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Pieter Levels is Wrong About the Dropshipping Scam

Pieter Levels, the founder of Nomad List calls dropshipping a scam but not only is he wrong, he's also hurting the digital nomad community while thinking he's trying to help it. Before anyone jumps to conclusions, I actually like Pieter and respect him as one of the brightest and most influential people in the digital nomad movement. We first met at Punspace in Chiang Mai almost three years ago and have chatted with him over beers a few times since. We've talked about dropshipping in person many times and he doesn't actually believe it's a scam in a sense that it doesn't work and people aren't making money with dropshipping stores, he believes its a scam because he doesn't like it as a business model digital nomads should get into.

I think Pieter is an idealist, he wants digital nomads to build great things and change the world, which I admire. But just as I disagree with his super optimistic prediction that there will be 1 billion digital nomads by 2035, I also think he's wrong about dropshipping not being one of the best first businesses digital nomads should get into. I've been super transparent about how much I actually make from dropshipping as well as how much I make from other sources of income ever since I started publishing monthly income reports in July of 2014 and I haven't missed a month since. He doesn't believe people like me and others are actually making money with dropshipping, as if he did I'd happily log into all of my accounts and show him the data, but he believes people selling and promoting dropshipping courses are selling a dream and not reality. Here's what I think Pieter is correct about and what he got completely wrong.








Dropshipping Doesn't Work




The problem with Pieter and others online saying that dropshipping doesn't work, is because it clearly does. I've personally made over $90,000 last year with my dropshipping store in profit, and that's not including the other income sources I have which includes money I make from promoting tools, courses, and hosting for drop shipping businesses. Companies like Hayneedle and Wayfair are giant dropshipping stores that make hundreds of millions of dollars. I've also personally met hundreds of people in person from Anton's course that make a full time living from their dropshipping stores, and if you come to any live event you can meet these people in person as well and verify it.

That being said, Pieter knows dropshipping works, he just hates it as a business model and thinks people should get into a different businesses, and he might be right. In the ideal world, everyone would be programmers and create awesome stuff like he has with launching 12 Startups in 12 Months which included what he's now most famous for, Nomad List. It's a site that ranks what the best cities are for digital nomads. But here's the problem, most of us don't have what it takes to be startup founders, web developers, or Pieter Levels. For the rest of us, starting with selling physical products is still the easiest way into getting into online business, making enough money to continue to travel, while building the skills that we can use for something else down the road.

In my 2017 Negativity Free Challenge I wrote about important it is to suggest alternatives rather than just say something sucks. If Pieter had a better solution for aspiring digital nomads to start a business from scratch I'd love to hear it.






Dropshipping is a Lure




Pieter is right now this. The end result of having a successful dropshipping business is what people look at, not the hard work it takes to build it. People see digital nomads like myself sipping coconuts by the beach, living the 4-hour workweek and traveling around the world and automatically assume starting a dropshipping business is easy and it's their ticket to freedom.

But it's not, and I've tried very hard to accurately tell people exactly what it takes to be successful. The reason why I recomend Anton's course for people who want to get into dropshipping is because I know that without it, I wouldn't have been able to figure it out myself. Just like starting any business, a million little questions come up, and without a step by step course or a member's forum where you can get good answers from people who have actually done it it's really difficult to be successful on your own. As someone who has personally been through the course, built multiple dropshipping stores based on what I learned in there, sold one for $60,000, built another one that is already worth almost as much, and have now met hundreds of people in person who have had similar success, I know his course works and it delivers. Pieter has no right to say something doesn't work if he's never been through it himself.

If I just wanted to make money, I could use my email list to sell a course on Web Development, Software as a Service, Amazon FBA, or anything else and make just as much money if not more. The reason why I continue to recommend drop shipping for most people is because not only is it what worked for me but it's what I think will work for most people just starting out without a ton of techskills or capital to start out. As for the middle America thing, I don't think anyone is targeting people from middle America, those people are just looking for an alternative to the terrible job market and rising costs in America and this is an easy transaction. Here's how dropshipping works if you're unfamiliar with the fulfilment method.







Pieter's Dropshipping Arguments




As a new section on Nomad List, Pieter is trying to add a list of common scams and warnings which I actually think is a great idea as I hate getting ripped off by Taxi drivers or potentially pick pocketed in a new location that I'm unaware is unsafe. In Thailand genuine scams are things like Tuk-Tuk (taxi) drivers telling you that the place you want to go is closed for a buddhist holiday so they can take you somewhere else. Other scams include people convincing you to buy gems or smuggle drugs. Other thefts include tour operators having staff go through people's bags that are stored under the bus to steal valuables. These are things that would be a huge benefit to a guide.

However, Pieter Levels wants to make it his mission to warn others about things like dropshipping, which in his mind is a scam but isn't. Here are some of his arguments and the truth to counter it.


Claim #1: They are normally in the $1,000-$5,000 USD price range

Entitled people expect everything for free or a super low cost, the problem is quality content takes a lot of time and energy to produce. If you buy a $47 course it's usually made by someone who has no idea what they're doing, or will contain a ton of upsells, rebills or another way for people to make it worth their time.


Claim #2: Pitches itself as a ‘shortcut’, ‘guaranteed success’, or implies that purchasing the course will give you an almost turnkey business if you just follow the course.

It is a shortcut. If you were to try to figure out all of this information yourself it would take you 1-12 more months. It's also a proven blueprint that has been used to build other successful stores.


Claim #3: Sellers of these courses make the vast bulk of their income selling courses, not actually running the dropshipping businesses they claim are profitable.

Who cares if Apple also makes money selling apps and softwareas long as you're getting a kick ass iPhone? Did you know that Amazon makes more money selling cloud hosting than they do with ecommerce, does that make their ecommerce business illegitimate? Earnest affiliates like myself post transparent income reports with net profit numbers so people can decide for themselves what they want. A lot of digital nomads would love to make $1,000-$4,000 a month.


Claim #4: Anecdotal evidence indicates 80-90% of course participants have given up within 180 days.

90% of people give up on any business they think about starting or pivot into something else. If anything buying an expensive course makes you both more financially invested and gives you the steps you need to follow, therefor giving you a much better chance of not being one of those 90%  who give up.


Claim #5: Sellers may approach you at co-working spaces attempting to ‘soft sell’ you by boasting of their success, and then offering to ‘let you in on the secret’

This is the stupidest thing I've ever heard. If someone is boasting about their success it's probably because they are excited they made a sale or are running a profitable business. If you doubt them, just ask nicely if you can see their dashboards. Unlike trolls hiding behind their keyboard in forums online, most people in person are genuine, kind and want their friends to succeed.







Pieter's Bigger Picture




Even though we disagree on a lot of things, there is something he is right now and that it's our need in the digital nomad community to create bigger, better, and more amazing things. I've been publishing my income reports every single month and have been very transparent about where I make money online. I think a lot of people assume they see a big number and want to get into dropshipping to get that. But most people who are just starting out their digital nomad lives really just want and need $1,000-$3,000 a month so they can live in places like Chiang Mai, Thailand, enjoy good weather, great food, and the good life on the cheap for a while. That's why when they see my income reports and scan through my 10+ streams of income, they choose dropshipping as it has a low barrier to entry and a lot of information on how to get started.

But what Pieter is right about is that it's not the end game and that we can do bigger and better things. I think Pieter wishes everyone would build cool shit instead of little dropshipping stores. I'd love to have Pieter on the podcast and would be happy to openly and honestly talk to him about any of his concerns, but from our conversations I don't think he thinks dropshipping is a scam, as I know he knows people genuinely make money from it, I think he thinks its a scam because it's preventing people from doing bigger things like creating 12 startups in 12 months like he has.

Well, taking his advice, I've spent the last two days creating something that I think would both add value to the digital nomad community as well as give people a realistic idea of whether or not they personally should get into dropshipping or do something different. So here it is, my "Should you get into dropshipping quiz beta v1.0" built with Interact. If there's any issues or bugs please let me know so I can fix them. But try it out if you're interested and see what results you get.


Update: There was so many bugs and it kept giving the wrong result, so I've taken it down until I can fix it. *Sigh* But this just shows another reason why some nomads aren't meant to be programmers.

Update: I've seemed to fix it but this is now beta 1.1 so if it has any major bugs, or clearly gives you the wrong answer please let me know so I can fix it. Overall, interact seems to be a cool quiz building tool that lets you embed it anywhere like here in blog posts, but has their issues like not being able to reorder questions after creating it so I apologize in advance if it's not as polished as it should be.



Take the Dropshipping Quiz


This is beta. 1.1 so it should be working correctly, let me know in the comments below if it isn't.








Final Thoughts




I think Pieter is a super smart guy with good intentions. I also think he's an idealist, which is a good thing as I think it takes visionaries to force change and do big things. I'm more a on the ground, make it work, give it a shot kinda guy. Moving to Chiang Mai and getting into dropshipping genuinely changed my life for the better. I was down to my last few thousand dollars in savings when I discovered it and at my lowest point when I was in the middle of building my store, I got down to $200 and started putting things on my credit card. I've documented the whole journey in my two books, 12 Weeks in Thailand, and Life Changes Quick if you want to know the full in depth journey of what it took.

I agree with Pieter that not every digital nomad should get into dropshipping which is why I created the quiz above which filters out more than 50% of people telling them to do something else. But I will stand and fight for the rest of my life that dropshipping has genuinely worked for me and countless others as I would have hated it if someone falsely convinced me not to do it 3 years ago.

Anyone who says it doesn't work hasn't successful done it themselves and has no idea what they're talking about. And for the MLM comments out there, 99% of successful dropshippers aren't promoting dropshipping courses, I'm one of the first bloggers who publically started doing it even though I was honestly tempted just to keep the information to myself and have less competition when building future stores.

But the reason why I talk about it so openly is because it genuinely works and is the best business model for most digital nomads to get started with. Trust me when I tell you I could just as easily tell you to take a course in Amazon FBA, Javascript, SAS products, house flipping, or something that's actually an MLM,  but I don't because I've vowed to only recomend things that genuinely work and that I've personally had success with myself.

P.S. If you still somehow think dropshipping is a scam read this.

P.P.S. I'm glad I wrote this because false warnings like Pieters are causing the misinformed to start banning dropshippers, affiliates, and course creators from places which is ridiculously stupid.


Warm Regards,


Johnny FD



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Post a Comment

  1. I make money dropshipping on eBay. It's not quit your job money, but it's money. I'm almost done building my DSL store and as far as I can tell it will make money.

    I understand some of Pieter's thoughts but I think he misses the mark about some of these business models - we are using them to free up our time, at least that's my goal. Once I earn enough online income and automate it, then I will have the time to focus on bigger and better things that aren't necessarily online. As long as most of my time and energy is spent at a day job I will never be able to give my other projects the focus that they need to be successful. Anyway, that's my two cents. Thanks for this article, Johnny.

    ReplyDelete
    Replies
    1. Hi Austin, I've several questions for you regarding your ventures into dropshipping, which I think could further confirm that this is the right choice. Would you mind connecting with me on Google+ So we can have a convo?

      Delete
    2. Hey Austin, thanks for sharing your experience! People like you speaking out really helps the cause. I definitely agree that the path you are taking is what I would recomend to most people.

      Delete
    3. Thanks Johnny!

      Peter, I'd be glad to chat. Just shoot me a message! I'm heading out right now to go camping for the weekend. But I'll be back on the grid Monday.

      Delete
  2. Could you please link to the source of Pieter's comments?

    ReplyDelete
    Replies
    1. I try not to link to toxic discussions and give them more fuel for their fire especially on anonymous sites like reddit as I think it sucks people into negativity.

      Delete
    2. I agree. With a few exceptions, Reddit is quite the hotbed of nay-sayers and those with a loser mentality; often definitely the not the can-do types.

      Delete
  3. Good article thanks. I'd like to see your quiz when it's back up and running

    ReplyDelete
    Replies
    1. Glad you enjoyed the article. The quiz is back up and running bug free! =)

      Delete
  4. Nice article Johnny, I like the quiz, I didn't notice any issues so perhaps I have just tried a better version of it.

    It's amazing that I had I no idea Chiang Mai even existed before November 2016 and now I live here haha, thanks for shining a spotlight on the area. It's amazing here, seriously!

    Now that i've made sales with my DSL store and eBay dropshipping, I would say eBay requires less effort in terms of marketing but a lot more effort in terms of volume of products. I've learnt soo much about marketing and business through DSL, techniques that I will apply to everything else in the future as well.

    In Chiang Mai I've personally met people doing both methods at various levels from all over the world, full time, so both methods can scale to replace a full time income, it just takes time.

    Thanks for continually pushing back against the wave of "Scam!" articles that seem to be cropping up everywhere.
    A lot of people don't realise that only a few of those that become successful, feel comfortable talking about it publicly. It carries implications in some cases depending on where you come from etc.

    On the other hand, those people that fail or never even tried, feel almost obliged to shout from every high tower they can find haha. Your Travel Like A Boss podcast is definitely a strong weapon against the trolls along with your blog. I've been sharing it with as many people as I can, along with letting my lifestyle speak for itself.

    There also seems to be a strong sense of entitlement from people who only want free information. For anyone reading this long after I've posted, ignore the trolls, Johnny is a genuine guy and I along with some of my friends, have been successful with his advice.

    ReplyDelete
    Replies
    1. Hey thanks so much for sharing your experience Jerry! Glad you like the quiz and I appreciate your support! It's not easy talking about success publicly but I know how vital it is to openly share what has worked with those just getting started or struggling.

      You're also right about the entitlement mentality and people wanting everything for free which almost never works. I'm glad you and your friends have been successful with both Anton and David's courses, congrats on the new income and keep it up!

      Delete
  5. This comment has been removed by the author.

    ReplyDelete
  6. Hey Johnny. (Not sure how I didn't know this blog post was here, given it's so recent and I'm subscribed)

    Anyway, I've noticed there's a very large amount of negativity over on YouTube and sadly (you probably know already) some is directed at you. It's dissappointing that some of it is related to the recent meet-up video(s) posted there. As expected, comments are made without any facts to back up the negativity and is possibly discouraging to newcomers, which is unacceptable.

    It's clear to me that this particular lifestyle and the means you and others support it with are something that seems to draw out the unjustified negativity and those who are "crabs-in-a-bucket" types.

    I realize that's how it often is, but I wouldn't be here if I didn't think you were the real deal.

    I built my first store then hit a show-stopper problem that will mean I'll have to start again on a different niche and store, but I've already learned a lot and I'm not giving up.

    Actually I have a coaching session scheduled for tomorrow afternoon with Earnest, because those like him are successful (like you) and men need to learn from / humbly take advice from other successful men. Something I learned along the way.

    Not giving up on my dream...want it so badly I can taste it! Can't wait until the day I finally get a one-way ticket out of the USA.

    Thanks for the great podcast, nice interviews, and real advice and not being in it to gouge us.

    Mucho respect!

    ReplyDelete

Please take a second to log in before you comment. I've turned off the anonymous commenting option. I'm open and respectful with you, please be the same back. Stay positive, trolls and spam comments will be automatically deleted.

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