What You Need to Know Before Starting a Dropshipping Business In 2020
I LOVE how everyone gets pumped up a new year rolls around.
It’s like the universe gives everyone a shot of dopamine and a turbocharged when January 1st hits. Which brings me to the next point....
I have always heard of people wanting to start their own badass Shopify store. And therefore, I feel that this is a perfect time to write out this article.
Here’s what you need to know before you start your Shopify dropshipping business in 2020.
As a beginner who wants to start a dropshipping business, it’s hard to know what false information is and what is pure fact.
A lot of information about dropshipping on the internet are either assumptions, are made through personal experiences, or what somebody has either seen or heard about dropshipping. But hardly does it ever reflect reality of dropshipping.
So basically, I'm here to help you to debunking yourself from these assumptions as it is essential in offering you a clear picture on how this business model works. Here are five common beliefs about dropshipping that you need to unlearn before building your own store.
Assumption 1: “People won’t buy from you – they’ll just buy from Amazon instead.”
This is a common misconception people have about dropshipping.
Why would customers buy a product with 2-3 weeks shipping from Aliexpress, if they can purchase the same product on Amazon, and have it delivered the NEXT day?
This seems logical. But this way of thinking ignores the type of customer that both stores are attracting.
Allow me to explain.
People who shop on Amazon know what they are looking for. If they want a LED keyboard, they simply type in the key word "LED keyboard" into Amazon’s search bar and are shown hundreds of LED keyboard that are being sold.
On the other hand, dropshipping stores target people who purchase on impulse. These purchases are driven by emotion, rather than necessity. And customers are usually unaware that they want the product until after it has been shown to them.
To achieve this, dropshippers focus on selling unique, exciting items that spike positive emotions in customers. An everyday necessity like toilet paper wouldn’t spike any positive emotion. But this "Magical Wireless Charger" sure would!
As a dropshipper, you shouldn’t worry about long shipping times or competing with Amazon, as these are not your customers from the start.
Assumption 2: “Dropshipping is a scam”.
People view dropshippers as slimy, shady con artists who overprice their items.
They see it as wrong to charge a customer 3 to 5 times the price you paid for it on Aliexpress.
But what these people fail to realize is that, if you never advertised your item on Facebook, Pinterest or Google shopping, a customer would never have known it existed. And so would never have a chance to purchase it.
It is the dropshippers job to put the item in front of the prospects eyes through advertising. And in doing so, they bridge the gap between an unaware customer and a product they don’t know they love yet.
But advertising costs money. And after you deduct this additional expense, plus the cost of goods and shipping, from each sale, most sellers are left with little to no profit.
Therefore, in order to widen your profit margin, it is necessary to raise the price of your item. This way, after you deduct expenses, you still have a healthy profit leftover that you can use to re-invest back into your marketing efforts.
But by no means is raising your price a method used to exploit customers. It’s simply business. And how 99% of businesses in the world operate!
Besides, pricing has no rules. You can’t say that it is wrong or unfair that a simple, plastic water bottle costs $50. Hey, maybe it’s a damn good water bottle! Similarly, dropshippers are not obligated to lower their price. Whether a price it is too high or low is determined by the customer, and has nothing to do with you.
Assumption 3: “Dropshipping is saturated”
This is another common myth you might’ve heard going around. Which, in reality, does not even make any sense.
You see, the word “saturated” refers to when the volume of a product or service in the marketplace has been maximized.
Dropshipping, however, is a method of fulfilment — not a product or service. And so could never be saturated, regardless of how many people start dropshipping.
There are items on Aliexpress that are saturated to a degree – Yes it isn't wrong to say that. But these are usually items everybody is fighting to sell in the first place.
A common example of this would be these cheap women’s watches as above.
Dropshipping an item like this would be pointless. I swear I can't even finish counting how many of these Shopify dropshipping stores are selling these watches!
It’s not unique, rare or exciting, and if you wanted to, you could easily find it at your local accessory store. General items are very difficult to successfully sell, and you should avoid selling them at all costs.
Heck, even if I were to use my years of experience I would have problems selling it.
As mentioned above, you want to focus on selling items that are rare and cannot be found at your local mall.
Assumption 4: “Donald Trump’s war with China has killed dropshipping”
A lot of news has broadcasted over the past year about Donald Trump announcing the end to ePacket.
It is the fact that ePacket shipping is the cheapest, fastest shipping option from China to the US. Packages can arrive in as little as 10 days from halfway across the world, for as low as $2.
However, in the past year, both China and the US have had ongoing disputes about the future of ePacket. With Donald Trump even threatening to pull out the UPU (United Postal Union) –– a worldwide organisation that is responsible for the international postage rates of 190+ countries.
A year has passed since Trump’s threat, and no change has incurred. ePacket remains an available shipping option, and currently still the best among the other shipping options.
The US are also still playing their role in the UPU. This is due to an agreement in September made between the US and UPU, where the US could now charge up to 70% of the China’s postage rates.
Example: if the price of an ePacket shipment was previously $2, the US can now charge $4.
Such a small increase is never big enough to negatively affect your conversion rates, if not minor. However, every business is run by a human brain. You can rectify this by upsell customers additional items after the initial sale, which can drastically increase profit margins.
If you would like to, you can offer express shipping to your customers at a premium rate – trust me, there are such customers out there who would even be willing to pay for it.
Assumption 5: “Most people who dropship will fail”
Alright this is probably true.
The harsh reality is that 99% of people will fail at dropshipping.
And no, I'm not gonna lie.
Yes, this is a lot. Surprisingly, however, the reason why they fail is something that can be easily avoided.
You see, those 99% of people don’t fail at dropshipping because they lack knowledge. It’s because they miss out on the knowledge you gain through constant trial and error, failure, and overcoming the learning curve of marketing products to consumers.
Reading a marketing book won’t turn you into a top marketer. It is only through action, through running ads, testing to see what works and what doesn’t, making the necessary tweaks to make better results, that turn you into a top marketer. Experience is the best teacher, not knowledge.
When I first started out in 2010 as a Affiliate Marketer, I have zero clue about the digital industry. I do not understand what is an ad, what is an landing page, what is a tracking, what is a server, what is a hosting etc.
It took me 2 years of understanding how the entire system and flow works while consistantly launching campaigns and learning at the same time.
When I decided to move over to Shopify in 2012, I still do not know how to market my products effectively – but I learnt how to along the way. Yes, I may have lost a ton of money in ad campaigns but I gain a whole lot of experience throughout these many years that money alone can't buy.
And throughout these years, I started to get better and better and this is where I am today sharing with you with my vast amount of experiences that I have gained.
Nevertheless, overcoming a learning curve is simply something you can’t avoid. It is the price of succeeding in anything in life. Yet one a lot of people are afraid to make.
Therefore, your success in dropshipping ultimately lies in your mindset. You must be willing to invest the time and money if you want to overcome the learning curve of marketing and sales, learn from mistakes, and ultimately be successful.
And every single year, you will always hear people keep on saying that Shopify dropshipping is dead.
Take a look at Shopify stock throughout these 5 years that I have extracted from Bloomberg from 2016 to 2020.
Well, assuming if what they says are true – Shopify stocks would never have completely rise above $100 per share.
But statistics proved otherwise, the fact that Shopify stocks has been increasing in value over the last few years simply proved that more and more people are jumping into the Shopify bandwagon. And this is expected to further increase in value for the next 5 years from now.
Long story short, Shopify is here to stay – like it or not.