Think Twice Before You Dropship: How to Actually Make Money Online

The video is about the risks and drawbacks of dropshipping as a way to make money online, and the speaker offers an alternative strategy for creating a profitable e-commerce business.

This video by Davie Fogarty was published on Nov 19, 2022.
Video length: 15:17.

This YouTube video titled "Think Twice Before You Dropship:

How to Actually Make Money Online" discusses the pitfalls of dropshipping and offers an alternative strategy for creating a profitable e-commerce business. The video begins with a story of a person who fell for a dropshipping guru's promises of easy money but ended up being scammed. The video then goes on to explain the dropshipping business model, the reasons why it is considered a scam, and the psychological tactics used by gurus to prey on beginners.

The video concludes by introducing a different approach to e-commerce that the creator believes is more successful and shares their own experience of building a profitable business without dropshipping.

• Dropshipping is a business model where products are bought from a factory in China and sold on a website at a higher price.
• Dropshipping requires little inventory and startup cash, but there are risks involved.
• Risks of dropshipping include platform bans, low customer feedback scores, and payment processing issues.
• Dropshipping also faces high competition and low-profit margins.
• Dropshipping gurus use false promises and psychological manipulation to sell their courses.
• An alternative strategy for profitable e-commerce involves building a brand and providing excellent customer service.
• Thorough research and critical thinking are important before starting an e-commerce business.
• YouTube gurus often sell repackaged information without ongoing support.
• Alternative strategies for creating a profitable e-commerce business include focusing on customer satisfaction and seeking guidance from experienced entrepreneurs.
• There is a five-step process for success in e-commerce, including finding a unique product and selecting a good supplier.

Think Twice Before You Dropship: How to Actually Make Money Online - YouTube

What is Dropshipping?

• Dropshipping is a business model where a dropshipper buys products from a factory in China and lists them on a website at a marked-up price.
• The dropshipper then buys the product from the supplier and ships it directly to the customer, making a profit.
• About $30 of the profit is generally spent on advertising.
• This model is popular because it requires little inventory and startup cash.
• However, there are issues with dropshipping if done improperly.

Reasons Dropshipping is Risky

• Platform bans: Platforms like Facebook, Google, and TikTok spend a lot of money to improve their customer experience and are unlikely to allow dropshippers to sell low-quality products.
• Customer feedback scores: Platforms measure whether a seller is fraudulent or not, and dropshipping often ends up with low scores.
• Payment processing platforms: Platforms like PayPal can seize all the money in an account if they suspect fraudulent activity, which is common in dropshipping.
• High competition: Dropshipping is a popular side hustle, leading to high competition and making it difficult to stand out.
• Low-profit margins: Dropshipping often has low-profit margins due to the need to mark up prices and spend money on advertising.

Tactics Used by Dropshipping Gurus

• False promises: Dropshipping gurus often make false promises of easy money and quick success.
• Repackaged PDF courses: Many gurus sell repackaged PDF courses with no ongoing support.
• Preying on beginners: Gurus target beginners who are looking for a way to make money online.
• Hyped-up profiles: Gurus often have flashy profile pictures and rented luxury cars in the background to create an image of success.
• Psychological manipulation: Gurus use psychological tactics to make people feel like they're missing out if they don't buy their course.

Think Twice Before You Dropship: How to Actually Make Money Online - YouTube

An Alternative Strategy for Profitable E-commerce

• There is a successful way to launch e-commerce businesses without the risks of dropshipping.
• The speaker shares the exact framework he used to create profitable e-commerce businesses.
• This strategy does not involve dropshipping or PDF courses.
• The speaker achieved over $450 million in sales and made it on the Australian Financial Young Rich list using this strategy.
• The speaker believes that if he had started with dropshipping, he wouldn't have achieved the same level of success.

Risks and drawbacks of dropshipping

• Dropshipping platforms have fickle policies that can lead to bans and account closures.
• Dropshipping lacks repeat customers, with an average repeat purchase rate of 3-8% compared to Amazon's 93%.
• Long shipping times and tracking issues create a negative customer experience.
• Quality problems with dropshipped products can lead to negative reviews and bans from platforms.
• There is no product uniqueness in dropshipping, leading to increased competition and rising advertising costs.

The problem with YouTube gurus

• YouTube gurus often sell repackaged information without ongoing support.
• They use psychological tricks to sell their products, preying on people's desire for quick wealth.
• These gurus charge exorbitant prices for their courses, taking advantage of people's willingness to invest in their dreams.
• Many of these gurus have never had a successful business themselves and rely on YouTube videos for their knowledge.
• Naval Ravikant's quote emphasizes that there are no get-rich-quick schemes, and these gurus are simply getting rich off their followers.

Alternative strategies for creating a profitable e-commerce business

• Focus on building a brand and providing excellent customer service.
• Offer fast shipping and prioritize customer satisfaction, like Amazon does.
• Ensure product quality and uniqueness to stand out from competitors.
• Consider using PayPal as a payment method to increase conversion rates.
• Seek guidance from experienced entrepreneurs who have successfully built e-commerce businesses.

The importance of thorough research and critical thinking

• Before starting an e-commerce business, thoroughly research the risks and drawbacks of dropshipping.
• Be skeptical of YouTube gurus and their promises of quick wealth.
• Invest in education and guidance from reputable sources with proven success in the industry.
• Think critically about the viability and sustainability of different business models.
• Take the time to develop a solid business plan and strategy before launching an e-commerce store.

Risks and drawbacks of dropshipping

• Gurus create fake Shopify dashboards to deceive people.
• Before spending money on a course, research the person offering it.
• Dropshipping can be a good option for beginners to get started.
• Dropshipping allows for testing product ideas and customization.
• However, dropshipping has limitations and risks.

Five-step process for success in e-commerce

• Find a product that is not saturated in the market.
• Ensure the product has a good profit margin for advertising.
• Use a tool or process to find trending products.
• Pick a product over three kilograms to protect your business.
• Make the product unique through branding or targeting a specific demographic.

Finding a great supplier

• Use Alibaba and filter for trade assurance or gold suppliers.
• Ask for customer references and product samples.
• Ensure the supplier has good communication skills.
• Supplier selection is crucial for resolving issues.

Setting up a branded website

• Shoot your own content for the website using a smartphone.
• Creating a custom brand website builds trust with customers.
• Avoid using content from dropshipping suppliers.
• Investing in a branded website is not expensive.

Watch the video on YouTube:
Think Twice Before You Dropship: How to Actually Make Money Online - YouTube