Exposing The Truth About Shopify Dropshipping..

Summary

The video script reveals the unsustainable nature of traditional drop shipping for long-term business success. The speaker shares their journey from drop shipping to building a multi-million dollar business by focusing on creating a strong brand. They discuss the common pitfalls of poor customer experience, intense competition, and issues with payment processors. The speaker advocates for using drop shipping as a stepping stone to find winning products and then transitioning to a branded business model, offering strategies for redesigning the store, working with agents for better products and shipping, and creating custom content to reduce ad costs. The script also includes insights from a successful e-commerce entrepreneur, emphasizing the importance of product differentiation and customer experience.

Takeaways

• 😀 Dropshipping is a good start for online businesses but not sustainable long-term.
• 🚀 The speaker has found success by pivoting from dropshipping to building a brand, generating significant revenue.
• 🛍️ The three main problems with traditional dropshipping are poor customer experience, easy replication by competitors, and issues with payment processors.
• 📦 Lack of control over product quality and shipping times often leads to customer dissatisfaction in dropshipping.
• 🏰 Building a 'castle' with a gate, bridge, and moat is a metaphor for creating a business that is difficult for competitors to penetrate.
• 🔍 Finding a winning product through dropshipping is valuable, but the focus should then shift to building a brand around it.
• 📈 Top Shopify companies transition from dropshipping to building long-term brands with real value.
• 🛠️ Redesigning the store to focus on a winning product and building a suite of products around it is a key strategy for brand building.
• 📹 Creating custom content with the branded product can significantly reduce advertising costs and improve conversion rates.
• 🤝 Working with an agent in China to brand the product, order inventory, and provide faster shipping can enhance the customer experience.
• 💡 The importance of improving customer experience and product differentiation is emphasized for building a strong brand.

Q & A

What is the speaker's opinion on traditional drop shipping as a long-term business model?

The speaker believes that traditional drop shipping is not sustainable in the long term due to issues such as poor customer experience, lack of control over product quality and shipping, and high competition.

How has the speaker's approach to business evolved to generate multiple seven figures?

The speaker has evolved by transitioning from traditional drop shipping to building a long-term brand with real value, focusing on a single winning product and improving the customer experience.

What are the three biggest problems with traditional drop shipping according to the speaker?

The three biggest problems are: 1) Terrible customer experience due to lack of quality control and shipping delays, 2) Ease of competition where others can easily replicate and outscale your product, and 3) Issues with payment processors like PayPal and Shopify due to chargebacks and reputation damage.

What is the speaker's recommendation for someone starting with drop shipping?

The speaker recommends using drop shipping to find a winning product but advises transitioning to building a brand as soon as possible to ensure long-term success.

How did the speaker increase conversion rates and reduce ad costs after transitioning from drop shipping to a brand?

The speaker redesigned the store to focus on the winning product, worked with an agent in China for branded products and faster shipping, and created custom content for advertising, which significantly reduced ad costs and increased conversion rates.

What is the importance of building a brand according to the speaker?

Building a brand is important as it provides a unique selling proposition, better customer experience, and a sustainable business model that is difficult for competitors to replicate.

What is the role of an agent in China in the speaker's business model?

The agent in China helps to brand the product, order inventory, and provide faster shipping for customers, which enhances the customer experience and the brand's reputation.

How did the speaker reduce advertising costs by creating custom content?

The speaker created custom content with their branded product, using their iPhone and friends to shoot ads, which reduced the cost per purchase in half compared to using generic online footage.

What advice does the speaker's friend Davey offer for someone looking to transition from drop shipping to building a brand?

Davey advises focusing on providing a good product and an excellent customer experience. He suggests improving the product based on customer feedback and negative reviews to create a unique and valuable brand.

What is the speaker's plan for reaching 100,000 subscribers on YouTube?

The speaker plans to do a live stream and a huge giveaway, offering free coaching calls and lifetime subscriptions to their software, to celebrate reaching 100,000 subscribers and to connect with the community.

How does the speaker describe the community they have built on YouTube?

The speaker describes the community as amazing, with positive and uplifting comments on every video, and expresses a desire to connect and engage with the community members.

Outlines

00:00

🛍️ The Truth About Dropshipping and Building a Sustainable Business

The speaker candidly discusses the limitations of traditional dropshipping, highlighting its lack of sustainability in the long term. Despite its benefits as an entry point for online income generation, the business model suffers from three major issues: poor customer experience due to lack of quality control and shipping delays, easy replication of successful products by competitors, and challenges with payment processors due to chargebacks. The speaker shares their personal journey of transitioning from dropshipping to building a long-term brand, emphasizing the importance of finding a winning product and then moving away from dropshipping as soon as possible. The summary also mentions a high-profile Aliexpress dropshipping store that shut down due to these issues, illustrating the points made.

05:00

🚀 Transitioning from Dropshipping to Brand Building for Long-Term Success

This paragraph delves into the speaker's strategy for evolving a dropshipping business into a branded entity. The process involves three key steps: redesigning the store to focus on a winning product, either by expanding with related products or by creating a product suite; working with an agent in China to brand the product, manage inventory, and expedite shipping; and creating custom content for advertising to reduce costs and improve conversion rates. The speaker also interviews a successful entrepreneur, Davey, who has built multiple e-commerce brands worth over 250 million dollars, to gain insights into branding and scaling a business beyond dropshipping.

10:01

🎉 Embracing the Community and Looking Forward to Future Growth

The final paragraph focuses on the community aspect of the speaker's journey, expressing gratitude for the support and engagement of the audience. The speaker announces plans for a live stream and giveaway once the subscriber count reaches 100,000, aiming to connect with the community and provide value through coaching calls and software subscriptions. The summary underscores the importance of transitioning from dropshipping to a more stable and profitable business model and invites viewers to join the growing community for further support and guidance.

Keywords

💡Drop Shipping

Drop shipping is a retail fulfillment method where a store does not keep the products it sells in stock. Instead, when a store sells a product using drop shipping, it purchases the item from a third party and has it shipped directly to the customer. In the video's context, it is presented as an initial way to start an online business but is criticized for not being sustainable in the long term due to lack of control over product quality and shipping times, which can lead to poor customer experience.

💡Customer Experience

Customer experience refers to the perceptions and feelings that customers have about a company or product throughout their interaction with it. In the video, the speaker argues that traditional drop shipping often results in a poor customer experience due to issues like slow delivery times and low product quality, which can be detrimental to the success of a business in the long run.

💡Scalability

Scalability in business refers to the ability of a system, network, or process to handle a growing amount of work, or its potential to be enlarged in order to accommodate that growth. The video discusses the lack of scalability in traditional drop shipping due to the ease with which competitors can replicate successful products, leading to increased competition and difficulty in maintaining a unique selling proposition.

💡Chargeback

A chargeback is a mechanism by which a customer can dispute a charge on their credit card. In the context of the video, chargebacks are mentioned as a significant issue for high-volume drop shippers, as customers may request chargebacks if they are dissatisfied with the long wait times for products, which can affect the reputation and financial stability of the business.

💡Branding

Branding is the process of creating a unique name, symbol, or design that identifies and differentiates a product or service from others in the marketplace. The video emphasizes the importance of transitioning from drop shipping to building a brand with real value, which can provide a more consistent and sustainable business model.

💡E-commerce

E-commerce refers to the buying and selling of goods or services using the internet, as well as the transfer of money and data to execute these transactions. The video discusses the growth of e-commerce businesses, particularly those built on platforms like Shopify, and the strategies for success in this digital marketplace.

💡Product Differentiation

Product differentiation is the process of distinguishing a product from its competitors in the marketplace. In the video, the speaker suggests that to build a successful brand, one must offer a product that is unique and solves a specific problem, setting it apart from similar products in the market.

💡Conversion Rate

Conversion rate is a measure of how often visitors to a website take a desired action, such as making a purchase. The video mentions that by focusing on building a brand, the speaker saw an increase in conversion rates, indicating that customers were more likely to buy from a branded store compared to a generic drop shipping store.

💡Advertising Cost

Advertising cost refers to the expenses incurred in promoting a product or service. The video discusses how creating custom content for branded products can significantly reduce advertising costs, as it allows for more effective marketing that resonates with potential customers.

💡Custom Content

Custom content is unique material created specifically for a particular brand or product. In the video, the speaker shares that creating custom content, such as ads shot with an iPhone, helped to reduce advertising costs and increase the conversion rate by providing a more authentic and engaging marketing approach.

💡Direct-to-Consumer

Direct-to-consumer (D2C) refers to a business model in which products are sold directly to consumers without the use of a middleman or retail outlet. The video features an interview with an entrepreneur who has built successful D2C e-commerce brands, emphasizing the importance of creating a strong brand and providing a good customer experience.

Highlights

Drop shipping is not a sustainable business model in the long term, despite being a good way to start making money online.

The speaker has generated multiple seven figures and is on track to do over two million dollars in sales without drop shipping.

Traditional drop shipping often leads to poor customer experience due to lack of quality control and shipping delays.

A case study of a large AliExpress drop shipping store that shut down due to customer complaints about delivery times and product quality.

Competition in drop shipping is high, making it easy for others to replicate and outscale successful products.

PayPal and Shopify Payments can shut down high-level drop shipping businesses due to chargebacks and reputation issues.

Drop shipping is excellent for finding a winning product without the need for inventory.

Transitioning from drop shipping to building a long-term brand is recommended once a winning product is identified.

Top Shopify companies focus on building a brand with real value rather than maximizing drop shipping profits.

A personal story of transitioning a product into a brand, resulting in increased conversion rates and reduced ad costs.

Three steps to transition a drop shipping store into a brand: redesigning the store, working with an agent in China for branding and inventory, and creating custom content.

Building a suite of products that complement the main product can significantly increase sales, as seen with the 'Snow Teeth Whitening' brand.

An interview with Davey, who built an e-commerce empire worth over 250 million dollars, discussing the importance of branding over drop shipping.

Davey's advice for improving customer experience and product differentiation to build a strong brand.

The importance of conducting research, improving based on feedback, and standing out in the market to build a successful brand.

An upcoming live stream and giveaway to celebrate reaching 100,000 subscribers, offering free coaching calls and software subscriptions.

An invitation for viewers to join the community and participate in the live stream for personalized advice and discussions.

Transcripts

i'm gonna be honest with you drop

shipping is not as great as people make

it out to be now don't get me wrong

hit is a great way to start making money

online and it has changed my life in so

many ways but the business model

is just not sustainable in the long term

but by approaching this business in a

slightly different way in the last few

years i've generated multiple seven

figures and as you can see this year i'm

on track to do over two million dollars

in sales without drop shipping so in

this video

i'm gonna be exposing the raw truth

about drop shipping and why i moved on

my exact approach that's generating me

over a hundred thousand dollars a month

consistently and we're even going to be

talking to one of my friends who has

built an

empire on shopify with multiple brands

worth

over 250 million dollars to get his

opinion on this

so let's break down the three biggest

problems with traditional drop shipping

this first problem is the main reason

why drop shipping stores don't succeed

in the long term

most traditional drop shipping stores

provide a terrible customer experience

we do not care when you're drop shipping

directly from aliexpress you have next

to no quality control over your products

you have zero control over the shipping

lines your supplier is using which

causes your customers to have to wait an

extremely long time for a product that

might not even be that good

it's not all bad though there's still a

decent amount of good suppliers on

aliexpress

though it's the lack of control that's

the issue and almost always leads to a

poor customer experience i want to take

a look at one of the biggest aliexpress

drop shipping stores of all time this

store actually shut down a couple months

ago because of this exact reason

so if we take a look at the reviews of

this store seconds

you can see that they have a ton of

reviews they have over a thousand

reviews

and this single-handedly killed their

business people are complaining about

the exact things that i just mentioned

they're complaining about slow delivery

times low quality

products six weeks to arrive these are

the exact issues that you're gonna run

into when drop shipping from aliexpress

if this store made this small change

that we're gonna talk about later in

this video

they would still be thriving and making

sales to this day

but as you can see the poor customer

experience pretty much just killed the

opportunity

let's talk about the second biggest

problem it is extremely easy for

somebody to come and steal your winning

product

as long as they come in and apply the

same tweak that i'm using

they're gonna be able to kick you out of

the marketplace and outscale you on your

own product i've seen this happen time

and time again and i've done this to

drop shipping stores using my method

competition is okay and it's actually

really healthy but you have to build a

business that makes it difficult for

people to come in and compete with you

think of it as if you were building a

castle and trying to keep people out the

best structures always have a gate

a bridge and a moat making it extremely

complicated for somebody to break in

you need to approach building your

business in the same way and we'll talk

about how to do that very shortly and

the last problem which gets super

annoying when you're scaling

is that everybody wants to shut you down

paypal and shopify payments

do not like it when you dropship at a

high level because since people have to

wait a really long time for their

product

a lot of times they will do a chargeback

which really hurts their reputation with

the banks which makes shopify and paypal

look at you as an unsatisfactory client

which usually will end up with them

holding a portion of your money or even

shutting you down entirely

so for these three reasons i'm out but

there actually is a way to use drop

shipping to build a long-term business

it all comes down to using it for the

right reasons drop shipping is

extremely good for one thing finding

your first winning product since you

don't have to order inventory it's

pretty simple to try out a bunch of

products until you find one that's

selling consistently and once you find

that product you should transition as

soon as possible to this

this is exactly what the top 100

companies on shopify are doing

let me explain instead of focusing on

making as much money as possible with

drop shipping

my goal is to build a long term brand

with real value

i simply use drop shipping as a means to

an end once i had a product that was

selling consistently and had

potential to grow i decided to build a

brand around that product

immediately by the way if you need help

with that testing process i made a

detailed video on how to get started

so make sure to check that out but for

making this simple change

i immediately saw a higher conversion

rate much cheaper ad costs

people were spending more money on my

store and the word started to spread

which brought in more repeat customers

this simple change took my business to

the next level if we look at the graph

from day one of starting this business

you can

see exactly what i'm talking about so in

the first month of testing products i

made around seven thousand dollars in

sales

in the following month i made around

sixteen thousand dollars and this is

when i found that winning product

and i transitioned it into a brand at

the end of this month and you can see

the following month i almost

5xed my revenue just for making that

simple change and by the end of the year

i had surpassed over a hundred thousand

dollars a month in sales and have done

that

every month ever since so now i'm going

to share with you three simple steps to

transition your drop shipping store into

a brand

the first thing i did was completely

redesign my store to focus entirely on

this product now there's

two ways to do this the first way would

be to fill your store up with a bunch of

products that are similar and go hand in

hand with your winning product so this

store actually started by scaling this

product and since then they expanded by

adding a ton of other products

and selling those to their list as you

can see this brand is bringing in over

500 000 monthly visitors and they're

absolutely crushing it

the other way is to build out a store

entirely for that product itself

and build out a suite of products that

you can use alongside it

so as you can see with one of the

biggest shopify stores snow teeth

whitening

they have the teeth whitening kit

whitening wands serum

toothpaste and floss it's all really

solving the same problem

and they go hand in hand together and

this store is making millions of dollars

a month and they even made it on ellen

the other day which is really cool

the second step is to work with an agent

in china to brand your product

order inventory and provide faster

shipping for your customers now i've

made a whole dedicated video on this

topic so if you want to check that i'm

going to put it in the card up above

once you have a winning product this

process is extremely simple these

companies are excited to work with you

and they're going to do what they can to

get you the best price and the best

experience for your customers

though be careful because there are some

untrustworthy agents out there

though i can recommend you a good one in

the description down below

and the third step which literally cut

my advertising cost in half

was taking that new branded product and

making custom content with it so instead

of using ads with footage i found online

i shot my own ads with my iphone and

some friends

and this literally sliced my cost per

purchase in half

i also took nice and clean photos with

our branded product

which really helped with our conversion

rate these three changes alone

will allow you to take that leap from

running a drop shipping store

to building your own brand of course

there's a lot more that goes into it but

these changes alone will set you apart

from 99

of people that are trying to sell the

same product which will allow you to

make a lot more money and run this for

much longer

now even though i've had some success

with shopify there are people out there

that are doing much

bigger numbers than me one of them is my

friend davey davey has built an

empire of e-commerce brands worth over

250 million dollars he is someone that

has absolutely crushed it with branding

so i want to give him a quick call and

get his opinion on this and also asking

for advice for myself

and for all of you out there let's see

what he has to say

yo what's up bro how's it going yo how

are you

good to hear from you bro so i think a

good place to start would be to tell the

people a little bit about you

guys so i'm david fogerty i am founder

of the hoodie

i've also got 10 other direct to

consumer e-commerce brands

all built on shopify over the past 12

months we've done about 300 million

dollars revenue

so you know we're acquiring direct

consumer ecommerce businesses and

growing them

that's incredible and you just started a

youtube channel as well right

just started a youtube channel so a bit

late to that party but we've just been a

little bit too focused on 13 friends but

yeah now it came to our story awesome

man what are your thoughts on drop

shipping for beginners and people who

are just getting started it's such a

an amazing thing that you know someone

so young

with such little money can actually

start a business nowadays so yeah i

encourage it

mainly because you know i've found so

many businesses before and

drop shipping really allows you to kind

of just fail and the only expense is

kind of your time

in putting in putting together sites so

yeah keep

keep learning and test with drop

shipping and eventually you'll hit that

winning product that can

you know teach you further but yeah i

don't don't recommend drop shipping long

term to be honest i suggest you know

going into

branding and building building a store

to be proud of

what would you say for somebody out

there that is doing drop shipping they

have a product that's doing well but

they want to take that leap over to

building a brand

yeah sure so probably it's good to break

down what a brand is

first drop should be a brand is a good

product

and a good customer experience so if you

already have an amazing product that's

differentiated

then chances are you might just need to

improve the customer experience and get

a 3bo

and shipping time but if you don't have

a unique product that is actually

solving the issue and it's just a

gimmick or a fad you're going to want to

like go back to the product development

stage

okay you've proven this helps with back

pain or something like that

you know now then you need to actually

either work with product engineers or

just even simpler as going through your

negative reviews or your competitors

negative reviews and saying

okay this material is causing a negative

review what can i then improve

and make my own to therefore make a good

brand it's a bit of research and

the fact that nobody else does it is the

reason why you should do it

because then you can you know charge a

bit more with your margin and

yeah have a have a product to be proud

of yeah that's really good just taking

what's already working and improving

upon and providing the best possible

experience

i think that a lot of people out there

are going to be really inspired by your

story

and your tips are really going to help

them a lot and i've actually become a

fan of your youtube channel i've been

watching all your videos

so let them know a little bit about that

and what your plans are for the channel

and where they can find you

yeah for sure head over to davey

foggerty we've just launched

four videos now we're going to take

people through the entire process

of what we do talk a little bit about

some really hard lessons that we've had

as well like we've got so many failures

um really just wanting to you know

inspire australians and

people in the us to you know kind of

kind of follow our footsteps and try to

build a brand that

that you can be proud of yeah that's

amazing man you're going to help a lot

of people in the process thanks for your

time the people are really going to

appreciate this one and

yeah man thanks man i'll check you soon

yeah appreciate everybody so hopefully

at this point you can understand why

it's important to not rely 100

on drop shipping it's a great way to get

started but it's not the way for the

long term thanks so much for watching

this video i hope you enjoyed it and

found some value in it

our family is growing like crazy and we

are this close to hitting a hundred

thousand subscribers once i hit 100 000

subscribers i'm going to be doing a live

stream

and do a huge giveaway where i'll be

giving away hundreds of dollars

free coaching calls and free lifetime

subscriptions to my software

i'm gonna be hanging out with you guys

for around two hours answering any

question you may

have reviewing your stores and really

just chilling with you all because at

this point we've built such an amazing

community and i want to really connect

with you guys the amount of positive and

uplifting comments i see on every single

one of my videos

is so special to me so i just want to

say i absolutely love this family we

have built and if you're not already a

member

make sure to click that subscribe button

down below stay tuned for that live

stream that's going to be happening very

soon

that's all for this video i hope you

guys have an amazing weekend

i'll talk to you very soon peace

[Music]