripe, Or Whoever) Dislike Dropshipping?

Amazon

First of all, you shouldn't be dropshipping on Amazon. But if you do, it is complicated.

You essentially just become a middleman. Amazon wants a cut and so does your supplier. 

Also, Amazon is unpredictable. One day they may decide to deactivate one or all of your listings and they're very difficult to reactivate. 

If you do, though, be sure to leave a generous amount of time for shipping.

Since you don't have any direct control over when your products are shipped, you want to avoid any late deliveries.

Amazon takes these very seriously and they will deactivate your account if you get too many.

Google Ads, Stripe, Etc.

It's a myth that Google Ads or Stripe have a problem with dropshipping. 

My students and I have been using both of these services for years now and have never had a problem. 

What they do have a problem with is Retail Arbitrage. 

Please do not do Retail Arbitrage. 

Retail Arbitrage is when you either:

  1. Buy a product from a retail store and list and sell it online for a higher price.
  2. Find an item you can mark up on an eCommerce site, like Ebay, Amazon, or Walmart, then list it on ANOTHER site for a higher price. When you get an order, you order the item from the original site and put your customer as the recipient.

The problem? 

Where to begin!

  1. It's not a real business
  2. It's not sustainable or scaleable
  3. It's weird and illegitimate. What are your customers going to think when they get a receipt from Amazon when they ordered from Walmart? 

Sketchy business practices like Retail Arbitrage will get you in hot water with businesses, like Google Ads or Stripe.

So, Once Again, Is Dropshipping Dead?

Nope. It's just getting started.

And if you play your cards right, you can make it work for you.

Questions or Comments?

Leave them in the comments below!



Links From This Episode:

Transcript

Hey, what's up everybody? Anton Kraly here and welcome back to the e-commerce lifestyle podcast. In today's episode I want to answer a question we get all the time and that is, is drop shipping dead?

And we'll get into a bunch of the common questions and different things people ask us at my company Drop Ship Lifestyle, but before I do that, I just want to say that depending on where you are in the world, this whole business model we use specifically, the Drop Ship Lifestyle business model, in some countries it's really like just barely being born.

It's like a little newborn baby that's still figuring out how to walk and how to talk and how to do everything because a lot of our members that we've seen tons of success with over the past couple of years are not just in the United States anymore. We have a huge group of members in Australia that are doing amazing.

The same can be said for the United Kingdom and for Germany and for a lot of other countries where this whole drop shipping model, using the Drop Ship Lifestyle system really is something that brands and suppliers are still figuring out.

So it works there, but it's more of like this education process between you as the person building the business and the brands, the suppliers that are actually making these products. So not only is it not dead in most of the world, it's actually something that is just brand new.

It's just being birthed as one of our members put it and it's something that you could definitely capitalize on just like a ton of our members have over the past few years as drop shipping with the Drop Ship Lifestyle business model continues to develop in more countries than just the US where things typically take fire first, right? Especially when it comes to buying behavior. We have a lot of money spent here, we're consumers.

But with that being said, what I'm going to do now is switch in to a recording that I actually made about seven months ago. It's just as relevant today as it was then, but it answers a bunch of questions that you need to know to figure out if drop shipping is dead as we move into this new year, into 2020. So let's get into the show.

All right, so I actually wrote down a list of questions before I started this video. I actually worked with our support team in Slack and got a list of the common questions attached to the question that comes in is drop shipping dead? I heard X, Y, and Z. So the first thing that people ask about is competition, which leads to saturation, right? Drop shipping is not new. I've been doing it myself since way back in 2008 and people have been doing it longer than me.

So the misconception is, you know what? This has been around for a long, long time. Aren't there just so many people doing it now that there is no space for new stores? A short answer is no, that's not true. When you're using this model, when you're drop shipping, your goal should always be to work with new suppliers and new brands and get the newest and the best products that come out.

So the products that were popular back when I first started are not still popular today. Well, some of them are, the majority are not. What do I mean by this? The industries that we sell in, they are still getting sales. They are still selling strong, but the top brands, the top skews, the top products, they are now in there going back, what? 12 years, in their 12th iteration. Some more than that, right? Products get updated. New brands come out, brands release new product lines. So a big part of this is to always be that person that's out front of your industry.

And I'm not saying to only sell trending products, but if you're in the office furniture space, then make sure every year you're working with the best brands that make office furniture. Make sure you're getting all of their new skewing numbers on your website. Make sure you're promoting them because then all that competition, you're thinking about, all those people that have been doing it for so long.

Guess what? Some of them are lazy, some of them don't update their sites. Some of them are comfortable making what they're making with stuff they haven't updated in the past five years. So as long as you're willing to do the work and stay on top of your business, which I hope you would be if you're really planning on doing this, then no, it's not too saturated. There's literally new opportunities popping up every single day when it comes to products and suppliers.

And I use the word suppliers interchangeably with brands. But again, always new opportunity there. Do not worry about this being too competitive because it's really not.

And the other thing I'll say about that is competition, you do want some, if nobody's selling what you want to sell, that's probably your red flag. So keep that in mind.

My next question that we get that comes in with is drop shipping dead is, I heard Trump is having all these tariffs and we're in a trade war with China and everything is going to be more expensive, is this worth my time starting?

A couple of things on that. First, we do not drop ship from China. So if I was directly in that business, would I be worried right now, if I was drop shipping from China? Honestly, I probably would. I would definitely be looking a lot closer at it. Then I'm looking at what we do. What we do and what I recommend you do is work with domestic brands. So for me that means suppliers in the States. If you're watching this from Australia, that means suppliers in Australia. If you're in the UK that means suppliers in the UK.

Now with this whole tax and tariff thing, right? Even if products that come from China to our suppliers here in the States get more expensive, it might happen and then maybe suppliers raise our product costs, but guess what? Then the product cost to the customer goes up and everything works itself out.

So I'm not worried about it. You shouldn't be either. Especially now if you're on the Drop Ship Lifestyle model that of course, I teach at dropshiplifestyle.com. So again with us, I wouldn't worry about it. If you are relying on drop shipping from China, maybe reevaluate your business anyway.

Okay, next question is about is drop shipping dead because Facebook ads are so expensive now and Google ads are so expensive now? Listen, they're really not. If you want to say that things are expensive now because 10 years ago they were dirt cheap. Well guess what? 10 years from now people are going to say in 2019 things were so cheap. Yes, ad costs go up.

Yes, as more competition goes to different platforms, bids get higher and higher and higher. Does that mean there's not a market? Absolutely not. What it does mean is you can't just be someone who's trying to gain the system. Someone that doesn't want to learn anything, someone that believes they can click a few buttons in Google and get rich. Guess what? That's dead. Maybe if you were one of the first advertisers on Google, that was a real thing, but that mindset, that business has been gone a long time.

Now, if you're a real business owner, you get into this because you actually want to build something of value that serves your customers and you then guess what? Ad costs are still ridiculously underpriced. Yes, on Google. Yes, on Facebook. Of course, you have to run them the right way. Again, I teach that in Drop Ship Lifestyle, but yeah, it's not dead because traffic costs are up.

Again, just wait 10 years. People are going to say, you had so much opportunity back in 2019 I can't believe you didn't do everything and start a business and build it. Don't look back with regret. Do this now and look back and be like, wow, that was an amazing ride. Okay, so that covers that one.

Next one is with people saying, "Oh, you know, this is dead. Every niche is taken." I hit on this briefly before, but you want to be involved in a niche that other people are in. If you have some idea for a product that nobody is selling, that's not a good thing. I mean even back when I started in late 2007, early 2008, I did not want to be the first one to ever try to sell something online.

That's not how this business model works. You want to find the markets that has competition. You want to identify their weaknesses, your future competitors, and then you want to start competing with them. Okay, so that's a good thing if other people are selling the product types that you want to sell.

Now that leads into the next thing that we get sometimes like, why would a supplier work with me, I'm brand new and there's established websites that have been doing this for so long? That's true. But if you're actually a real player here, meaning you're trying to build a real business, again, you're not trying to game any system or get in for a quick buck. If you're trying to build something real, then the good suppliers are more than willing to work with you.

They want partnerships like the ones they have with me and my students and you, if you follow a proven system, and again, if you focus on building a real business. If you're trying to again just say, "Hey, can I drop ship this, this, this, this, this? Can I put up a website real fast?" Then yeah, guess what? The suppliers, that won't work with you now, they wouldn't have wanted to work with you 10 years ago either. So yeah, the thing that maintains is if you have integrity and you're building a business for the right reason, you will be rewarded in many different ways.

So even speaking of that, that leads into the next two points that I have written down. One of them being, hey, I heard that Google Ads, right? Formerly AdWords, doesn't like drop shipping. And you know what? It's in their terms of service that they don't like drop shipping. And guess what? It's been there since again, the past 10 years, I have never had a problem with Google Ads Accounts for that, neither have any of my students that use the system.

What they don't like is the model of trying to get into arbitrage deals like buy something on eBay and sell it on Amazon and drop ship from Amazon and sell it on Etsy and all that stuff. They don't like that because it's not a real business. Again, is that type of drop shipping dead because Google doesn't like them to advertise with them? I wouldn't say it's dead, but it's not a real business. But again, it never was. It was just a little way to try to have a hack and get some easy money, but no, don't do that. And is it dead? Maybe, maybe not, but it's not what we do here.

Another one Stripe, same thing you might see in different Facebook groups you're part of, "Hey, I'm drop shipping and Stripe closed my account." They didn't close your account because you're drop shipping. We've had Stripe since 2012, so have tons of our students.

The reason that Stripe closes accounts is because there's too much risk. And they see that there's risk when there's a ton of refunds, a ton of chargebacks and you know what type of store it is? Get a ton of refunds and a ton of chargebacks? Ones that don't care about their customers, ones that take three weeks to ship items, ones that don't answer support tickets. So is that model dead? Yes, but that's the model of ripping people off, right?

And that has been dead again since before there was even a little window to try to game the system, that's not sustainable. So yes, that model of not taking care of your customers and hoping you get rich, guess what that form of drop shipping is dead. Oh no, right? It doesn't matter.

The model of having a real business that provides real value to your customers though, when you ship them products, when the customers get them in three to five days, when you have customer support, then not only will you thrive on all of these platforms, on Shopify, with Stripe, with Google, with Facebook, but you will be rewarded in terms of customers coming back to you, sending more people your way and seeing your business grow.

So another thing that comes up is, "Hey, I heard Amazon doesn't allow drop shipping, is drop shipping dead?" Amazon's never liked drop shipping and it doesn't matter. Again, you don't want to be in the arbitrage model. You don't want to sell something on your site and have it shipped from Amazon. You don't want to sell something on Amazon, then find somebody on eBay to fulfill the order. That's not a good way of doing business, whether it's drop shipping or not, so just don't do it and it doesn't matter. That's always been dead.

Now hope that answers the question. No, drop shipping is not dead if you do it the right way. If you actually care about building a business that provides real value to your customers, you will be in business. You will be rewarded in terms of profits, in terms of an asset, which is your business, in terms of people coming back to do more business with you. There's no end in sight for building legitimate businesses online with the drop ship business model.

Now one more thing that's somewhat related that people do ask about, which is totally valid and fair that I thought would make sense to add to this video is okay, if this model is not dead, then why every time I go on YouTube do I see 20, 15 year old kids telling me that I should join their course about how to make all this money drop shipping, right? If they're all making all this money, why are they selling courses on it?

Yeah, listen, I have a problem with that too. Again, I do believe that the model of drop shipping from China with three weekly times with bad support, I believe that has been dead for a very long time. And I believe that a lot of these kids you see popping up telling you, "Hey, buy my thing." They are not doing well with their business. Surprise. Surprise, right?

So that's my thought on that. It's not what I would recommend doing at any point in my e-commerce career over the past 12 years. I do think there's ways to do it right, but I think most people that you see out there, when you see, when you get flooded with a million people saying, "Hey, buy my thing." I think yeah, a lot of them don't have a thing besides that. And I think the reason is because again, they're not trying to drop ship the right way.

They're trying to use a model that maybe had a small window where it worked, where they were gaining the system by basically just trying to sell as much crap as possible and not caring what customers thought about it. So never did that. Never recommend doing that. If you stick with real quality products from quality brands and focus on your business, again, you're not going to have that issue and you're going to see a lot less people that actually do this the right way. But hey, that's a good thing for you, right?

So, with that being said, again, don't look for loopholes. Look for building something real. Work with quality brands, care about your customers. Use those ingredients and if you do, drop shipping is far from dead. Our businesses have only been growing since I first got into this and again, I don't see slowing down anytime soon.

So as always, guys, if you got value from this video, please do give it a thumbs up. Definitely click subscribe if you haven't already. And I would love to hear your comments on this topic as well.

So let me know in the comments below, do you think drop shipping is dead? Why or why not? Let me know in the comment box and I'll talk to you down there.

Hey everyone, Anton here again with a quick message. If you got value from that podcast and you're looking for help building your own highly profitable semiautomated online store, be sure to go to dropshipwebinar.com, D-R-O-P-S-H-I-Pwebinar.com. I have a free training there. It's about three hours long and we go deep into niche selection, how to find suppliers, how to get traffic, and how to set up some automations that make it possible where you really only need to put about 15 to 30 minutes of work into your business every single day, dropshipwebinar.com.

Also, as a bonus over there, I'm giving you a free copy of my 21 day launch plan. It's basically an ebook that's 53 pages long that covers everything I talk about on the webinar, so you have a printed resource to follow along with as you're going through the free training. So be sure to go to dropshipwebinar.com and I will see you there. Thank-you.

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