Dropshipping is a HORRIBLE Business You Shouldnt Do It

Author:

Jake Tran

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Subtitles:

this short little clip encompasses every reason why dropshipping won't last we know customers like low prices we know customers like big selection and we know that customers like fast delivery and those things are going to be true 10 years from now they're gonna be true 20 years from now so we can count on those things so we can put energy into them how am I so sure drop shipping won't last let's find out no I'm not gonna try to sell you in a course or something at the end [Music] I actually know some of the big dropshippers in the space and most of them are pretty good guys but I wanted to provide a different perspective than what every other online guru will tell you before you go out and potentially waste your money on drop shipping drop shipping was one of the latest we'll call it business ALPA box schemes that has been around for a few years now this is something that internet marketers claim that if you buy their course they'll teach you how a very little effort you can make money quit your job buy up new Lamborghini without much effort because of this new opportunity now that doesn't necessarily make these business opportunities bad but this is where things start getting a little tricky the whole premise of dropshipping is that you find these so-called winning products from wholesale distributors usually from China with Ollie express then you set up an online store with these products for sale at a marked up price from the distributor without having any actual inventory on hand then you run paid ads to this product usually on Instagram or Facebook and if someone buys from you that's when you actually order the product from the wholesale distributor at a wholesale price the product gets shipped directly to the customer from the warehouse and the benefit of this is that you don't need any money to start and you don't have to do any of the fulfillment whatsoever all you have to do is find the product get traffic to your website people buy and you pocket the difference but this is where this business model starts to fall apart [Music] so what's wrong with dropshipping and why won't it last well it's actually pretty simple if you're able to answer this one question where does money come from when you get paid out a job you made money because you provide a value to your employer in the form of your labor and in every other kind of business on the face of the planet it's the exact same story you make money from customers when you provide enough value to them the more value the more money you make so money can be looked at as just a storehouse of value you get money when you provide a value and you can use the storehouse of value in the form of paper in your wallet or digits in your bank account to exchange it for other things of value in the future like a new Lamborghini so let's go back to a clip of Jeff Bezos the richest man in the world we know customers like low prices we know customers like big selection and we know that customers like fast delivery and those things are going to be true ten years from now they're gonna be true twenty years from now so we can count on those things we can put energy into them in Jeff's own words customers that buy products online who would be potentially buying your dropship products if you were to start a drop shipping business only care about these three things low prices having a big selection and having fast delivery and since those three things are literally all Amazon focuses on that's probably why Jeff is the richest man in the world because he's providing more value to the world than anyone else by building a worldwide infrastructure of warehouses distribution centers same-day delivery all what the goal of keeping prices as low as possible with the biggest selection as possible and the fastest delivery as possible compare that mindset to the only things people focus on with drop shipping how can I do the least amount of work how can I make enough money to quit my job and fire my boss oh it takes two to three weeks to ship from China to the customer oh well whatever it's not like customers care about fast shipping or anything and there lies the problem the entire idea and business model of drop shipping completely neglects what every customer wants you will never have the lowest prices since you're ordering one product at a time from a warehouse that you have no control over you're not gonna have the biggest selection because all you're focused on is finding that one winning product and you're inherently not gonna have the fastest delivery because it's shipping directly from a warehouse instead of a giant custom-built infrastructure of distribution centers like what amazon has or in other words you literally provide next to zero value to customers besides the actual value of the product itself which Amazon probably sells to at a cheaper price with faster shipping with better customer service when a better return policy and the list just goes on and on and on and because we know money comes from providing value since you don't provide much of value at all you're probably not gonna make much money so how are people making money from lists lenten it's a reasonable question with a few possible answers whenever there's a new wave whether that be mobile apps or the dot-com wave etc the ones that are there first have such a huge advantage that there's a dedicated phrase for it the first mover's advantage there's next to no competition you have all the customers to yourself and it's a lot easier to do business and grow before the market starts to get saturated I go over this concept in my breakdown of the success of pretty much the best tech channel on YouTube marques Brownlee and it's a pretty inspirational story so I'll link it down below for you guys to check out drop shipping was the same situation the people who got there first were probably able to advertise for cheap get their valuable advertising data to market to new customers a lot cheaper and more efficiently increase their margins and build a solid foundation before all these new drop shippers came onto the scene the next possibility is probably more likely even though gurus might be showing you huge sales numbers they don't show you all their expenses how much they spent on ads how much they pay in taxes and what's really left over in their pocket and I bet it's not very much any more depressing possibility that 100% happens is that people can just fake their sales numbers it's as easy as just editing the HTML in Chrome to change the numbers taking a screenshot on your phone and changing the numbers in Photoshop using someone else's account and there are a number of other ways so how are people making money from this then which one is it well like most things in life is probably somewhere in the middle you have those first movers with an actual business you have the ones that have super low margins and you have the completely fake gurus that literally just blatantly fake their numbers but maybe I'm just being too negative let's say you can make a profitable honest drop shipping business where you have enough profits to make it worthwhile even if that is possible is that really the best long-term business model you want to get into where you're kind of just doing it for the money not because it's what's best for the customers where you have major players like Amazon who are concerned about making a profit at all to snuff out the competition in the long run and provide as much of value to customers as possible is this really the path you want to go down so why are there so many gurus on YouTube saying just how great dropshipping is why is this ad you're about to see probably about dropshipping well you've probably guessed that but selling online courses are one of the most profitable business models out there right now that really is hands-off and definitely not like a saint putting down online courses because this is coming from personal experience too I have a course on how I landed remote jobs and even though it's a fraction of the price drop shipping gurus are selling their courses for it's still ridiculously profitable like so profitable to the point where I would be pretty well-off if all I did was shamelessly plug the course in every single video I made but I personally don't want to be that guy I don't want to be selling all the time and telling you that it's linked in the video description and you should totally check it out because I'm just not like that but in all seriousness the ease and the money and the lifestyle that dropshipping promises is ironically more in selling the courses themselves than actually drop shipping [Music] I've been pretty negative about dropshipping but is there any hope to it at all is there any case for dropshipping is actually a viable there actually is even though the majority of the time customers care most about low prices big selection and fast delivery there are other ways to provide value and in turn have a successful drop shipping business the reason why Apple can sell their highest and I phone for $1,300 and the airport's Pro for $250 when there are clearly more reasonable options out there is because they're selling the experience they're selling the gratifying feeling you get when you get to say Babla Bay they're successful partly because of how superior you feel compared to all the other clubs that can't afford an iPhone and if you can find a way to do the same with a drop shipping store there might be some promise in that or take the rise of movement for example the popular affordable watch brand although they're really far away from just directly drop shipping in the traditional sense I would assume they still white label their watches using existing manufacturers with their own slightly modified designs and they actually use a Shopify store to host their website but even though there are hundreds of other watch brands out there they're so successful because they found an underserved niche affordable fashionable watches and marketed it in a way where you can still get away with some profit margin yet still keep it affordable enough to be successful and probably the most realistic way I see dropshipping being a viable business model is if you already have a successful personal brand for example if mr. beast open up a drop shipping store with like fidget spinners or something even though those aren't popular anymore and he just snapped on his logo he will probably make a lot of money this is because people aren't just buying it for the value of low prices big selections or fast delivery they're buying it because it's coming from you a person that they're a fan of that they trust and that they want to support in fact there are many channels that make an absolute killing whip merge dust drop ships well the merch is printed on the man with someone orders and a ship directly to loan from the so is there any hope for dropshipping I think my opinion can be summed up to this whatever business you're going after if all you're focused on is making money in the easiest business out-of-the-box way where you don't care about the customer at all and you just have this tunnel vision of making money which is usually the mindset people go into buying these courses unfortunately you're gonna lose and you might as well not start because at the end of the day money comes from a generous standpoint where you're willing to go the extra mile to help out the customer not from the position of I want to make money to fire my boss so next time you see an ad for whatever business opportunity comes up just ask how much value does this really provide to the world thank you so much for being part of the watch to the end Club what is your experience and opinion on drop shipping was this video like complete blasphemy for you let me know down below because I do read and reply to every single big video I replied to every single comment on my videos and if you are new to this channel and you enjoy the style of like visually pleasing videos for love business entrepreneur niche be sure to click that big red subscribe button down below while you're down there as well you can also turn on the notification about to get notified whenever I release a new video just like this one every single week one last final plug you can follow me on instagram i'm jake trent io thank you so much for watching you've been awesome I've been Jake I'll see you guys in the next one [Music]