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Why You should start with Dropshipping in 2017

Dropshipping changed my life and has made me the success I am today. If it wasn't for me starting my first dropshipping store a few years ago, there would be a huge chance I'd still be broke today. Last year I made close to six figures in profit just my dropshipping businesses and on top of that it's allowed me to make a ton more through other streams of income that wouldn't have been possible if it wasn't for the capital, confidence and experience I've gotten from starting my dropship store.

But even with all of that being said and all of the benefits there are a tons downsides to the drop shipping business model as well. In this post I'm going to break down exactly what the bad sides are, include who definitely shouldn't start a dropship store, and more importantly who should and why it may still be the best business model for most people as their first online business venture. It's still the best way to start your first online business, especially for digital nomads and those who wish to be location independent. Keep reading for my 2017 guide to all things dropshipping.





Best Business Model for 2017?



It's almost funny that when I first got into dropshipping in 2013 people online would say it was too late and that it was dead. That first store not only replaced my full time corporate income for the next couple of years, it eventually sold for $60,000

Then people told me I got lucky and that it couldn't happen again especially not in 2015, it worried me I started a second store with Larissa, my girlfriend at the time and that too has been a success and continues to bring both of us income every month. Now that it's 2017, it's a bit ironic that the same people online that said dropshipping was dead in 2013 are now preaching it as the hot new business model. Well, those people can chase all of the trends they want, I'm going to continue to do what works. Watch this video first as an overview, then keep reading for all of the details including breakdowns of the pros and cons of starting yourself. 






Why Dropship in 2017?



The reason why I still recomend the dropshipping route for most people I met or talk to online as their first online business is because it's still the most straightforward, proven, and is relatively low cost to startup. There are very few businesses you can start in just a few months and for less than a few thousand dollars.

Even with more people getting into the space and more compeitiors, there is more opportunity than ever with new products being invested and released everyday, software that makes the process easier, and new ways to advertise, get customers and get paid. But the main reason why I recomend dropshipping as your first business venture is because it's the easiest and cheapest way to get into physical products and ecommerce without having to deal with inventory. Dropshipping allows you to have access to hundreds of thousands of dollars worth of inventory without pre-buying or warehousing any of your own.







Why Physical Products?



Even though I'm a huge fan of digitally deliverable products, it's actually a terrible way for most people to start. The honest truth is that starting any business is difficult and most people aren't meant to be hugely successful entrepreneurs. Most people don't have the hard work, dedication, or even the willingness to do what it takes it become a successful business owner. That being said, if you can't sell someone a piece of furniture that they're looking to buy anyways, there's no way in hell you'll be able to find and convince someone to buy a digital product that they didn't even know they needed in the first place.

If I told you to sell any of the furniture items in the photo above, I'm sure most of you could do it. There are plenty of places online that people are already looking to buy couches, tables, and chairs, and all you have to do is list it there, take good photos, and match the lowest priced competitor. If you wanted to go the extra mile you could offer free shipping, great customer service or another incentive for them to buy it from you rather than someone else. Now, if I told you to sell this ebook below, or even worse, for you to go out and create something out of thin air such as software, online tools or something else that only exists in the online cloud, how would you go about selling it? Where would you find your customers, and what would you even price it at? Have you ever noticed that some digital products sell for upwards of $500, while something seemingly similar can sell for as low as $1? 

The reason why physical products are king to start with is because it's easier to wrap your head around selling when it's your first business. Honestly, if you can't sell someone a table that everyone in the world knows is worth $299, there's no way in hell you'll be able to sell someone a digital product or piece or be successful creating a piece of software to sell for the same price. 






Why Dropshipping over FBA?



There's a ton of hype right now about Amazon FBA (fulfilled by Amazon) and there is good reason for it. A lot of people are making a ton of money from selling items on Amazon. Similar to dropshipping, you don't need a warehouse and you can be location independent as you can run your business from anywhere. But the reason why I still prefer and recomend the dropshipping model for most people is because there is less upfront cost and a lower time frame to start being profitable compared to Amazon. 

Even though it's possible to get away with just ordering few thousand dollars worth of products for your first run with Amazon and some people save time by completely skipping ordering a sample or any quality assurance, in reality the people who are actually successful are willing to spend $10,000 and a few months more on their products to do it right. 

They other reason why I prefer starting a dropshipping store over an Amazon FBA business is because you aren't tied to one platform. The reason why we use Shopify, take payments through Stripe, work with the suppliers we use and advertise through Google and Facebook is because those are currently the best options and not because we have to use any of them in particular. If any of that changes in 2017 we'll just switch over to what's working better. With Amazon FBA, you can't do that. You're 100% controlled by Amazon and you are completely locked into their world. When everything is working in your favor, it's incredible, but if Amazon decides to make any small change, you could get f$%ked. 





Downsides of Dropshipping



I'd love to say that dropshipping is perfect, but it's not. All businesses a ton of hard work, dedication and a certain level of investment and skill. The biggest downsides to dropshipping is the low barrier to entry. Since anyone can use templates like Shopify to create an online store in less than a week, other people can copy your niche and try to compete with you quite easily. This is the main reason why most dropshippers are so secretive with their niches and website urls. 

Other downsides that people often repeat online aren't actual downsides but sound like they could be. One argument is that there are lower margins with drop shipping than with other forms of ecommerce. The reason why it's not really a downside is the fact that there's no upfront costs for inventory so technically your margins are 1,000%. It'd be nice to have to higher than 25-35% margins, but it's not an actual downside when you're not paying upfront for inventory. Other people say that all of the good niches are already taken. These are the same people who first heard of dropshipping years ago, but never took action then, and are just looking for excuses on why they shouldn't put in the effort to start now. While it's true that there are a lot more competitors, the fact is the ecommerce industry is growing each and every year.

Two years ago I never even heard of Wayfair or Hayneedle which are both dropshipping based ecommerce businesses. Last year Wayfair made $179.1 million in profit which is 24% margins. The smaller company, Hayneedle just got bought for $90 Million. As more and more people start buying things online instead of retail stores, the more opportunities there will be with dropshipping. 







Who Should Dropship?



I'll start with who shouldn't start a dropshipping store in 2017. If you have a successful business or valuable skill that you can bring online, there's no reason you should abandon that, start over, and learn everything from scratch. For example, if you are a programer, go partner up with a successful online marketer and create a cool app or tool or continue to sell your services online. If you live in a country that doesn't currently buy things online and you don't want the difficulties and added hardship of trying to be the first, you shouldn't get into dropshipping. Honestly, I wish dropshipping was already established in places like Thailand where I live or South Africa where Larissa lives, but it's not. Being the first to successful crack ecommerce in these countries or in India will surely produce billionaires, but that's most likely not going to be you or me. 

If you live in a country where people are already comfortable with buying things online, using their credit card online, and reciving packages via Fedex, then dropshipping will work for you as long as you follow the right formula. Those countries as of January 2017 are the U.S, Canada, Australia and most of Western Europe especially Holland, Sweden, and a few others. Two years ago everyone complained that dropshipping didn't work in Australia, yet now it's the country that has the most successful dropship lifestyle members due to them being first movers and the lack of competition. 






How to Start Dropshipping



The first thing you need to do if you want to start a successful dropshipping business is to decide how much time, effort and money you are willing and able to put in. The path to starting a successful dropship store should only take you 2 months, but nothing in life in guaranteed and it may end up taking you twice as long especially if you have other work or life obligations. 

If you want to do it correctly and give yourself the best chance of success, make sure you have 2-3 months to dedicate 30 hours a week to learning and implementing. Aside from the cost of education and mentorship, starting your actual dropshipping store will only cost you $200-$400 including the ads you'll need to run to get started. Below is a PDF of discounts for all of the courses, tools, and software I personally use to start and run my dropshipping stores. 

If you want the best chance of success, I highly suggest you invest in Anton's Dropshipping training course and follow his teachings step by step. It's what I followed to start both of my stores, which in total have made me over $200,000 in profit since. He offers a few different packages, but when I started all he had was his Blueprint course which is all you actually need to build a successful store. The other packages are helpful for people who want the site built for them or to have someone to call and talk to over the phone if you get stuck.






Best of Luck in 2017



Regardless of the path you take, I sincerely hope everyone starts some type of online business in 2017. The benefits are enormous and until you start, you won't even realize how many doors of opportunity it opens for you.  Being a location independent business owner allows you to save a ton of money on rent, living expenses, and even taxes. Being able to fly to Thailand, Australia or Europe to attend a business conference means you can write off your business class flight, transportation and hotel room.

It's an amazing feeling to have the freedom of being able to choose where we live, work and spend our time. If you know dropshipping is the best path for you, but can't currently afford Anton's course, then make it your goal to be able to save up enough or make more money so that you can. I've written a mega blog post on how to get started even if you're broke that everyone can follow with success as long as you are willing to put in the work needed. Here's to an amazing 2017 filled with success, travel and adventure!



johnny fd jen



Warm Regards,


Johnny FD


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Post a Comment

  1. Great post Johnny. You were very right about the issues of being 100% controlled by Amazon. Even though it's not my main thing, I'm selling t-shirts on merch.amazon and it's so damn cool to wake up and see getting a shirt sale and not doing anything.

    The bad side to it is at this current moment haha. They froze uploads and edits so they could efficiently handle customer service and orders, which I definitely respect, but man, it's been almost a month and still nothing is back up yet. They did put out a notice saying they were slowly going to let people upload and give limits to how many per day but that was almost a month ago and I still can't do anything. I do get some sales here and there which is nice but it's a perfect example of why it's always good to have the "multiple streams of income" going on. :)

    ReplyDelete
    Replies
    1. Hey Matthew, sorry to hear about Amazon freezing sales! Thanks for sharing your personal experience! Hope they get it back up soon!

      Delete
  2. It's a great business model to start with but it comes with many prerequisites, one of which is the availability of credit. You can't use the funds you get from the sale to buy the products directly, so you need to have a high limit credit card yourself or partner with someone who does. I would also recommend getting a foundational business education at a local community college or online at udemy. Business plans, marketing plans, and financial plans must all be learned. You can learn as you go, but it's a must. education is key to long term success.

    ReplyDelete
    Replies
    1. Good point about the credit cards. Since it normally takes Shopify 3-5 days to pay you for a sale (and longer if they flag you as being new untrustworthy when you're just starting out) If you don't have a $7,000+ limit on your credit card, you'll need to figure out another way to fulfill the orders so you don't have to make your customer wait an extra 5 days to get their item.

      But that along with learning business basics as you mentioned, although they're all super important, will be required for whatever business someone gets into. I agree that education (not necessary college) is the key to all long term success as long as you also implement.

      Delete
  3. Hey Johnny, as usual, great pieces of advice. I am just about to launch my first drop ship store and I went through your affiliate link specifically because 1) You were the one who introduced me to dropshipping, thankful for that, and 2) I would get free access to your optimize like a boss course. I have no idea how to gain access to it, so any help on that would be much appreciated! Thanks man!

    ReplyDelete
    Replies
    1. Hey glad to have you as part of the journey! You should be getting access to my "Jump Start" course within a few days after you get forum access. If you don't, forward me your DSL receipt to hello@johnnyfd.com and i'll take care of it.

      Delete
  4. Hi Johnny, I searched for this high and low on the internet, but couldn't find any direct answers. As a non-US citizen/resident, does someone have to open an LLC in the US to do dropshipping selling/buying within the US? all of the information I find is that you _can_ go the route of getting an LLC in WY or DE, but do you _have_ to? according to the IRS, you can get an EIN from them without having a domestic LLC, without having to start LLC then apply for EIN. Reason is, I'd like to set up dropshipping business with (Thai) gf, and if it's in her name I avoid paying taxes as myself am a US citizen :)

    ReplyDelete
    Replies
    1. Dude, just pay taxes. It's not worth trying to do it under your gf's name. For Non-Americans, here's the article I wrote for you: http://www.johnnyfd.com/2014/05/dropshipping-for-non-americans-antons.html

      Delete
  5. Hi there,

    Very interesting read, I'm also about to undergo my journey into dropshipping. I'm definitely going to start one of the courses mentioned above as a starter.

    I was intrigued by your mention of Thailand, as I'm also based here (originally from U.K.)

    Do you think it wouldn't be so 'fruitful' to set up here? And if so, why? What would be the issues..

    Sites like lazada and kaidee are gaining popularity I think...

    Your thoughts would be greatly appreciated.

    Kind regards

    ReplyDelete
    Replies
    1. Hey Sam. I think some really smart people will make hundreds of millions if not Billions in SE Asia including Thailand through things like Lazada and Kaidee. But it won't be me. It'll most likely be a local Thai guy who is in university right now that can navigate through the bureaucracy, laws, etc. For me, i'm happy making $100,000 a year from dropshipping and using that money to do something else.

      Delete
  6. Great reply, well received, thank you Johnny.

    So are you running all your dropshipping stores from Thailand?

    Don't you get very high shipping prices when sending from here?

    ReplyDelete
    Replies
    1. I run the stores while living in places like Thailand, but I dropship the products to and from the U.S. =D

      Delete
  7. Interesting read, a useful case study. I am also intending to start a dropshipping business, but not in Thailand. The only issue I have heard is that you need a Tax ID in that country to start a dropship business (https://magenticians.com/how-to-start-dropshipping-business/ ). Is that true?

    ReplyDelete

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