Is Dropshipping Dead as an E-Commerce Business Model? – 224

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Over the last few years there’s been a tremendous wave of interest in private label selling. If you weren’t paying attention, you’d think that’s the only thing happening in e-commerce.

But that is far from the truth. When it comes to selling products online, there are a lot of business models that work. Today on the AM/PM Podcast, Tim Jordan welcomes Mike Weiss, the Chief Community Officer for a company called Dropified that supports a thriving community of over 30,000 dropshippers.

As the e-commerce space becomes more compartmentalized, many skilled sellers have made the mistake of overlooking dropshipping as a possible avenue of growth. Because you don’t have to worry about developing new products or purchasing and storing inventory, dropshipping has a very low barrier to entry. In fact, many Amazon private label sellers got their start with dropshipping. Recently, the dropshipping business model has changed to allow more room for creativity and partnerships with brands as well as introducing cutting-edge products with a higher perceived value.

Is dropshipping a good side-hustle idea? Who should be interested? How does someone get started?

Mike answers those questions and more in this conversation. You never know, dropshipping might just be a great way to quickly raise the funds to level-up your Amazon brand or help you to branch out to a niche you’ve always been interested in.

In episode 224 of the AM/PM Podcast, Tim and Mike discuss:

01:50 – What’s a Chief Community Officer?
03:30 – Rescued by Dropshipping
08:00 – Breaking Rules Professionally
09:45 – Branching Out to Toys on Private Label
12:00 – An Amazon Suspension Forces a Change
16:30 – What Exactly is Dropshipping?
20:30 – Mail Order Dropshipping
22:00 – Popular Dropshipping Misconceptions
24:30 – Big Changes to the Platform
28:45 – Best Case Scenarios
34:30 – Dropshipping from US Manufacturers
37:45 – Why are We Choosing These Specific Markets?
41:30 – Partnering with Manufacturers
45:00 – Where to Go to Find Additional Resources
48:00 – Using Dropshipping to Product Test

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Transcript

Tim Jordan: When it comes to selling products online, there are a lot of business models that work there’s some that can’t work. And one of the ones that’s gotten a little bit of a bad reputation, a little bit of a stigma attached to it is drop shipping. Today, our guest is going to be talking about drop shipping. We’re talking about how the industry’s changed, what works, what doesn’t work and where it may actually be good for you. Check it out. You’re going to like this episode, here we go.

Tim Jordan: Hi, I’m Tim Jordan. And in every corner of the world, entrepreneurship is growing. So join me as I explore the stories of successes and failures. Listen in as I chat with the risk takers, the adventurous and the entrepreneurial veterans, we all have a dream of living a life, fulfilling our passions, and we want a business that doesn’t make us punch a time clock, but instead runs around the clock in the AM and the PM. So get motivated, get inspired. You’re listening to the AM/PM Podcast.

Tim Jordan: Hey everybody. And welcome to another episode of the AM/PM Podcast. Today, we have a special guest with us, Mike Weiss. I just learned that it’s not Weiss, which I’ve been saying in my head for the past, like three months. It’s Weiss. And Mike is the chief community officer of a company called Dropified, which supports somewhere around 130,000 drop shippers. It’s pretty big deal. So welcome to the show, Mike, glad to have you here.

Mike Weiss: Thanks man. It’s great to be here.

Tim Jordan: So the reason I want to have you on is I want to talk about drop shipping. And the reason I think that’s important is because you know, myself and a lot of the audience come from the e-commerce world and it’s very siloed. It’s very compartmentalized. We have the arbitrage people. We have the Amazon people. We have the Shopify people. We have the affiliate people. We have the drop shippers, and I know very little about drop shipping, but I know that a lot of ways, it’s extremely similar to a lot of the things that I’ve done or the things that I am actively involved with. But I think there’s a lot of misinformation about drop shipping. And I think that there might be some missed opportunities and there might be some people jumping into deep and maybe paths that aren’t going to be very fruitful. So I’d like to talk kind of a lot about drop shipping today, as it pertains to, is this a relevant side hustle? When would this be applicable? Who should be looking at this type of business model, things like that. But first off, let’s start off with you. So, I already gave the punchline away that you’re now the chief community officer of Dropified. First, tell us what chief community officer even means, because it sounds like one of those cool corporate names you make up when you can’t really find a typical description.

Mike Weiss: You know what, and I think that’s pretty much it, the whole point when I came on with Dropified was– so Chase Bauer and Lowell Rempel are the two co-CEOs here at drop a fight. And if you ever meet chase or Lowell they’re both awesome guys. Um, but both admittedly don’t really kind of want to be out there and be the face of drop a fight. And so what they were looking for was somebody that experience in, it doesn’t have to be like 30 years experience or anything like that, but just, they had to have enough experience in both just e-com dropship, arbitrage, private label. To be able, just to speak to the general community about what is dropified doing with their new tiers and how are we advancing a growing, which I know we’re going to get into later in the show. ButI won’t bother anyone with that right now, but yeah, so then they had interviewed something like, I don’t know, 10,000 people, I think, which is a pretty obscene number actually. And then when they got back, it was like something like 10,000 resumes they got. And I didn’t know that until after I had gotten the position here, but I just actually had such a dream for Dropified because there was a time when I actually needed to drop ship in order to actually get my family out of a really nasty situation where we were stuck in the United States. And by the way, we’re from Canada. That’s why I say stuck. This isn’t some weird political thing, but yeah, we were stuck in the States for about six months and man, we were trying every which way to get out. And we just couldn’t because financially we didn’t have it. And so I needed to use drop shipping and Dropified was the platform I chose because it just, there’s a lot of great things that helped me make the money quickly. And I was able just to quickly put together about 20 grand in a couple of weeks and we’re able to make our way back home. And so why, what the chief community officer position is, it’s really someone that was a lot like me, it’s someone that none of us really fully understand what’s coming in e-commerce, everyone can always predict what they think is going to happen. But a lot of people are kind of stuck in this same situation where they’re like, well, I know what I’m kind of doing, but I don’t really know how to prepare, or there is some people that are even a little bit further behind that. And just saying, man, I have no idea what I’m doing. All I know is I just kind of lost my job. Right. All I know is I kind of just want a side hustle, but man, this is super confusing. And so my job is to come in and say, Hey guys, listen, there’s been very few things that you are going through that I haven’t gone through. So let me just take you by the hand, let me actually show you how it’s not, instead of just being another person talking, I actually want to jump into your site, jump into your products, help you understand maybe what a smarter route would be and Dropified’s really done a great job on kind of opening up that kind of master coach, if you will position. And so I would probably chop it up as a chief community officer as like a master representer, or master coach, or an ambassador and evangelist for the company, but that actually knows what’s going on and is willing to help people.

Tim Jordan: Well, I think it’s cool that you have this position with a company that you actually used as a client. You actually used it as a resource before you started working for them, which is pretty cool. So I’d love to hear more your story about this being stuck in the US but basically it sets up a lot of the context that I think is interesting about drop shipping in that, it is on the surface level. And I want you to explain this more, a business model that doesn’t require a lot of capital. You said you use drop shipping to raise money cause you were broke, and if you’re broke, you can’t go out and buy inventory. So before we get into that, tell me what’s your career been before this? What led you to this? Oh, crap. I’m strapped for cash. Oh, there’s this crazy thing called drop shipping out here. It’s going to help me.

Mike Weiss: Yeah. Because people are like, let me stay away from that career. Right?

Tim Jordan: What left you broken stranded?

Mike Weiss: What left you broken stranded? So over the last 20 years, uh, I have had the privilege of working with a number of different companies really to focus around their sales departments. Right? So, anywhere from the online security to finance, to telcos, to Amazon companies, to restaurants, whatever, the component was they wanted to bring somebody in that was kind of a fresh perspective. And so I’ve had the privilege of actually having more of a consulting type gig that would hop in and out of these longer contracts with folks. And really, it was just to say, poke the holes. Right. And I love, I mean, to be honest, it started back when I was in a front– when my first, first, first job in corporate was I think I was just a phone salesman at a telco up here in Canada. And I mean, unfortunately the way that you’re trained sometimes is to kind of grease the wheels if you know, and so, it doesn’t matter how it got there, the fact is that it got there kind of thing. And I just started realizing, man, there’s a lot of ways to break rules in big large corporate environments, because there’s just the checks and balances aren’t the same as when you’re super lean. And it’s like every decision that you make has a consequence. Right. And so, I just actually had a– it was actually a really bad start, I guess, but I actually really enjoyed breaking rules, but then reporting those broken rules back to my boss after there was a couple of times where maybe I stuck in a broken rule environment, a little too long, but then I would bring it to my boss and say, guys, I have an eye for just poking holes and stuff and breaking rules and helping you understand where you’re going to be losing a lot of money and where people are capitalizing on this opportunity here. And that actually earned me a couple of nice promotions in that position, in that company. And I just realized, man, I love doing this. Like I love helping people understand where holes are, but then I also was also doing very, very well in the sales side of it and helping my sales teams grow. And so I thought, man, there’s a right and a wrong way to doing this. There’s an old way and a new way to doing this. And I kind of just hitched my wagon onto the new way. And that’s what brought me out of telco. And I started getting into– I got into online securities, which was a world I did not understand. I mean, I knew how to play halo and stuff, but there was, there was a world out there that people on the day-to-day do not know about.

Mike Weiss: And that is that online, gaming online chat, online securities world. And so anyway, I spent a year just really helping a company grow and develop. And that was really maturing because I was like, Holy, like, this is lean. Now this is, I need to actually get this thing moving. And so there was a definitely a couple of months where it’s like, well, if I don’t sell $200,000, then the company’s going under and it’s like, Holy, that’s a lot of pressure. And so I just went back to those strategies of just, what’s the best way of selling. What’s the best relational way of selling? How do you story tell this thing properly? How do you go through the points that you need to all of it. Right. And then finally I ended up with the financial company and then my wife and I decided that we wanted to kind of stop working for exclusively just for other people, like just to line their pockets with money. Although it was great. I mean, I really enjoyed the experience, but we kind of wanted to do that for ourselves. And so we thought, why not bring that over into our world and start doing this ourselves? And that’s where we started creating our own companies and our own private labels. And we started with selling toys and that kind of branched into a number of other things. So right now, my wife– and then my wife fired me because– get this is my wife. She’s like, get out of the house. I can’t deal with you all the time. I’d go do something else. We’re fine. The company’s doing really good just now you go do something else. So, anyway, so yeah, so then she’s doing great. I mean, the company’s selling tens of thousands of toys, had a killer Q4 so far and, and so then yeah, Dropified kinda of was just another project. And it was one that I was really passionate about and I just choose not to jump into projects unless I really enjoyed them. So, the whole getting like losing money, we had actually taken a bit of a trip together as a family. And so what we had done is we had gone down to the States. We went to the big family vacation. It just really came after spending about 50 or 60 hours a week working at the financial company. And it was just a high demand and we just said, forget it. So we decided to take this big, long trip down and while we were down there, my wife’s company, she was selling exclusively on Amazon and Amazon had thrown a hazmat dangerous goods in hazmat stall on her.

Mike Weiss: And so we had like literally tens of thousands of, sorry, we had hundreds of thousands of dollars tied up in this dangerous goods and hazmat, which is really kind of all the money that we were kind of bankrolling, because again, at the time I wasn’t working at right at that point. And so as it got stuck, I mean, as anyone that sells in Amazon knows there’s storage fees and everything else. They don’t pause. Like they don’t say, Oh, okay, well, we’ll hold off on that while we’re holding off on you, that I kept going. And so we were at a point where our season was hot and we actually– Amazon came in and they froze everything. And for six months they were charging us storage fees, which obviously incrementally got bigger, but this was over a time when IPI– the IP score came in. And so, because we had such a crappy IP score because our inventory wasn’t moving, then we got, we started getting charged through the nose on storage versus what it was prior to, and all that money was coming out of our personal stores. And so if you think about something like 10 or 15,000, very large box units that are getting charged storage fees every month. I think we were kind of losing, I don’t know. I think it was something like, I don’t even know what the number was anymore. I think it was like a few grand for sure every month just in storage fees and then over and above that there were other fees and stuff that they’re trying to take us on for. And so all of that actually started coming off of our personal stores as well, because like our personal money, our personal funds, credit cards, everything else that we had attached to the personal side of that business account, which we were using for things like gifts or whatever prior to, because we were homeschooling our kids. And so we needed to get our Amazon, it was faster for us to use Amazon than anything else to get our stuff, to help them home, to help them homeschool them. And so anyway, these days they just took all of our money, essentially. That’s kind of where it all came down to is Amazon just literally took all of our money. Now, granted, we owed it in storage fees, but we also were locked in being unable to sell. And so then last, sorry. And then yeah, at the very end. We got to a point where we literally only had, we had less than $10 in the bank. I mean, luckily we had some friends that were helping us out with their house and so they let us use their house, which is– they’ll always be a blessing in our lives. And I remember my wife find out and she went out and she spent the last $9 we had on, I think it was a carton of eggs, some butter and then some rice or something like that, just to stretch as much food as we could, because that’s where we’re at. And I thought, man, there’s got to be a way to actually sell something. And I didn’t have time to private label. I didn’t have the money to private label. And I thought, how the heck am I supposed to do? I can’t go out and consult because I’m a Canadian, I can’t work in the States. I mean, I was kind of freelancing as like because I’m a musician. So I was freelancing at churches and anywhere else that I could just to play piano or just to sing or whatever, just to get some money. But I mean, that was drying up real quick and we thought, Holy, how are we supposed to do this? Well then, I mean, I had done Shopify and drop shipping before, but I just, I was, I made the mistake of doing the whole, Walmart thing where I’m just like, Hey, we’re going to pretty much copy and paste all the Aliexpress and put it onto my Shopify store. And everyone will come to me instead of Aliexpress. It’s what it’s like the common mistake. Right. And so I spent thousands of dollars and just it wasn’t working. And so then this time I thought, okay, I can’t do that. I have to be really specific. So I actually ended up finding a number of different products for dropship that I knew people were looking for over the Thanksgiving holiday last year. And yeah, I was able to actually sell it to them and then do a lot of customer orders and then jump onto Facebook and jump in and just do whatever ad spend I had left for a couple of hundred bucks we had left. And in that process, it was like I said, it was a two week process, lot of research on the front end. But after two weeks, I was able to put together about 20 grand and which helped us actually get home. And then that’s where we kind of reset and said, okay, what do we need? And then obviously Amazon unlocked and we got a chance to figure that out. So, sorry, that was a long answer to your question.

Tim Jordan: It’s really good because you have so much context, you have so much background because you have done different types of e-commerce selling. You’ve done private label, you understand all this stuff, I love Amazon private label and I even hate the term private label. I love building a brand and selling it like will say that. But there are some downfalls like getting your money tied up in inventory. In Q4 is tough because those of us in the industry, everybody thinks that we’re raking it in Q4. You make all this money. Well, Q4 you’ve been leaned for four months because you bought mountains of inventory to get ready. And now you’re depleting your inventory. You got turned around and push all that money back out to buy new inventory for Q1 and prior to the Chinese new year and all that good stuff. So drop shipping is very interesting because it is a business model that doesn’t necessarily need massive amounts of cash upfront. And I know there’s some caveats to that, but for the people that are not familiar with drop shipping, can you just define what drop shipping is? I know we’ve said the term probably 374 times this episode already, but what is drop shipping?

Mike Weiss: Yeah, I know it’s a good question. So, ultimately in drop shipping has a really nasty stigma attached to it because it comes across with quality. But, I’m sure we’ll talk about that here in a little bit, because I think that there’s a lot of false beliefs that come with that. But essentially what drop shipping is, this is it’s basically shipping products to your customers directly from your suppliers and what essentially that means is that you’re never holding any inventory. So how it works is that you’re going to create your own online store or you are going to do your own direct mail order, or you’re going to whatever, like whatever it is that you’re going to do for your medium, for people to purchase, you’re going to create that. And then whenever someone buys it, essentially the order comes to your store, okay, which then you are then going to place the order directly with the supplier, because now you’re holding the money and then you’re going to order directly from the supplier. And then that’s, you’re going to be buying it at a much lower cost than what the person paid you for. So you’re paying the margin or, sorry, they’re paying the margin, and you’re paying costs and then they are going to ship it to your customer directly. So you never touch the inventory, but you get all the profit. That’s essentially that’s it. And it’s in its simplest form what a drop shipping is.

Tim Jordan: Yeah. And just some examples for those that aren’t familiar with it, the three most common examples of drop shipping I see, and if I leave one out, Mike, let me know. But I started seeing drop shipping the first time when I was selling first products on Amazon 2015, 2016, and my products were showing up on walmart.com, right? So what people are doing is they’re just copying and pasting my product information, listing it on Walmart as if it’s their own. And if they got a sale, they would go buy it from me on Amazon and set the shipping address as that client that just purchased it. And they would Mark the price way up. And I would see people all the time, like in the Facebook groups, Oh, I’m selling my product for 20 and someone else is selling it for 40 on Walmart. Hijacker, no, it’s not a hijack. They are just drop shipping your stuff. Second example. I know guys that were selling, they’re still doing it like $10,000 hot tubs, steam showers, thing like that. So what they do is they find manufacturers that have new, a nice product and they go out and they build their marketing funnels and they build Facebook ads and social media ads and Google ads. And if you go to their website and you buy the product, then it’s shipped and maybe even installed without you ever having to touch it. And then you just pay the supplier, the manufacturer, the one that sells. And then the third one, the one that gets a lot of, I guess, bad rap. And what you’re saying, there’s a little bit of a stigma involved is this drop shipping straight from China. And where I’ve seen that specifically, like on Amazon is people will list products on Amazon. You’ll see the delivery time is two weeks, three weeks, four weeks sometimes. And they’ll ship it super inexpensive. And these sellers will have 3000 listings. And all they’re doing is copying and pasting the information, the images, the product stuff from Ali express, which has Ali baba is like B to C platform. Right? And that’s where a lot of these bad stigmas came, I remember. And it doesn’t just have to be Amazon. It could be Shopify sites. It could be social media. I remember my wife found this. Yeah, eBay, my wife a few years ago found this amazing sweater on a Facebook ad. And it looked great on the model. And this is going to be the nicest sweater she’s ever bought. She’s like, Oh, this thing’s amazing. She buys it. Where is it? Where is it? Where is it in like three weeks later, it shows up and, wat it up, packaged with Chinese writing on it. And she opens it up and it is not what she expected. I mean, it’s like light years different from what the images were. And she was so upset, but she only paid $9 for it.

Mike Weiss: Probably for a doll.

Tim Jordan: Yeah, exactly. So, those are like the most common types that I’ve seen of drop shipping. Are there any other big ones that I’ve missed?

Mike Weiss: I mean, China is kind of the big, big, big one right now. I think I’d probably say the only other one that I would throw in there is something like mail orders. Right. So for example, when you look at traditional MLMs, that’s a perfect example of what drop ship could be, right. So if you have like, I mean, I don’t want to throw any brand names out there, but let’s just say like a makeup or a shake or a vitamin thing, that would be an example of like more of a drop shipping, because essentially if you think about, you have an agent that is going to be making the margin or the commission, or a lot of the margin or commission, if anything, it’s like a glorified affiliate program. But, they are going to be making like a lot more of the margin of commission based off the packages that they sell, because there’s more margin there. And then when that happens, they say they go to their friends and they have a party or whatever, and they showcase all this great stuff. Then people say, great, I want to buy one of those. Then they’re going to go in and place the order for them, like face to face. Because that’s the strategy. And then that order, like they’re not touching the inventory. Right. So that order literally is going to go around that person and they’re going to go directly to that person’s house. And then the beautiful part is now they’ve signed up on a subscription model. So now they become whatever a seller or they’re going to become a client. I know that they’re going to have discounts.

Tim Jordan: Yeah. So, a lot of people assume that the hardest part about selling online is having the product. No, there’s a million products out there. The hardest part is getting people to buy it. So you do that with marketing, Amazon school, because there’s a huge platform, but the reason you can’t sell everything on there is because there’s either no market or too saturated market. And there are so many manufacturers out there that have great products and they just can’t sell the stinking things because they don’t understand marketing. So drop shipping is a great, a great way for people that have some marketing prowess that knows how to access audiences that knows how to build funnels and knows how to tell a story and connect the manufacturer, the end user. Right. So what are some of the biggest misconceptions about drop shipping as a business model? I think the first one talked about that. Yeah. It’s all a scam or that it’s all junk, right?

Mike Weiss: Yeah. It’s a scam It’s junk. It takes too long to ship. Am I even going to get it? Poor customer service. Because I mean, if something takes 60 days to get to you, that’s not like a chandelier or something that’s like big enough to actually merit a 60 day delivery date, or handcrafted. There’s just lots of issues when it comes to customer service tracking, lost items, can be coming through pretty big. On the, I think on the that’s on the customer side, on the seller side, it could be that again, same thing, long tracking times, the fact that they actually have to pony up the money first before they actually even get the money, because depending on the actual merchant provider that they get, it can be something like five days before they actually receive the money that the client had actually given them. And then, but they can’t wait five days to actually wait for the shipping because it would just, that would delay it like crazy. So they usually front the money and then they get paid afterwards. So that’s a big pain in the butt. Sometimes tracking numbers, track getting tracking information is really hard. They have to work with a number of different tools to get out there. And I think the biggest part, and you’ve said it already is marketing. Marketing is very, very difficult sometimes for the seller because they were selling the same stuff as everybody else. And so how do you, how do you sell something that’s the exact same, and try and sell it a little bit differently. And that’s always a big trick for people and everyone that jumps in dropship and they do it because of the super, super low cost barrier to get into it. And there’s a truckload of learning that comes with it. I’m not talking about it. It’s a lot to learn. I mean, like there’s so many resources that people can pull from. It’s not like a very hyper niche. Do you have to spend two grand just to get this amazing course? It’s free. Everything is out there and then you can learn from the best. But, these are a lot of the negative stigmas that at least people are told before they want to come into drop shipping.

Tim Jordan: So what are some of the biggest changes that have happened in the industry? Give us like an overview, because I know that three years ago, the drop shipping “scene” was very different than what it is today.

Mike Weiss: Yeah, definitely. So if we were just to stick in the last few years, then I think the biggest one is a presence, right? So for example, we have so on Amazon, like you said, people were everywhere selling this stuff on Amazon. I mean, I remember even our toys, people were trying to hijack our toys. Now, thank God. It was customized, but people are trying to hijack like a lot of the components of our toys that we were getting from China as a private label. And they were selling them at cents on the dollar. Like it was so brutal. And so as a reaction to that, I mean, you would know this, you would know this as well, but as a reaction to that, people are getting super pissed because, and think about it. Amazon is at a position where they have hundreds of millions of customers that are coming onto Amazon for one thing, it’s not to consume content. That’s not to write blog articles, that’s literally to shop. And if they have a crappy experience because the product quality is bad, well guess, I mean, Amazon also as being a seller on Amazon, they take over the customer service component or a lot of the customer service component. So if they’re the one fronting all the questions of my product is crap. I want a refund or I want a new one and all that stuff. Well, I mean, Amazon’s not going to, I mean, what are they going to do about it? Like the Amazon, the product is crap and they go back and they find out where it’s sourced from. And that’s why they’re actually asking people, where is this sourcing from now that they require that on so many different categories in, is tell me who your manufacturer is. And because I want to know, is this going to be something that’s drop shipped, or is this actually your own brand? And it feels like Amazon has really taken a big push on to branding. Like I want, I only want real branded products, real companies, not just these fly by nights or these drop shippers that are coming on. And I’m telling you that last year alone, that drop ship component like where people were allowed to jump in last, I remember it was last December. I saw it everywhere. And I was just like, I was blown away. I was like, Whoa, man, Amazon is going to tank. There’s no way. There’s no way that they’re going to survive if they keep allowing these people on here, because everyone is selling the crap, but for like a few pennies more or a few pennies less, and it’s the same thing as every other commerce site out there, every Facebook ad that you see for whatever the product is, it could be anything that is coming from AliExpress. So that’s one big change, I think is the actual gating to drop shippers on Amazon. And I think that was a pretty bold move for Amazon because, but I think it was necessary because a lot of people were coming in and just really defaming this thing, like crazy, which is not the purpose of drop shipping. It’s not to sell crappy products is to get people products that they want at a discounted rate because you can, I don’t know, like that’s kind of the beauty of it is you have these people that are super ambitious and super lean and super young, and they want to come in and give you the best experience possible. And sometimes on Amazon, you don’t get that because you don’t have such the, you don’t have the heavy customer service component that you would if it was outside of Amazon.

Mike Weiss: Right. So that’s one, I mean, two, you could date it all the way back to the sixties and seventies, when it actually started. But I mean, we don’t have a lot of time today, I think, to dive into all that. But I mean, the thing is the evolution of it since the sixties has been crazy, even from direct mail from JC penny or Sears, all the way to the .com, all the way to when eBay and Amazon kind of first surface, I mean, it is that it has really evolutionized across the way here. And it’s been pretty fascinating to see, even just in this last few years kind of what it’s done. So anyway, so that to answer your question that’s because Amazon was off the table, which is a ocean of buyers. People had to go back and they had to say, okay, I need to get really smart with how I’m going to market this thing. And now people are looking to, how can I actually put my own brands on these things? And that’s changed the game wildly as well, because you need to drive volume in order to create those private label brands, which again comes into just the traditional private label model. Anyway, hope I answer your question there.

Tim Jordan: No, you did. You definitely did. And that’s going to lead me to my next question is considering all the changes, considering all the misconceptions, but considering the opportunity. Because it has worked for a lot of people. It does work in certain scenarios. It obviously worked for you at a time when you needed it. Can you give us just a high level overview of the business model now that does work in drop shipping?

Mike Weiss: That’s getting, yeah. I was like, that’s– I don’t even think it’s evolving right now. And we’ll see kind of what that looked like, or it looks like, I think here’s the thing drop shipping. The best way of dealing with drop shipping, is really this a if you can drop ship with your own private brands on it, which there are ways of doing that with print on demand. And there’s a lot of really great ways to like customize drop ship stuff. Now you’re doing it at a premium, which means you’re not going to be making as much margin. But again, the ultimate question you’re trying to answer is what are people willing to buy? And how do I know that, how do I have enough data to prove that this is what people are willing to buy and how can I bring it to them where the quality is there. So, the one model is customization. Okay. And I think that’s a super powerful way because it’s something, it’s unique. It’s something that no one else will have. And it’s what someone else it’s what everyone wants. And so, for example, things like, if you have like a journal, a journal is not unique, but a journal with your name on it, or a journal with a verse on it, or journal with a specific saying that you and your friend always say, that’s unique. The journal isn’t unique, but it because it personalizes it with that individual message that only you and some other people only you and your family would understand, that’s what makes it special. So that’s what actually drives people to be able to do that. Now, how do you do that at a volume base? Well, you don’t open the doors to that message to everybody else. You do. However, say, Hey, customization available, right. And all we need is a picture, all we need, all we need is your writing, all we need is this right? And then that’s it. And then you’re good to go or the other way of going about it. So, you opened the doors for customization was a lot of work on the drop ship side, but it’s still going to open up the doors for how you could sell it. I think the other model is looking for designs. If you’re sticking to the print on demand side is looking for designs that already responding to people. A lot of people want to express themselves on things like Merch, right? So that’s why Amazon Merch is out there. That’s why you have companies like Printful out there, Viralstyle, Teespring, whatever it was because people want to be able to express themselves.

Mike Weiss: So how are they wanting to express themselves who’s already kind of hitting the market right now. And in what way, and how can you kind of take that, take inspiration and actually transfer that into another audience. So outside of print on demand, the other, so if you’re not going to do anything with customization, the tried and true method with Dropified, not dropified, sorry, with drop shipping is you’ve got to find products that have a high perceived value, but are actually low cost. Right? So for example, jewelry is always going to be something that has high perceived value, but is always going to be a low cost. And it’s great because when it shifts, it’s going to ship super cheap because it’s so light, right? So if you can get, I mean, you go out there and you see all these freaking rings and you have tungsten rings. You have titanium rings, you have rubber rings. Now you have like wooden rings. Like you just, whatever it is, you have to make sure that it’s a high perceived value. And then if you can get it into bundles where it’s not just one at a time, but you can get two or three at a time. Right. And you do that by figuring out which manufacturer is going to do that for you. And again, trust me, there isn’t a manufacturer in China that won’t make exactly what you want. If you can show them that the market is going to be really hot for it. So again, you want to get things that have high perceived value and then have, and that have but low cost. I think the third model, and this is what I recommend is, not just high perceived value, but it needs to be something that’s literally cutting edge that people really haven’t seen it. They would love to be able to add to their world. And that could be cool lamps that could be a carpet, that could be different towels that people have. Like it could be anything, it could be a dress that no one’s ever seen before. I mean, one easy way of doing that is if people were to go into places like wish, which essentially is kind of like the major competitor against all drop shippers is a–, because literally it’s the manufacturer going on there and they think they’re upselling it by like 5% or 10% or something like that. So you’re getting so many cheap things on wish is being able to get something that’s local, right? So, the only competitor competition that you can have with someone, like wish it was going directly from China, most of the time is be able to go onto places like Ali express, or even Alibaba and asking for like low minimum order quantities, if you don’t really want to jump into full dropship, but just do that where they actually have presence in.

Mike Weiss: And if you’re in the United States, in the United States. United States is growing like crazy with the local suppliers that are available. And it’s because the one area that you’d be able to kill them on is shipping, especially when it comes to Q4, people don’t have two months to wait for their Christmas presents. Like they have maybe, maybe you have two weeks. And so if you want to get in there and make sure you can get shipping done in seven to 10 business days, then you’re able to go in and do that and you can push it really hard over the next two weeks and people, they will get it for Christmas because it’s locally supplied.

Tim Jordan: So now that we’ve looked at some of the misconceptions and we can bust those up by saying, Hey, you can offer good products. You can make sure that it gets there on time. You can do marketing correctly. And we’re talking about a lot of the ways in which it works well has to do with supply chain. So fast delivery, personalization, ability, and high quality products. And that leads me to kind of come back full circle, to talk about dropified, which has done something very interesting. And it’s really why it dropified caught my attention on the industry, which is you guys have created a model now where people can drop ship from US manufacturers with like a one unit minimum order quantity with personalized branding. Can you talk about– you don’t have to give the drop fight sales pitch, but talk about why you guys felt like it was important to go on that endeavor to allow US manufactured products and how you’re seeing that change the industry now.

Mike Weiss: Yeah, no, it’s a great question. And so I would probably say this, Dropified started as a drop ship product hub, right? So like we were out there, I mean, similar to what you’re seeing out there with overlo and Spock, I mean, we definitely had a lot more features, but the key is, is that we were in that hub where, I mean, it’s a great business model for folks, and there’s lots of commissions that Ali express pays out on and other suppliers. But the thing is we were seeing the same thing over and over and over again. And because dropified took over a lot more of the helping with customer service and helping with fulfillment. We did just kind of leave it to the end seller to deal with all that. We were getting the same questions over that you’re talking about over and over and over again. So a couple of years ago, Lowell and Chase, they made a pivot and that pivot was, how can we actually do some, how can we disrupt the industry enough where we can, we can actually be chartering new territory that very few people have actually even thought of if anyone has ever thought of, and that way we can actually combat all this stuff. We can combat the long shipping times, we can combat the poor quality. We can combat the generic branding that everyone else is kind of selling. Right. So how do we do that? And so what we did is we realized that there’s actually a lot of people that had the same desires as we did, but they didn’t have the resources like we did. And what I mean by that is these were people like folks like manufacturers or fulfillment centers that were just saying, Hey, listen, if you could just like, let’s talk about fulfillment centers.

Mike Weiss: If you could just give us the products, we would make sure that the shipping is done in one to three business days because of the high volume that we have, we get to negotiate with the shipping companies, crazy rates, because we’re dealing with tens of thousands of orders a day. And so we can get very, very, very low shipping costs and we can make sure it’s done when we’re talking about shipping costs about priority, right? So one to three businesses, we combat that. So we thought, awesome. All we need now is the product, right? And so, we believe the product really is the most important thing, because the one problem, especially with the types of products that we’re talking about, messaging and delivery is a massive component. But if your product sucks, you can be the best marketer in the world, but you’re only going to get that customer once. And then, word of mouth is going to travel way faster than your marketing. And then it’s going to slowly, slowly go down. Right? So what we did is we went after the product and we said, okay, what’s the right product to do this with. Well, it’s not rings. It’s not towels. It’s not dresses. It’s not because these are all single purchased items. No one’s ordering a dress every month, you know? Not the same dress. That’s right. Yeah. And so, I mean, you do get some kids like that that are out there, like Fab Fit Fun does a really great job on really creating these kits and sending about the great stuff for kids out there that do the same thing. And it’s really cool. But the thing is, we wanted to bring something that brought a lot of value to folks. And especially when it came to the health industry and we saw the health industry booming, and it has been booming for a very long time. And so when we’re talking about health industry, I was talking about supplements, right. But then we couldn’t ignore the skin care market, which was coming close to about half a billion dollars by the time that we got into it a couple of years ago. And I think right now it’s almost a three-quarters of a billion dollars. It’s crazy how much has been growing. And so we’ve thought great. Now we’ve got to get skin creams in there. And then pet industry was on the rise and CBD was the Wild West. And we thought, man, but everyone’s stupid if we, sorry, everyone in our company would be stupid to not jump into the CBD side of things because this thing is going to take off.

Mike Weiss: And we believe that that’s why we opened it up. And so we said, why are we choosing these markets? Well, it’s not just because the quality of these are easier to gauge because it’s all certified, right? You need certifications in order and testing and quality assurance to make sure that these are high quality products, if you’re going to the right manufacturers. But it’s because our end seller not only is going to get a quality product, but they’re going to be able to do it with their own labels, their own brands, their own designs. And why is that matter was because when they do all their heavy marketing, that’s going to help them huge on their marketing side because they get to literally target people where they are. They’re not asking people to come to them. If they want to find a golden retriever owner in Wisconsin, that’s a cheese head. Awesome. They can actually create a very specific label if the market was big enough there for them to do that. Well, actually, sorry, I’m going to recant that it doesn’t care. It doesn’t matter if the market’s big enough, this as long as it’s someone that if, even if they can get 50 people or a hundred people or a thousand people that fit that demographic profile, then you know what, as long as they can have people, when they see that they’re going to be like, Oh my gosh, this is exactly for me. Especially if it solves the problem that I’m trying to solve right now, which is golden retrievers have heavy joint support issues over in Wisconsin. And you know what, I’m just the only thing that I’m kind of breaking out is are they a cheese head or not? Right? They could be a factory worker. They could be a stay-at-home mom. They could be a teacher. It doesn’t matter, but I can break out as many of those labels as I want and target. And that’s the whole purpose was to help them market so that they could find what that winning label that winning design and winning demographic would be. But the key here was not just to find and get them to buy at once, like the dress that we talked about it. So that, because the market that we’re in is, is heavy ribeye because they’re consumables. When someone has done their multivitamin pack, they’re going to want another one because they are trying to supplement those vitamins, nutrients, and minerals and whatever it is that they’re trying to put in their body, or on their cream, or on their skin for their creams, they want to suck. Like they want to rebuy there.

Mike Weiss: They need that again, especially if it’s a high quality product. And so now we’re thinking, this is where it’s going to take off is because this is a high, these are high rebuy markets. So when we tell people to sell this thing, we’re telling them, if you do not have a subscribe and save set up, get it, because this is your bread and butter, because that’s how you get your recurring revenue and your overall cost of acquisition going down. And everything after that initial purchase is sheer profit. And you’re getting profit for months and months, and months, and months, and months from each customer that comes in, which is going to add to your budget for marketing, testing out different markets, and these untapped markets and untapped niches that no one has ever gone after. So what we did is we said, okay, well, here’s the arrangement we’re going to make with you. We will actually take these from you. So dropified will buy these from you at cost, and then we’ll negotiate the wholesale with you. We’ll put in these fulfillment centers that have the printers in them. And then at the end of the day, whenever someone orders something, it’s going to come through our platform, go right to the fulfillment center to print this label, or these labels of whatever products that they have, because we’ll always carry stock there. And, then they’ll be able to put it all in the same box, ship it out to the person in one to three business days, but then they would talk about the stock issue. Well, actually there is no stock issue because if you have a constant, it’s kind of like a water faucet, right? Is you can’t run your from your water main outside into your house because that’s just an obscene amount of water that will constantly be flowing. What you need is a valve, right? And so think of what we’re doing as the valve is when we need to turn on more or get more water in the tank, we’re turning the valve on. And it’s just as simple as doing that water fills in super quickly, boom, we turn off the valve, we did care. We use the waterfall where you need to, and if we need more, we’ll turn on the valve and keep coming through. So this is the beautiful part of having all these manufacturers partnered with us, is we have all these water mains that are coming in and saying, man, we love this because we’re getting high orders because the volume is pushing out like crazy. And as long as we’re continuing to bring high quality products, that’s the only way this is going to sell is people are only going to choose our sellers. Now have the pick of the cream of the crop to be able to go from that. Sorry, I didn’t want to do too many plugins for Dropified, but it is a really exciting opportunity because the only other way around this is a lot of people are trying to do this as well, is they’re limited by how many products are allowed to do this with. And we’re just not because we don’t, we’re not limiting people to one brand or two brands or three brands. We’re not limiting people to because that just takes away the point, right? If you have to it, because it’s the same thing. As private label, you have one chance, you have to do so much research to get your one brand figured out. And I just don’t believe that people today or even the world today is going to respond to that. Because if you fail on that one brand, it means that you’re done. Right. And it’s a lot of time, a lot of work, a lot of effort. And we’re just saying, well, take it, take the pressure off of that. Why don’t you create 50 brands? Do your research, put 50 brands out there, figure out what one’s going to land. And if someone comes in and buys even one, then we’ll fulfill it because there’s no minimum order quantities because it’s that traditional drop ship model that we’re trying to go after on the order fulfillment side. But we’re bringing in the power of private label, similar to what you would see with something like print on demand for apparel and things like that.

Tim Jordan: Well, I think it’s interesting that so many people get a perception about an industry and they lock that into their brain. So example drop shipping is Alibaba to Amazon or Ali express to Amazon. And what’s cool about an industry that is full of entrepreneurs is that even the companies that support those entrepreneurs are entrepreneurial too. You guys saw this opportunity for drop shipping. You knew the need for it, but you knew that you had to change the game. And I think there’s a lesson to be had about being told no, all these manufacturers that you went to. No, no, no, we don’t do one-offs. We don’t do one product. We’re not going to do this, do this, do this. And there’s a lot of times you could’ve said, okay, give up let’s let’s keep going back to the old model. Let’s figure something else out. But somebody was able to figure out, we’ll find, we’ll just buy this stuff from you and we’ll ship it to somebody else who will actually fulfill the orders and do labeling, which is a great solution. So I think it’s a good example of ingenuity and not taking no for an answer and being able to just keep grinding till we figure it out, which is something that we all have to do, but it generally is worth it. So kudos to Dropified for pulling that off. I think that’s really cool. So I know we’re running short on time. This has been a little longer episode than a lot of them, but there’s so much information I wanted to get here. Let me ask you this, Mike, there are a lot of people that have multiple businesses, they’re doing all sorts of online, offline, whatever. And those of us that are very entrepreneurial. A lot of times we do multiple, I was looking for the next thing. So if anybody listening, that’s not familiar or maybe they are, but generally not familiar with drop shipping is a business model. Where would you tell them to go to find some resources, to learn about drop shipping, to determine if it’s something they need to add to their entrepreneurial arsenal, so to speak or not?

Mike Weiss: Yeah. Actually one thing I would probably recommend, I mean, there’s so many resources out there, dude, like freaking Shopify alone has I think is leading on like drop shipping education. Just because, I mean, that’s kind of where their bread and butter is as well. Right. Private label goes to Amazon drop shipping is kind of sticking with Shopify. And they’re huge. Right? And so, I mean, I would definitely, you could freaking Google like how to drop ship and you’ll see a whole, like pretty much the whole page is going to be Shopify as blogs and how to articles. And they actually do a really solid job there. So it’s not a plugin for Shopify for any personal reasons, but it’s just I want to bring the best information to people. I mean there’s a lot of a number of courses and stuff that you can take out there as well. But again, it’s really kind of based off of what you feel comfortable putting in and how much investment you want, what I would probably, if I could here Tim is, I would say that when you’re looking at drop shipping, you need to think of it as a tester, right? So, what I mean by that is this, if you already have your own products, if you’re on Amazon like me, right. Don’t think of it as being another product necessarily of man. I’m going to just focus a hundred percent on drop shipping and I’m going to make that a whole another business model. I wouldn’t do that. I would say understand the power of drop shipping. The power of drop shipping is this, you can have access to literally what the entire world of products are out there. Right? And what you need to do is consider what is going on with your brand, right? What is happening with your brand right now? And how can you compliment that brand? You can compliment that brand by doing things like free giveaways drop shipping is a really easy way of creating free giveaways because it’s super low cost. And I mean, it’s a way to kind of get it out there to your clients to actually test it, right. Another way that you can use drop shipping is to figure out what your next product needs to be. Right? So use drop shipping as an opportunity for you to do your product testing. Right? If you’re going to use something like Dropified, where you can do the customization, then use it to help test what your brand is going to be, test what your design could look like, tests what could this look like? And who’s interested in it because the thing is every company is going to die if they stay static. Right. And that’s, I think that’s just universal until you reach a certain level where your brand can sell itself and like Coca-Cola or Pepsi or whatever, but even then they’re not even remaining static. They’re always out there and they’re changing and manipulating, growing and engine. But the thing is, they don’t deviate from what’s working. If you’re in a position where you’re like, cool, I have a seasonality product right now. And I need to look for an evergreen product. Well, I mean, one of the best ways you can do that is to actually go out there, do your research and on finding out like, what is selling and how is it working and then get those samples for yourself and say, how has this feel? How has this actually, Like, is this a good quality thing? Do I want this, will this be a good part of my brand? And then even asking your existing customers, Hey, listen, if you were to buy something like this, would you be interested in it? Or, Hey, here’s five products that we’re interested in right now. We want to give you one of them for free or two of them for free. And then we’re looking for feedback on it. None of them are going to have your brand on it yet, but it’s all dropped yet, right? This is a very powerful way for you to actually do your research. And this is where I think a lot of folks that do drop shipping, fail to jump into private label. But a lot of people that private label fail to do with drop shipping is they don’t see it as a product testing environment.

Mike Weiss: They don’t see it as a brand testing environment or a design testing environment. They just say, that’s evil. This is where I am. And I’m going to stick with what I know and there’s wisdom with that to some degree to shifting your business model. But there is it, you would be foolish to not adopt both business models, because what I mean by that is say that you have the product that works. There’s nothing stopping you go to that manufacturer and saying, Hey, I want this to look like X, Y, Z, with my brand on it. And I want to order a thousand of them. So you can bring that back into private label really, really, really quickly, but to actually jump out there and say, man, this isn’t working for me, for drop shipping, because of all these negatives with, I mean, you’re missing out on so much opportunity for folks like our 130,000 customers that are saying, thank you, please don’t stay out because we’ve figured this thing out here. And because we know exactly what Mike’s saying, and this is exactly what we do. And we can flip in and out of products without any inventory, like that. It takes me a day to change my entire catalog and how– for Amazon, you just can’t do that. I can’t go to my wife and say, let’s change your whole catalog of toys tomorrow. And she’s like, what, I’ve invested a hundred thousand dollars in my toys. I can’t do that. Right. So what I would say is this is, yes, look at the learning. There’s lots of great resources and tools out there. I mean, I’ve kind of named a couple like Shopify would be one really great one. Jump into Facebook groups that are currently doing drop shipping right now. And really just of feel the presence of what’s going out there. There’s a lot of starter Facebook groups out there that are just how to get started in drop shipping. So you don’t have to jump into like these Facebook groups that have just master levels of range, where you’re going to get overwhelmed by e-pack it, if you have no idea what the heck that means, and you’re just looking at product research. So yeah, I think that’s a beautiful world that we live in right now is that you can literally jump in and put yourself in the silo that you feel like you’re going to learn best from. And there’s going to be a lot of people in there that are experienced. I know, I hate the answer of saying, go to Facebook and jump into Facebook groups. I hate that myself, but I do think that don’t just go to one resource would probably be my big answer. Listen to what I’m saying, listen to, look for what trend, people that are leading in their thought pools are saying, and just make sure that you kind of figure out what that means for you. And then just go out and do it, go out and try it, go out and start with like five drop-ship products, which takes literally 10 minutes to figure out like it’s not difficult to get started.

Tim Jordan: Awesome. Well, thank you so much for sharing this. Those of you listening, I know it’s been a long episode, but we tried to pack in a whole lot here. There’s a ton of stuff we could talk about with drop shipping, but we’re trying to pack in as much as we can on one episode. So just forgive us for the length, but Mike, thanks so much for sharing this information with us. Thanks for doing what you do. Thanks for sharing your kind of origin story in the industry as well. And for those of you that want more information, you can go to dropified.com. They’ve got a lot of good information. You’ll see Mike floating around out there and yeah, I guess that’s it. So, Mike, thanks again for being on. Any final, last single word of wisdom for the listeners here.

Mike Weiss: Start.

Tim Jordan: Just start. Awesome. Well, thank you guys for listening to another episode. We’ll see you on the next one.

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Is Dropshipping Dead as an E-Commerce Business Model? – 224

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