Dropshipping

Has anyone ever considered quitting investment banking and doing dropshipping fulltime? I feel like bankers spend so much time making stuff "look" good and can analyze data that they'd be well positioned to build and market a dropshipping site successfully.




 

It's a different 'looking good' than making a power point deck, etc. 

Certainly they are smart enough to figure it out, but I don't think the skills line up to make it a softball. It's more of an SEO, design, copy writing game than anything. Not that you can't do it, but I'm not sure the natural role for an IB who decides to quite is digital marketing. 

 

Dropshipping, a fascinating business model, isn't it? I have a friend who ventured into it. He was sourcing products from Alibaba, but the challenge was selling them on Amazon. He was almost ready to give up when he found this guide on. It was like finding a map in a maze! If you're considering dropshipping, this guide could be a valuable compass for your journey.

 

I've been watching alot of Tai Lopez lately and I just feel like having gone through IBD, I could very quickly get up to speed on e-commerce marketing, etc. and pull of a Kevin Zhang type-thing...apparently he generated $20mm of sales in Year 1 (albeit, he is currently being sued for fraudulent marketing) but after watching some of his youtube videos (quick and dirty photoshop, shopify super easy to setup), I feel like I could imagine using my somewhat above-average brain with IBD hours to build a very successful drop shipping business. Maybe I'm out of my mind though...

LA Bull
 

Don’t listen to Tai Lopez lol. He’s an internet marketer, he made a course on real estate investing, but didn’t know what cap rate was, like cmon... all these guru type people sell you a dream, never anything of substance.  I guess it’s possible to make a successful drop shipping business, but the market is very over saturated and very competitive. The people who got in early made a killing and these gurus made killing selling courses on how to make a killing drop shipping. I wouldn’t quit my IBD job, there are better businesses out there to buy than to build and most likely fail drop shipping. At the end of the day the choice is yours, no one on WSO is going to give the answer to this, but I would caution you against this, the opportunity cost isn’t worth it IMO.

 

There is someone who claims to be a successful dropshipper on this forum - I think his handle is @OnlineMoneyMan or something like that.

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee
 

I tried drop-shipping a long time ago when I was in high school, before the craze about it began, maybe it was 2014. The main issue was that customers would complain that their products took so long to arrive, and even worse, would sometimes demand refunds. I ended up solving the issue by having the products sent directly to me first, and then shipping the product out. The shipping from China to the United States through ePacket was free, and the product was already so cheap since it was manufactured overseas, that I would still end up making a profit. For example, I would buy a leather bag overseas from AliExpress for $40, sell it for $100, and shipping might cost $10.

I ended up making a little bit of money, but more important it was a good learning experience for a young person. I learned the ins and outs of how to use advertising on Facebook, to target the exact people you want to target. I learned how to take quality product pictures using lighting, and how to edit those pictures to make it look appealing.

However, I probably would not try it today. The products are so oversaturated. Everything that you can think of, you can bet that there are numerous other sites trying to peddle the same thing. 

 

Dropshipping (more specifically private-label e-commerce & leveraging the incredible volume of Amazon via Amazon FBA) was a good space to get into 5+ years ago... now it is saturated & filled with Tai Lopez-esque individuals. More money to be made by selling courses on how to dropship... My biggest regret in life is not dropping out of college and running my amazon business full-time... now instead I get to look at all the amazon seller CIMs we get in for businesses selling for $50mm+. GAHHHHH

 

Long story short: Yes.

Know several people, including myself on this path.

Essentially: Use IB Job/Main Job to build some capital > Start Dropshipping Store/Other E-Commerce Venture on the side > Gain valuable skills in internet marketing/sales/advertising/online business > build more capital > start ACTUAL Brand/Product business > scale > sell > repeat

Biggest thing is you want to move on from Dropshipping ASAP as it is not a good long-term business strategy at all. Building your own unique brand/product is the way to go.

 

Did you start your e-commerce venture on the side? I tried to but the progress being made was way too slow for my liking and it was because working in IB was eating up my time and energy. Working 80+ hours a week doesn’t leave time for much else. If you’re a beast, you can maybe squeeze out that extra 20 hours a week for the side business but I wasn’t willing expense my relationships for it.

Recently left my analyst seat to go work on my thing full time. I figured if it breaks down that I can always walk back through those doors whether it be at my old firm or another.

 

At it's very simple form, it's selling a product without ever holding on-hand the product your selling.

Hence, dropshippers will create online websites (typically using Shopify) selling products from sites like Alibaba / Aliexpress. If the customer buys the product, the seller will buy the product from Alibaba / Alixpress and profit the difference in price that they sold it for and that it costs on Alibaba / Alixpress.

The catch is that alot of the people doing this and hosting Shopify stores have no clue what type of product they are selling (i.e., they don't know the supplier, they've never seen the product before) so customers in many cases get crap products that aren't what were advertised AND shipping can take 2-4 weeks so customers in today's day having become accustomed to same day shipping via amazon also get annoyed with that.

LA Bull
 

Hey, I've been following your posts for sometime. You clearly have had success in the e-commerce space and know a ton. I just wanted some advice? I'm looking to start some sort of venture even on a very small-scale in the e-commerce or even just digital real-estate in the form of social media as an undergrad but really don't know where to start. I get the sense that most things are pretty saturated at this point. I can PM you also if that's better. Up to you. Thanks a ton. 

 
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I didn't mean to discourage you. Give it a shot if you'd like but just be aware that there are easier ways to make money and most of these "eCommerce gurus" are full of shit. They wouldn't be selling courses if they were successful.

Here's a good example of an account that I have access to. This guy was drop shipping, then moved to warehousing his own product to avoid the FB bans. Volatility in the is caused by CPA moving by single digit percentages. His net is actually decent but he really is purely at the mercy of Facebook's CPA and he hasn't built a business..he really just built himself an OK job if that makes sense?  

The problem is that CPA goes up every year on digital channels because inventory has more buyers than ever. So a company like this gets squeezed and squeezed until it's nothing. Cookies + CCPA = even higher CPA next year and then the co is toast. 

Starting a co like this is fine if you're a dropout and you aren't about to get a decent job anywhere, but if you're still in school (a real school lol) then I'd recommend staying the path and working in IB for a bit before doing your own thing. It's a much better path and gives you the opportunity to be picky.

Edit: I should add for context that before 2016/2017, you could definitely juice a dropshipping co to 8 figures. $3 - $5 CPA all day whereas avg is now $20 - $30.

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