Dropshipping Demystified: A Complete Beginner's Blueprint for Success

What's up guys, Trevor here with eCommerce Paradise. Welcome to today's video. And today I'm going to talk about dropshipping and what it is and how it works, the pros and cons and kind of some of the pitfalls to avoid and how to make it profitable and successful.

A lot of people get started with dropshipping and they don't really realize like what it really is because they've seen videos on YouTube and you know, it just kind of seems like one of those get rich quick things doesn't really work out for most people that try it. And And, you know, for the most part that, that might seem like it's the case because a lot of people just give up early on, but if you stick with it and you don't give up, then you'll definitely become successful.

It's just a matter of persistence, determination, and continuing to test things out. So, you know, even if it's just a side hustle for you, spending an hour a day on it is going to be enough over time to where you can become successful. Successful you just need to be able to understand the business model well enough and become confident with yourself that you can do something like this and then also be willing to test different.

Niches out different products and different categories of products until you find one that works for you and it's a weird thing but sometimes a product will work for you because you know it in of itself is profitable and there's a lot of demand plenty of suppliers and you will just start getting orders. And that's great. Sometimes a profit product will work for you because you have more sales experience with that product.

Maybe you come from that industry already from a different, you know, employer, and you are bringing what you already have known and understood of that product category into your new business. And that's going to help you to sell that product, right? And to market it and to be confident that it does sell and things like that. So there's, there's different reasons why a product or product category will work for you as opposed as opposed to somebody else.

And generally speaking, I've come up with a few niche selection guidelines. To help you with that. But we're going to get into that a little bit later. Definitely watch till the end so that you can get a free bonus that I'm offering to all of my subscribers.

And definitely don't forget to subscribe to the channel for more awesome videos like this. So let's get into it. So what is dropshipping and like, kind of how does it work? Dropshipping is just basically selling products online without holding any inventory.

And so, you know, when you start a typical e-commerce business, you're going to be, stocking the products that you sell, whether it's a custom made product that you make yourself, or whether it's a product you private labeled, maybe you order it from China and then you stock it yourself or you put it in some sort of a fulfillment center warehouse, like Amazon's FBA program, for instance, that would be doing your own fulfillment.

But with dropshipping, you don't have to do that. Your suppliers will actually stock and fill the orders for you, ship them directly to your customers. That's basically what the business model is. The way I found out about dropshipping is that I worked at a distributor in Los Angeles for about five years in my college days. And that distributor sold safes, locks, and security hardware, keys, things like that. It was a security hardware distributor company.

And so I worked in the warehouse where they had all the products that they stocked. And then I moved up into receiving, and then also I handled returns, shipping, all that stuff. So I handled all the things in the warehouse in the first couple of years I worked there. And then after that, I transitioned into sales. And I started managing sales, and even ordering purchase ordering, placing purchase orders with suppliers and things like that.

And so as the salesman at the distributor, I learned the process of drop shipping. Because what would happen sometimes is I would have a customer that came to me and said, Hey, I want to get this product, but you guys don't have it in stock. Can you get it for me and give me a good price? And then I would have to call the supplier and I would have to get a custom quote for that product.

And then I would send it to the dealer, and they would tell me yes or no. And I would quote them the price, and then they would negotiate the price usually, and then we'd come up with something that's fair. I would try to stick to 20% margin at a minimum. I would start at 30% usually and work down to 20% if I had to. Mm-hmm.

And it really just depended on the customer. Sometimes the customers were like a local, you know, small employer business, and they would have to negotiate me down to get better margins. Sometimes the customers were bigger companies, B2B, or even like government, you know, like school systems and things like that. And they wouldn't really care because they would just have a budget that they could use.

So that's what I would do. And I would quote that out to the price depending on the customer and their needs and their ability to pay. And then if I got the order, what I would do is I would place a custom purchase order with that supplier for that one or more products. And then I would usually, instead of having them shipped directly to us, I would have them shipped directly to the customer and have it drop shipped without an invoice. And that's called blind drop shipping.

And so I got used to this as sort of a way to fulfill orders quickly and efficiently without having to pay double shipping costs. And customers were happy. I was happy. We made a margin. They make their margin, whatever it happens to be. And everything worked out. And then I started receiving purchase orders, requesting blind dropshipping as well.

And I would even see this in the warehouse also. Like if I was working in the warehouse, shipping an order out, packing an order, it would say blind dropship on the package. And I would know that you did not put the invoice on that package, only a packing slip, which means the invoice has the price on it, like the dealer price.

And so if their customer received, their customer received, their customer received, their customer received, their customer received, their customer received, their customer received, the price they're paying is going to be higher than the dealer price, right? That's how you make your margin with dropshipping is the difference between the dealer price and the retail price.

Or you would call it the wholesale cost or, you know, whatever that you want to call it, the cost versus the retail price, the manufacturer suggested retail price. Sometimes it's known as MAP pricing, which MAP stands for minimum advertised price. And we'll get more into that later. But so what I would do is I would receive purchase orders and then I would ship the product directly to that dealer's customer for them.

And then, you know, so they wouldn't have to stock it and they wouldn't have to pay double shipping. So the drop shipping process, the blind drop shipping process worked really well. It was more efficient. It allowed the dealer to have a just-in-time fulfillment method, which means that they didn't need to purchase the stock ahead of time and then have it, you know, ready to ship out and then handle the shipping themselves, which is a lot more to do.

Not just in shipping costs, but also in time and effort spent. I knew dealers that did that, and they would have mass amounts of packages and big boxes they would have to bring to the post office usually every other day to ship out, which is fine, I guess, if you're making your own product because paying for a fulfillment center and all that's expensive, right? It's probably going to be 20, 30% of your cost.

And your margins are going to be way higher if you're making your own product, obviously. But it makes a lot more sense to drop ship if you're selling other suppliers products, other like branded products that you don't make yourself, it makes a lot more sense, right? So that's basically what I did for customers. And that's how I learned about it.

And at that point, I was talking to a lot of people like, hey, why don't we, you know, why don't we get involved and do this drop shipping stuff ourselves outside of this business, because we can make money in other niches.

And one of the customers that I was talking to, sorry my cats are having a fight in the background kitties stop happy cats are crazy okay so one of my customers and i started talking about selling bicycles online and he saw that there was a big uptick in demand for a thing called fixed gear or single speed bikes in north hollywood at the time which is where i was working and yeah so we found a supplier we had to buy some upfront inventory from them in

order to get a dealer account with them, because they usually only sold to retailers. But we did get a dropshipping account when we bought the upfront inventory, which was really cool. So this isn't always the case. But sometimes, you know, dropshipping suppliers will ask you to buy inventory upfront before you can get a dropship account with them, just to kind of prove that, you know, you're a big business, or at least you have the financial capabilities to order inventory, that kind of thing.

So what ended up happening is we were able to get a dropship agreement with this one supplier. And we were able to then list their products on a website, an e-commerce website, and then drive traffic through SEO, through organic traffic, and then through paid ads like Google shopping ads. And then we would get sales. And when we got the sales, the supplier would charge us for the product, the dealer price, for the shipping, and then for like a small dropship fee, and then the credit card fee.

So everything added together. And then we would sell it for what's called the minimum advertised price, which was different from the MSRP, manufactured suggested retail price, because. Usually there's an MSRP that a bike shop would sell at, that a retail store would sell at. And then there's the MAP, which is the minimum price you're allowed to advertise online. So we would sell it MAP online with free shipping, and then we would pay the shipping.

So it would definitely be deducted from our margins. We'd make lower margins, but because of that, and on top of that, we're also able to not have to charge sales tax for any order outside the state we were operating in, which at the time was California. So if they ordered from another state, they didn't have to pay sales tax.

So that customer, instead of having to go to a bike shop in their state, pay the MSRP price and then also pay sales tax on top of that, they're able to save a little bit from the difference between MSRP and MAP, which is usually like 10% or something. And then they're also to save on that sales tax. So they would save close to maybe 20%. And then later on, we're even giving discounts like up to 5% off per order, that kind of thing.

So they're able to save a lot of money by shopping online with us. So there's definitely a value add to in just the price alone. And then on top of that, later, I'd be doing free gifts and things like that to even incentivize them further because competition breaks in and people start selling at lower prices, and it becomes kind of a race to the bottom. So we have to compete in order to keep getting sales, but there's still margin, and it's still decent.

So that's how it worked. And we ended up getting more sales and more sales. And I grew from there. So that's kind of how I discovered dropshipping, how I first started with it. It's going to be the niche I was in at the time definitely isn't as easy to sell in now. There's more competition, you know, there's different suppliers, things are just different now. That was back in 2012, 13. This is like 10 years ago, 10 plus years ago. So that's kind of how it works, how dropshipping works.

You know, sometimes with suppliers, you will be placing an order on their order portal online. Sometimes you'll place it by sending the supplier a email with the order information.

Information sometimes you'll have a like a pdf that you can make and there's apps to do this now where you can create an actual purchase order pdf you can send to the supplier so the process of purchasing from the supplier is different for each supplier and the thing about drop shipping is that every supplier is going to be different sometimes there's dealer portals where you have multiple brands under one actual you know distributor and sometimes the brand itself is selling direct themselves

through you so you know it's just going to be different for every single one. That's kind of how it works. The biggest benefit of this obviously is it's lower risk than having to start a retail brick and mortar store. Like you don't have to buy the inventory, you don't have to pay rent, you don't have to pay overhead, you don't have to, you know, pay for merchandising and displays and paint and whatever else, you know, security cameras.

You know, locks and security hardware and all that stuff that you would have to do with retail store. On the other hand, there's higher competition online these days, of course, so you're dealing more with that.

It is a bit more tech intensive as well, because you have to deal with the computer more, whereas with maybe physical retail, or if you just wanted to put like a stand up on the street somewhere at like a market or an outdoor market, it's a little bit less computer oriented, it's more like physical oriented. So some people are more like oriented towards computers and stuff like that. And some people are less oriented towards computers.

So I would say if you wanted to get into some sort of an online business model, you first really want to to learn how to use a computer really well, because computer, you know, literacy is going to be super important for your ability to make money online. Okay. Yeah. So let's get more into some other things here. Another good benefit of dropshipping is that you have the flexibility to operate from almost anywhere.

And basically almost anywhere means anywhere you have an internet connection and anywhere that you can basically, you know, send emails, make phone phone calls, things like that. That's basically where you can operate your business from. And so with the advent of the internet and the smartphones and all that, we can really do business from almost anywhere now. So that's pretty cool. And that means you can live in other places or just travel around the world all the time.

Like for me right now, I'm staying in Bali most of the year, just because I've kind of made a home here since the pandemic started. Before that, I was traveling around Thailand and Southeast Asia a lot, Europe, Mexico. And just traveling around the US a lot. I had a home in Los Angeles for a while, stayed in Seattle area. I grew up in Seattle. And so it really just depends. Things are a little bit different nowadays with the online platforms because of scammers.

So the online platforms, especially the marketing platforms and the payment processing platforms are a bit more tedious now to set up accounts for people where if they see they're out of the country for a long time, or if they see that the person doesn't have a physical retail address, They won't even work with them, especially with the banking system. So it's made it a bit tougher for anybody who's outside the U.S. To do business in the U.S., but that doesn't mean you can't do it.

You just have to kind of jump through hoops and figure things out using special methods and things like that. And there's lots of resources online for people that are doing business abroad in the U.S. market. So definitely utilize Google as the search engine to find information for yourself. There's lots of bloggers and YouTubers that have come up with that kind of information. Yeah.

I might start making info on it, but I mean, the basis is really the banking system just requires you to have a physical retail, a physical residential or physical business address. You can't use a virtual mailbox anymore. You can't use a virtual address for your business for a bank account.

Okay. So for a bank account, they require that credit cards even are requiring that and payment processors are requiring that now Shopify payments or Stripe, they're requiring you as a physical residential address in the U S that can receive mail with your name on it. Okay. And that's just kind of what it comes down to. It's pretty simple. So as a person outside the US operating in the US, you're not going to be able to use US resources like US bank accounts or payment processors.

You're going to have to use the resources in your own home country to do business in the US. Like if you're a resident of the UK, for instance, you'll have a virtual address, but you're not going to be able to use that for banking. So you have to have a bank set up in the UK with your physical residential address. And then you'll have have to, you know, use a service like TransferWise or something to move money between your payment processor and your bank.

If your payment processor, you know, doesn't send money directly to your bank, if they do, then that's great. The payment processor you use is going to have to be an international payment processor, you know, and there's lots of different ones, but you'll have to do that research and find out the best one for you. All right, so let's get beyond like what dropshipping is and how it works and why you, you know, should do it.

When it comes down to it, dropshipping is just a low risk and location independent business model. A lot of people have a lot of problems with dropshipping because number one, they choose a niche that is too competitive, or it's hard to sell online or for whatever reason doesn't sell for them. So that, you know, obviously it can take time. And then if they're not making money, then they just give up and go to something else that works better for them. Okay.

The same thing can happen if you do a private label product, you can make your product, you can send it to Amazon, and it just doesn't sell very well for a lot of reasons. Mainly, Mainly, it's because you really just need to stand out these days. You have to have a better sales presentation than your competitor does. And that's one of the main things is because if your competitor has a better

offer than you, people are usually going to go to them. If they have better branding than you, they're probably going to go to them. If they have better social proof, then they're probably going to go to them. So you have to try to do your best to have better social proof, branding, and an offer.

And lots more than that too. content marketing is key social media video marketing is key lots of things and reasons why people buy from particular brands and you should consider if you're doing retailing that your retail store is a brand of its own okay so keep that in mind, All right. So let's talk about choosing a niche and niche selections that we're talking about.

Like one of the main reasons why you might fail with this type of business is by just choosing, you know, a product that doesn't sell very well, or maybe it's just hard to sell as a dropshipper. The main thing is that if you choose a good product, you're gonna probably have more sales. And you have to look at a couple of main factors. Number one is demand. And the other one is supply apply, and then competition.

So those are the main three things I look at. All right. So market demand is kind of like how many people are currently searching for this product and buying this product online these days. One of the easiest ways to figure that out is with a keyword search tool like KW Finder. KW Finder makes it really easy. It's a free trial and then a paid account.

So just go to kwfinder.com or you can use my affiliate link, ecommerceparadise.com slash kw finder link is in the description kw finder will tell you how many searches per month a particular keyword has so all you need to do is type in the product category for that keyword into the internet and then it'll tell you that okay so it's super simple another thing is that.

Google trends is also a good way to determine if there's demand for a product or if the demand is going up or down so if you type a keyword into google trends which i believe is google.com trends, then you'll be able to see the overall trend over the course of a few months, a year, five years, 10 years. And then you'll be able to see, okay, is this product category getting more search volume than it has in the past? Or is it lower?

There is a bit of seasonality. So you definitely want to look back to five or 10 years to see the overall trends. But generally speaking, Google Trends will tell you, number one, if it's trending up, if it's just pretty much flat or even, or if it's trending down. And it'll also give you the seasonality information. And seasonality is good to know because then you'll know what seasons of the year you'll have more business and which seasons of the year you'll have less business.

Okay. So market demand is good to know. Usually I want to create a niche store for any product category that has 50 to 100,000 keyword search volume per month or more. And if it has less than that, then I usually want to create a store that has multiple product categories in it that fit together, okay?

Now, let's talk about competition. Competition is key here because you want to make sure there already are people that are selling that product online in the same way that you're gonna be doing it, and that there's more than just one. There's like at least, I would say, three to five at the minimum, okay? The problem is if there's no people selling online the way you want to do it online, then that means there's probably a reason why.

And if there's only a few competitors or even less than that, maybe just like one, that means that that's probably some sort of an exclusive agreement issue going on where that one competitor has the exclusivity to sell those particular brands or that particular brand. Or the brands themselves are just selling direct and they own that retail avenue, that retail store themselves.

So when you're looking for competition online, especially if you want to do dropshipping, the key is you have to look for stores that are online only and that have multiple brands on them. And usually you want to just look for Shopify stores as well.

You don't want to be trying to extract information from stores that are like 10, 15 years old or ones that are using WordPress or BigCommerce or something like that, just because they probably don't really follow the same methods that a lot of experienced dropshippers follow these days. So number one, in order to see if a store is online only, you just have to look on their website for a retail location or some sort of mention of a store locator or a retail address of some sort.

If you can find that, then that means that they are not online only and that their brands probably require that they have a retail store in order to sell them, or at least some of them do. Because as a dropshipper, one of the ways you can scale is by actually starting a retail storefront or having a warehouse of some sort, and then actually getting brands on that will only sell through you if you have a retail storefront.

It's one of the great ways to scale out of dropshipping to solidify your business. And that also comes with its own downsides, like having to deal with overhead and employees and taking your time to go to that place every day, you kind of become more location dependent instead of independent. So whether you want to go that direction or not, it's up to you. But that's something to think about way later.

It also takes a lot of upfront investment. So it'll require a lot of money or debt in order to do it. But anyway, so you want to find a store that is online only. If they do not mention a retail store or they do have an address, but it's like a house or an apartment or something like that, you'll be totally fine. That's exactly what you want to see because that means that all the brands that are selling on that website, you know, are dropship friendly.

So they'll dropship for you and they're dropshipping for them. So they might dropship for you. Now, the other thing is you want to make sure they have multiple brands on their website, not just one, because if they have just one brand on their website, then it's likely that it's a brand just selling them direct themselves, even if the website is a generic sounding website. Okay. So just keep that in mind.

All right. As far as, you know, the most competitors you'd want to see in a niche, I would say if you start seeing competitors in a niche that are big box stores, then you have a problem. But as long as all the competitors are online only competitors, and there's just no brick and mortar stores, or if there are brick and mortar stores, they're niche specific brick and mortar stores, I think you should be fine.

But as soon as you start looking at niches that have big box stores selling them, like Home Depot and Lowe's and things like that, I would definitely stay away because that's going to make it much more difficult to sell those products online because people can easily go to these stores and they just get way better service. They get warranty service. They can return the products really easily.

They can just take advantage of the fact that that company has a huge capital backing and will probably help the consumer out if anything goes wrong with that product.

And you know yes there are ways you can sell still but it's just going to be more difficult to sell also those big box stores have a bigger advertising budget so they're going to be spending more money on ads as well as seo so they're usually going to outrank you on this on the organics and on the shopping ads and the search text ads. Sad to say, it just is very difficult to sell in niches where there's big box stores that are selling those products too.

So stay away from kitchen appliances, home appliances, if you're a beginner, those kinds of things you can find in Home Depot, Lowe's, Best Buy, and it's just going to be very difficult to sell those things online. I would definitely try to find very unique products that you just cannot find in big box stores. Those are going to work way better for selling online as a beginner. Okay.

So that's pretty much what it is with competition. If you find that a niche has like 50 or 100 online only sellers, I would say you could still go for it. Because even though there's all these online sellers, they're online. So you can still distinguish yourself a little bit better by creating unique content and just making a better offer in whatever way you can figure it out. And yeah, it might be a little bit difficult because everybody's got a really good offer for the product.

But just the fact that they're not in big box stores makes it easier for the consumer to make the decision to buy it online. And that's what is key. All right, so we've talked about demand competition. Let's talk about supply a little bit here.

When it comes to any particular niche, you want to make sure there's enough suppliers and enough of these best selling suppliers so that you can have a decent business. And some niches, there's only like a few suppliers and it's just really not enough to have a big enough business, you know, by drop shipping alone, by doing retailing alone, you're going to want to make your own brand or something like that.

But if you can find a niche that's got 10, 20, 30, 50, or 100 different brands to sell online, there's a way better chance that you're gonna get some brands on board right away, that you're gonna be able to start selling right away, that you're going to also be able to get some good best-selling brands on board. And that there is going to be more best-selling brands in general in that niche. And so it's definitely better if there's more suppliers in general.

So you want to kind of take these three factors into play, demand, competition, and supply. And then the fourth thing is with niche selection is just figuring out what is going to be better for you, especially if you're a solopreneur, you're going to be doing this all by yourself. You want to figure out which out of all of those profitable niches and the niches that that meet the demand, competition, and supply filters are going to be ones that you will have a decent time selling online.

Because with dropshipping, you're going to be taking phone calls, answering emails, doing live chat, closing sales. And in order to do that, you need to have some sort of understanding of those products and how they work. And basically, maybe you've sold them in the past or you've used those products in the past. You have some sort of knowledge of how they work and that kind of thing. Or you're just willing to learn about them and you're interested in them, have some interest.

Because in the beginning, business can be slow. And so you need to have some interest and ability to learn that kind of thing, some skillset with that already. So I would say, break it down, figure out which niches are profitable. And then out of that short list that you create, figure out the ones that you want to sell, that you have some experience with or skillset.

And if there aren't any, then just be open-minded about it, be willing to learn. Okay. All right. That's it for that. choosing a niche can be a little bit tedious, especially when you finally have some research done, you just can't figure out, make up your mind on it. I would say at least have a list of three to five niches and just try one and see how it works. Try the one that fits those filters the best.

If you're going to give it a grading system, choose the one that gets an A+, and then have a list of A+, A-, B+, B-, that kind of thing. And then just choose one niche, go for it. If it It works great. If it doesn't, for some reason, give it like three months or six months. If it doesn't work, that's fine. Just scrap it, move on to the next one.

If you have a store built out and you've got suppliers, you can always go on some sort of a e-commerce store marketplace like flippa.com or submit it to us over here at ecommerceparadise.com and we can help you sell it. Usually you'll get between like three to $5,000 for a fully built out store that has suppliers, but like a lack of sales history, that's usually achievable. Okay. So keep that in mind. It's not, you know, the worst thing if your store doesn't work out for you.

It might work out for somebody else. There's lots of e-commerce investors that have portfolios of stores, and they like to buy these stores that are a bit smaller and also have potential to grow and niches that they're not already in yet. And then they can absorb them and scale them.

All right. So as far as finding suppliers for dropshipping goes, there's a few different avenues you can go with. The first suppliers that I would reach out to is the suppliers you found on the competitor sites that you researched during your niche research process. Those are probably going to be the best suppliers. There's lots of distributors out there that sell tons of products.

You can always get accounts with those. They'll usually open an account with anybody, almost anybody that has a business set up, a legal business. But the ones that are on your competitor sites are usually going to be the ones that sell the best. And the thing is, you usually want to sell, you usually want to purchase a product directly from the supplier themselves, like from the manufacturer, they're going to give you the best margins.

Whereas if you go through a distributor, or if you go through some sort of a supplier directory distributor, where you have to pay like a membership fee, they're probably going to give you lower margins because they're just a middleman. Whether they're even stocking the product themselves, or they're just fulfilling it directly from the manufacturer, when they get the order, or they're going to charge you a membership fee, then it's probably going to be lower margins

and suppliers will never charge you a membership fee. They're just going to ask for your business documents up front. And so, you know, it's pretty easy to find suppliers. They're the same brands you extracted from your competitor's site. But what you have to do first before you reach out to suppliers is you've got to set up an online store. You've got to set up your Shopify store. Okay. Shopify is free to set up in the beginning. There's a free trial.

You can get a free trial at ecommerceparadise.com slash Shopify. Thank you for using my link. If you do, supporting the channel, I appreciate that. And what you can do is just set up a really simple store. You just get a logo made on fiverr.com for five bucks. You can get a banner made or just use a stock image and just put some sales information.

And then you can upload what we call demo products. Demo products are basically generic products where you take an image of one of those products and you you have a description that is basically like pulled from a competitor site or something lacking the actual description, just the specifications of the product. You can use AI to make a custom description just so it's unique. So you want to make sure there's no branding on the product.

And when you create a demo product should just be completely generic. So there's no way to track where that particular product listing came from. So it looks unique to your site. And when you have a one category site, it's really easy to do usually just one main in category, maybe a three or four subcategories, like different types of that product. And then you'll have to add, maybe I would add a two or three per subcategory. So you'd end up with like a 10 to 15 product demo site.

You want to add maybe just a few simple apps to make your site look legitimate. Trusted site is a good app to add. You know, judge me reviews is a good thing to do. You can add a few reviews to your website and just make your website look professional with an about us page, contact page, privacy policy, terms and conditions, things like that.

Shopify provides template stuff, but it's better to go to someone like terms feed for your terms and conditions pages because they're going to give you professional and like legally acceptable policies. LLCs. And I have a affiliate commission thing set up with TermsFeed as well. So ecommerceparadise.com slash TermsFeed will give you a discount on their service. And I appreciate if you choose to use my link. Thank you.

There's a lot of other things you want to do, but you should probably just keep it simple with a demo site. Just set up the bare minimum of what an e-commerce store requires, and then you can get your business documents. You'll want to get an LLC. I would recommend in that. You can do a sole proprietorship, but you will be legally liable for any business debts. And it's a little bit easier to get things set up as an LLC.

And LLCs are pretty cheap. I recommend going through Bizzy, which is a company that used to be called Inkfile. And I recommend them and use them. You can use my link at ecommerceparadise.com slash Bizzy. That's B-I-Z-E-E or ecommerceparadise.com slash Inkfile. By the way, all my resource links are in my resources page at ecommerceparadise.com slash resources. So check that out, guys and girls. But so you'll need an LLC.

You'll need an EIN, which is an employer ID number. You'll need a bank account. You'll need a credit card, a business credit card. You'll need a seller's permit. The state that I recommend setting up in is Wyoming, but it really depends on what state you live in. If you live in California, setting up in Wyoming is not going to really help you that much just because you're still going to have to pay the California franchise tax. Any state with a franchise tax is going going to have the same rule.

So if you want to be a digital nomad, one of the great hacks is to go to South Dakota, to Rapid City and stay a night in a hotel and then get a virtual mailbox at. A virtual mailbox company in South Dakota. There's one called America's Mailbox and you can go there, get that, and then you can go to the DMV and get a driver's license and register to vote and you'll be officially a South Dakota resident. And then you'll have no income tax and you can travel all over the world.

And you can use that virtual address, you won't be able to use a virtual address for banking services, though, you're still going to need a physical address for that.

But, you know, it's a good way to start. And, and anyway, so with that, you can also get a Wyoming LLC, your business in can be set up in Wyoming using a Wyoming virtual address, busy provides that in a Wyoming registered agent, and then you will have no state income tax in your business or your, you know, physical residence as long as your physical residence is in South Dakota.

That's the way to do it. Become a digital nomad, travel the world and not pay any income tax besides, you know, social security and Medicare, which is 15% federal income tax minimum.

And if you make a lot of money, of course, you'll have to pay more. But another good hack, just kind of going off on that tangent for a little bit longer is that if you stay out of the US for 11 months out of the year, you're only in the US for one month out of the year, then you can file and and qualify for the foreign earned income exclusion, which FEIE is otherwise known. And that gives you the ability to exclude any income under around $100,000 a year.

So if your income is over that, you'll still have to pay tax on that. But if it's under that, then you won't have to pay any federal income tax beyond the 15%, which is Social Security and Medicare combined. All right. So now that we've gotten past that, that's basically what you need to do in order to set up a business. I have all those resources on my website at ecommerceparadise.com in the form of blog articles.

If you just go to the top, there's a guide section, and then you can find the particular guides to help you with business formation and help you with getting a seller's permit, business account, check credit cards, banking accounts, things like that. So there's lots of that stuff on the website. So check that out.

One of the hardest parts is going to be getting a payment processor. But if you have a US residential address, it's not that hard. art. There's just a lot of know your customer rules these days and banks have to follow them very carefully. So when you set up a Shopify store, Shopify payments will be the way to go right away. And then they also give you shop pay installments as a financing option built in, which is really nice.

And you can use PayPal as well. And there's other lots of other payment processor methods that you can put through Shopify. But if you use a different one other than Shopify payments, they'll charge you a 2% fee beyond what they already charge you per month. So it just is what it is and you just have to kind of deal with it. All right. So a little thing about suppliers and dealing with suppliers.

This is kind of after you start getting orders and stuff like that, but you really want to make sure... Actually, you can do it before you start getting orders, but you want to make sure the suppliers are good quality suppliers. So what I would do before you onboard a supplier is you check out their reviews and ratings online on other websites and marketplaces. And other websites can always hide bad reviews. So I would just definitely check out marketplaces if they're available in marketplaces.

But that's definitely one of the main things I would look at is if they have good reviews or not, if they have good ratings, because if their products are good quality, that means that your orders will go through smoothly. But if they're not, if they're bad quality products, then that means that there might be issues with product delivery, with warranty, with defects, things like that. And since you are handling the payments as the dropshipper, as the e-retailer.

You will be liable to deal with chargebacks and disputes if there's problems with the products.

So that's one of the big drawbacks of and you know of this business model and where the risk kind of does lie with drop shipping is that as the person who is accepting the payments you have to deal with the chargebacks and disputes and that's also one of the things one of the reasons why suppliers want to work with online retailers is because then that takes the risk off of their plate and it gives it to you so you're dealing with the risk in exchange

for a profit margin if the product so that's kind of what the thing is with suppliers and that's so why it's usually pretty easy to get accounts with suppliers is because you can just kind of give them that like, hey, look, we're taking the risk off your plate. You don't have to pay anything up front to get under our website. We'll do all the work to put your listings on the website.

And we're going to be processing the payments. So you don't have to deal with any, you know, chargebacks or disputes or customer service from the customers. All we ask of you is to, you know, provide a solid warranty and to help the customers in case a defective product or shipping damage product arrives is to, you know, do your part to fulfill the product and make sure a good product arrives for the customer. But I would definitely look at reviews first before you bring on suppliers.

And if you happen to have a supplier later on that has lots of problems, I would definitely consider removing them from your website. All right. Another thing for suppliers is that you just want to be able to work quickly with them. So as soon as you give them a call, usually you'll just say, hey, how's it going? I have this website. Are you accepting new dealers right now? And then they'll say, yes, no problem. We'll send you the dealer application.

You say, say, great. Okay. And then I would fill that out right away because if you wait like a week or two, they might just forget and then take time on their end, you know? So it's like building a relationship with anybody that the quicker you communicate, the more respectful and responsible you seem. So I would definitely get the dealer account filled out right away. And then as soon as you get a dealer account filled out, then all you need to do is get a few things from them.

You got to get the product descriptions, images, pricing, SKUs. If they have barcodes, get the barcodes, all the stuff you need to make a listing, you'll need to get all that stuff. Okay. And all that stuff is on Shopify. So it's pretty easy to figure out. All right. So as far as setting up your online store goes, definitely Shopify is the way to go.

There's lots of great themes available. There's the Empire theme, which is what I use and recommend now because the Empire theme is really professional and it kind of looks like Amazon. So it's a good, easy to use theme. You probably will have to do some customizations to it, which I would definitely recommend hiring a virtual assistant from Fiverr or through online jobs. Either of those platforms works well. And hire a developer who knows Shopify coding so that you can customize your website.

Or if you try to learn it yourself, it's going to be kind of difficult if you don't already know coding. But if you want a free theme, because Empire Earth paid, it's like $300 or something, you can go with their, you know, built in supply theme or something like that. They got some free themes that'll work. And for a demo store, it doesn't really matter. Just use the supply theme. Definitely get a logo made. Starting a store without a logo, you're not going to look professional.

Get an 800 number for your phone number. Don't just use like your home phone or something or your cell phone. Look professional. Get a professional business email address. Don't Don't just use at gmail.com, get like a G suite or they call it Google Workspace now. And if you want to sign up for Google Workspace, I would recommend signing up with my affiliate link so you get a better deal. It's ecommerceparadise.com slash G suite. And there's also Grasshopper phone systems for the 800 numbers.

That's who I recommend for them. ecommerceparadise.com slash Grasshopper. It's like a small business phone number. It's like 30 bucks a month, super cheap, affordable, and good system. They have really good features built into it. And for the business address, I'd recommend definitely using a virtual address, not using your home address. But some of the marketing platforms these days, they really want to see that you have this physical retail address.

So maybe putting both on there is good, but you can definitely protect your privacy. Don't just put your home address on your website because then customers might decide to show up at your home someday. So putting a virtual address on your website is better. You can use Busy, which is who I recommend for LLC, or you can use Traveling Mailbox. I use them for my personal virtual mail address, ecommerceparadise.com slash travelingmailbox for that.

So just set up a good professional theme, add a logo, add some demo products, and you'll be good to go. Okay. So once you got your suppliers on board and you have onboarded their products to your website, you've added their category, you can just delete the demo products, you set up payment. There's some apps you can set up in Shopify, apps to increase your conversion rate. Definitely set up email marketing. Klaviyo is a good app to go with that.

Ecommerceparadise.com slash Klaviyo. And go to an app like Wheelio or some other app to get an email pop-up that offers a discount coupon code. That's going to be a good way to get people to order from you and you can follow up with them. You should also create an automated sequence through Klaviyo for people that sign up for that coupon code.

And also for people that abandon their checkout, they go all the way to checkout, they enter their email address, they'll be entered into your system as a customer that did not order. And then you can automate emails to be sent to those customers. And even Shopify has built in stuff nowadays. So you don't have to use Klaviyo, you can just use Shopify's built in email marketing stuff.

But yeah, there's a lot of different marketing strategies you can use, just make sure you have the foundations built into your website. I would say the foundations are for sure search engine optimization, meaning that you have unique product descriptions and you can use AI for this now and it's built into Shopify, so it's super easy.

Unique titles. So if you're going to upload stuff and copy from your suppliers, I would definitely recommend you making them unique and adding keywords into them, things like that, like subcategory keywords, so they rank better. You'll also want to add internal links to your website.

I would definitely make blog posts that are like the best top 10 of any category and then like FAQ and Q&A and like how-to tutorials for those particular categories and then maybe brand brand comparison blog posts, and all those are great. And then you can use a link like Link Whisper, sorry, an app like Link Whisper, which is an app that you can make automated internal links based on keywords. And then any particular keyword in a blog post will link to a collection or,

you know, product, that kind of thing. So those are really good ideas to do. Email marketing is a great foundation as well. If you have a good email sequence built out for people in different stages of your funnel, then you'll be more likely to convert customers. And then social media is also a really good thing. It kind of just, it shows social proof for your company. That's a good company.

What you can do is you can create content automated through like a social media app on Shopify that creates automated content, maybe just like pictures and videos of the products and post them to social media. And then what you should do is you should get all the different links for people to leave reviews on social media platforms and put them into an email.

And when somebody places their order and then receives their order, You can automate an email to go out that says, hey, thanks for your order with us. How did you feel about the ordering process? And then another one that says, hey, what do you think about your product when you get it? Okay, those are really good things to do. On top of all of that, of course, you're going to want to run paid advertising these days because you are not going to be getting sales without it.

So Google Merchant Center and Google Shopping Ads are probably the main place to go for traffic when you first begin. in. And there's a whole different, you know, a whole unique strategy there that I have that I've created that you can learn more about just by diving into my email list. Go and get my free niches list and mini course at ecommerceparadise.com slash niches.

And then once you are in there, the email list that you'll get emails periodically from me and you'll learn more about marketing methods and my Google Ads methods specifically. I also have other YouTube videos as well as blog posts on this. And in my main course, my high ticket dropshipping masterclass, I have a full breakdown over the shoulder tutorial of how to set these types of ads up. They're very unique and they work really well.

The other thing is, these days, it's very difficult to get on Google Merchant Center. So if you have problems with it, I would recommend reaching out to someone who can help. And there are particular companies that help. I am working with a company called GMC Doctors. They're out of the UK and they can help you to try to get on board with Google Merchant Center. So I recommend them. Another idea is to go to Microsoft Ads, which is the platform that Bing Ads runs on.

Microsoft Ads looks and works the same way as Google Ads. It's a little bit glitchy sometimes, times, but usually it works pretty well. It gets a lot less traffic than Google does. But for certain niches, it works really well. So Microsoft ads is really good. So definitely run paid advertising. There's Google, there's shopping ads, which appear at the top of the search engine with images and prices.

So those usually work the best. But you can also run search text ads, you can also run dynamic remarketing ads. Those ads show up on other websites and our little, you know, boxes where it shows the products and the discounts and things like that. And it only gets shown to your past, you know, product viewers or whoever the audience is that you choose. Yeah. So once you run some ads, you get some SEO going, you should get some sales and sales usually come in right away for high demand niches.

So if you chose the right niche and you got a good offer on your website and got a good website set up and really good marketing and ads, you should get orders right away. And if you don't, for some reason, there's got to be some reason why you really got to dig into it and figure out why. If you just give up right away, then you're never gonna get to the point where you can actually become successful.

So dig in, analyze, figure out how to fix it, figure out how to improve it, and then go from there. But the next process is usually managing orders and customer service. Now, if you're gonna do it yourself, just know that you gotta be at your desk nine to five, just like a regular job, because people are gonna be calling nine to five.

But if you have some money or if you are a business owner and you already know the process of hiring and stuff like that, you can outsource to the Philippines and hire Filipinos that will stay up all night in the Philippines to assist your customers during the day and the US hours. And that's what I do. And it works really well. You'll still need to do a bit of admin work and management work, but definitely do that.

One tip, though, is to avoid scammers is to never give a Filipino assistant access and the ability to issue refunds for your store. I've been scammed in the past where a Filipino had access to issue refunds. And what they decided to do behind my back was to call customers, past customers, and to tell them that there was some problem with their payment. They had to refund it. They wanted that customer to pay them directly via wire transfer.

And they ended up getting some orders paid that way and then refunding. And I caught it just in time to get most of it back, luckily. But they did get one or two. And so, unfortunately, I just had to eat it because there's not really much I can do besides going to the Philippines myself and trying to go after this person, but the money's already gone and I would probably get in trouble and it's just not a good idea.

So just had to kind of accept responsibility and write it up as a business loss, but you can avoid it by learning from my mistakes. So never give somebody access to refund. You'll be the one to refund it. And also I would say, just don't give access to delete products from your website or delete blog posts, things like that. Because if you ever have an upset employee, they might just decide to go to your website and delete a bunch of stuff.

And you can also get apps that back up your website. So I would definitely do that too, just to protect yourself. But most of the time, you're not going to deal with it. This is kind of just seemed like a one-off thing I had to deal with that I learned my lesson from. So you guys can learn from that. But as far as order management goes, the process is super simple. So all you have to do is you get an order, you send a purchase order to your supplier.

That supplier will tell you whether it's in stock or not. If it is, great. You want to make sure that the shipping cost is not going to eat all your margin. So you ask them for a quote on the shipping cost. If it's free shipping, great. If it's not, okay, how much is the shipping cost? If it's profitable still, then after the fees and discounts and it's still profitable, then you can go ahead and process the order.

And you either place the order on the supplier's site using your business credit card, or you can send them a purchase order and they'll send you a credit card authorization form where you fill it out with your card and then they'll charge it directly. So some suppliers work both ways. Some suppliers work with the order portal. Some suppliers work with the purchase orders. Every supplier is different. So it'll just be whichever that, whichever they work with.

But regardless of the time as to when the product will ship out, sometimes it ships out right away. Sometimes it takes three to five days. Sometimes they're custom order products. They take three to five weeks to ship something like that. Every supplier is different. Of course, you're going to have to deal with it. I would just recommend communicating with your customer no matter what happens. Okay, so if it's going to go out right away, just let them know.

If it's not going to go right away, definitely let them know. You don't want to get a charge back. And the thing about Shopify is that if an order is going to take a while to fulfill, you still have to capture the payment. They're only going to give you like three to five days before the payment expires. It's not like Amazon where they can charge your card even weeks later when the product finally ships.

You have to charge the card up front. So you got to let the customer know, hey, we're going to actually charge your credit credit card now. And the product will ship in three to five weeks, or maybe it's like three to five months or something like that. But they have to be okay with that. So that they don't end up filing a chargeback or dispute or, you know, complaining that, hey, I haven't received the product, I already paid you.

So you want to definitely just communicate with the customer and let them know these kinds of things. Okay. And then of course, you want to put this stuff into your policy pages, you got to have a clear return policy, excuse me, a clear shipping policy, clear payment policy, refund policy, all that stuff, it should be in an FAQ page, really easy to find this information on your website, which is just the most ideal thing. Okay.

All right. And then once you process the order with the supplier and they give you the lead time, then you'll get the tracking information. And then, you know, whether it be FedEx or UPS or some sort of freight company or whatever it is, you'll get the tracking number and then you will input that number into Shopify. And then you can also contact the customer as well, just letting them know that it shipped out.

They'll get automated emails and then maybe you can just call them and let them know as well. Just good customer service is always just making sure the customer knows that you don't just send it to them, get no response and think it's okay. Like you have to get a response from the customer, a confirmation that they received it and they understand. It's usually how it should be done. Of course, before the product ships out, you want to actually capture the payment.

Before, we would just auto-capture payments because if we refunded a payment, we would also get refunded the merchant fee. But a few years ago, that changed. And now all the payment processors, almost all of them don't refund the merchant fees anymore when you refund payments. So now we don't capture payments until the product is confirmed in stock and ready to ship.

We do capture it before it ships. If we wait to capture until after it ships, and maybe Maybe by that time, the customer has maxed out their credit card or something, and then it's not going to go through. That's a problem, right? And usually this doesn't happen, but it's happened to me in the past. So what you want to do is capture the payment before it ships. Okay, just make sure you have the money in your account before it ships. So you're not out the money later.

But after that's done, you're good to go. So yeah, and there's lots of things that can happen in the shipping process. Shipping can go smoothly. It could perfectly ship out, arrive on time.

They get the product they love it that's just the dream situation but a lot can also go wrong with shipping so things that can go wrong with shipping include you know maybe the package got last got lost in the shipping maybe it just got delayed you know for some reason there's like freak storms and stuff or maybe got lost in the warehouse and there's a delay for whatever reason shipping can get delayed and we use an app called aftership and you can add this in shopify as an app.

And with aftership, it will automatically send notifications to your customer when there's a delay, when there's a delivery exception, things like that, they'll get emailed about that. So that's a really good way to make sure that your customer always knows what's going on. And the other thing too, you know, products can get shipping damage, so damaged in shipping. So you should have some sort of a thing that explains to the customer what they should do in the case a product arrives damaged.

Now, sometimes it arrives damaged, and they can't even tell the packaging is perfectly fine, but inside the package, the product is damaged. So So usually I tell them via email, hey, you've got to check inside the package, but it's not always possible. The delivery guy gets there and they just throw the package on the doorstep and that's it. Even if you pay for signature required delivery, sometimes during COVID especially. They didn't even care. They just threw the package and that's it.

So signature required is a thing where the customer was there, he did get the product, they didn't just throw it on the doorstep and then walk away because someone can steal a package. And sometimes packages get stolen and you just have to deal with it. They're going to file a charge back and you're going to be out the money. So always ship with signature required delivery and hopefully it arrives on time and the person gets it and they accept it and it's not damaged.

But if it is damaged, then you will have to send a claim to the supplier and ask them to send parts that will fix it or whatever that is. It just depends on the product. Sometimes people ask for a discount for damages, and that's totally understandable. Sometimes the supplier will be open to helping you with that, and sometimes they won't. It just is what it is.

All right, so next is the product can arrive and be perfectly fine, and then maybe weeks or a month later, or maybe even right away, it just doesn't work properly. Something's broken with it. It wasn't broken and damaged in shipping, but it did just not work properly. And that's what I call a warranty issue. you. And so you'd file a warranty claim with the supplier, and then they will either send the product, the parts to fix it.

And then the customer is liable to actually pay for the any like labor that they have to fix it with. Sometimes they'll ask for discounts and things like that to cover the labor. Sometimes they won't. It really depends. The customers can be cool. Sometimes they're total psychos and act like children. You'll deal with all different types of people doing dropshipping.

But the main thing is, is to keep your cool no matter what and to stay professional throughout the situation, no matter what, like just know that they gave you money. So they are kind of your boss, you know, and so you need to treat them with the utmost respect, even if they act like children. So just do your best. And sometimes orders are profitable, and then they become unprofitable because of these types of issues.

And you just have to keep in mind, like, no matter what, it's just about taking care of the customer and moving on to the next one and hoping that the next order goes smoothly. And keeping your order defect rate under like 5% would be awesome because you don't want to get above 2% chargeback rate or your payment processor will start putting your payments account on hold.

And you definitely don't want to have too much of a defect rate either because then your business is going to struggle with profitability as well. It's just another thing to keep in mind with niche selection because some niches are more complex than others. They are more delicate. Sometimes the more products are more delicate. Like an example is aquariums, you know, like aquariums are super delicate.

And if you're going to dropship those, they might be profitable upfront, but then if they always arrive damaged and the person files chargebacks or whatever, because of that, it's not going to be a profitable business. So a lot of niches like that are better done through retail storefronts because I can carefully take the product and deliver it to the customer instead of them dealing with a shipping company and then maybe the packaging isn't very good or they just throw it around or something.

So keep that in mind when you're choosing your niche as well as is the delicacy or complexity of the product can make a big difference on your backend profitability. Okay. When it comes to issuing refunds, it's pretty easy to do through Shopify. I mean, you just do it. Like I said, do it yourself. Don't have a VA do it for you. Just, you know, you be, you need to be your accounting department at the end of the day.

If you do scale big enough to have like an accounting department, then you would have them do it, but it's gotta be someone you really trust. And just focus on customer service, you know, focus on taking care of your customer. I think that's the main thing at the end of the day is just having a really good customer service. Okay.

All right. So handling returns and refunds when somebody has a product, but maybe they have like buyer's remorse and they just don't like the product or they maybe there's lots of reasons why people ask for returns other than being damaged or not working properly. Buyer's remorse, maybe they used it. It just doesn't meet their expectations. What else? You know, I don't know. Maybe they didn't like it, the color or something like that after they got it.

They weren't happy with the color. There's so many weird reasons. So you've got to have a clear refund and returns policy on your website, which usually includes a restocking fee and then terms on whether the customer has to pay for return shipping or not in any case of buyer's remorse.

And usually customers, if they have buyer's remorse, they'll try to turn it into some kind of like a, it was defective or damaged sort of an issue so they don't have to pay for it because that's just how customers are.

They're fickle usually. you know and so you just kind of have to deal with it and just do your best to take care of them but also protect yourself and your downside risk because suppliers will usually charge a restock fee and require return shipping costs to be paid by the customer so you've got to pass that on to the customer just to make sure that you know they aren't gonna have these issues try to make your website as clear as possible in your product descriptions like make sure your pictures

accurately represent the actual color of the product that it doesn't like not it's like inaccurate or whatever when they get it looks different. Make sure the pictures are accurate. Make sure the descriptions are accurate in the specifications and stuff like that. And you don't oversell the product because then people will get it and then they just aren't happy with it. That kind of thing. The best way to do that, of course, is to actually buy the product yourself first and then review it.

And I used to do that with my bicycle website in the very beginning. I would buy the bicycles and I would use them and review them, make a video and a blog post. And that increased sales a lot. But, and you know, of course it would make it more clear as like what the buyer would expect. and then it was a more profitable business altogether. But because high ticket dropshipping, specifically expensive products, you're not gonna be able to probably afford to buy all these products.

But maybe later on, when you get a lot of profits, you can. So I would definitely recommend reaching out to your suppliers, ask them for the price of a demo product, just as if you're a retail store, it's a product you wanna buy so you can test and review and all that. And I would do that just with your best sellers. And definitely just, you know, or you can reach out to your customers, say, Hey, you bought this product, you used it.

Can you, would you be willing to make a video review and write it up if we pay you for it? That kind of thing. You can also do that too. And I I've done that in the past, ask customers and incentivize them 50 or a hundred dollar gift certificate. If they can make a short review of a product, you know, with the product in the video, and then, you know, we can turn that into a blog post, that kind of thing.

But for the most part, when you're handling a return, what's going to happen is your customer is going to request the return. You're going to to give them the terms, they'll agree to it. And then you reach out to the supplier and you get a return label from them. Usually they're going to be the ones that create the return label. And then you send that to the customer and they ship it back.

And then they will discount, they will remove the price of initial shipping, the return label cost and the restocking fee from the amount they refunded you. And then you'll do the same thing to the customer. What I'd recommend doing is putting your restocking fee a little bit higher than the suppliers. And that way you'll be able to keep your, you know, margin a little bit there.

Like like try to end with like a two to 5% margin because remember, you're not gonna get refunded for your merchant processing fees. So there's always gonna be a little bit of a cushion there that you wanna create. So I usually raise it by 5% just to have a cushion. And it also pays for your admin fees. Like you gotta pay the VA or yourself to do this kind of work. So just make sure that there's a cushion there.

But just make sure things are processed promptly. Don't sit on a return for like two weeks and not refund it because you'll end up getting a charge back or dispute and you don't wanna deal with those. The weird thing is even if chargebacks are won, they're still going to put it against you. And, you know, so that sucks, right? Even if you get chargebacks and you win them, they're still going to hold that against you. And your account could end up getting penalized because of that.

They'll put you on a hold or something like that, or like a rolling reserve. It's super annoying. But yeah, just try to, you know, do the best you can with customer service. If the person's freaking out and having a terrible time and they just, everything is going terrible for them, I would just make sure that you eat the costs in order to make them happy.

At the end of the day, I think that's the best thing to do. So just consider small losses okay to get rid of the headaches and to just like make your life good again, you know? This can be extra painful when you're dealing with really expensive products, for sure, because the costs are a lot higher. If the product is less expensive, it's not a big deal. But if it's like a $10,000 product, you know, obviously everything's going to cost a lot more,

so it's going to hurt more. But just consider that you're saving yourself a lot of hassle and headache by helping the customer. And if you decide not to, they can turn around and leave bad reviews on every single website talking about you and even complain to the government about you and stuff like that. I've had that happen. Send lawyer documents and things like that. So it's just not a good idea. So I just take care of the customers.

Alright, so once you kind of get past that process, and you understand the processes of fulfillment, returns and customer service, you can start to scale your website. So at first, you might get like five or 10,000 in a month in sales, you know, with high ticket dropshipping. And then, you know, with with normal lower cost dropshipping, you might do 1000 or something like that.

But as you scale, you can bring on more suppliers and have more products, higher cost suppliers, lower cost suppliers, you can offer accessories as a post purchase upsell, you can have add-ons on the product page, you can create better offers, providing free gifts, things like that. And you'll just start to really scale and get more sales in general.

You're going to have to hire people eventually. I think I remember when I got to the point where I made $100,000 in a year in revenue, you know, and my net profits probably like 10 to 20% or something like that. It was just enough where I could quit my full-time job and work full-time on my online business.

After that, it got to the point where I was working all day and into the the night to fulfill orders, do customer service and all this stuff, much less not really even working on growing the company anymore. So I had to get to the point where I was hiring virtual assistants to help me. So I hired a VA for customer service. That was the first thing. And then I started hiring VAs to do product uploading for me. And then I started hiring VAs to do marketing and stuff like that as well.

So hiring full-time VAs is best done through the Philippines. I like the website called onlinejobs.ph. They have basically a VA a Rolodex of all the Filipinos. They'll usually start working at three bucks an hour. And then as you know, they get more experienced $4 an hour is usually the baseline there. And then as the business does really well, I usually pay them $5 an hour. Especially when they become experts in the niche and the product categories

and the products you're selling and things like that. And they are able to close sales. They become a closer, they're definitely worth more. So when you have a VA, I would just definitely get them started on taking off all the stuff from your plate that is just like the ongoing things that you're doing all the time so that you can focus more on the growth of your company.

And then I would definitely train them on sales, definitely train them on good customer service, and just make sure that no matter what, people are getting taken care of. That's the most important thing. When you're hiring a VA, make sure that they speak English really well and that they don't have too thick of an accent, that they're easily understood.

And when they're faced with tough questions or problems that they can't solve, that they have really good go-tos instead of just, you know, not knowing what to do and sort of putting off the customer, that they give them a definite answer and, you know, follow up and figure out the solution. They're good problem solvers. I think that's the main thing is they got to be good problem solvers, that they don't just give up when there's a problem.

So that's the main thing. The other thing you can do is to figure out apps and different ways to connect your online stuff to automate tasks like inventory updates, price updates, catalog updates, things like that can be automated. There's different apps like StockSync on Shopify that can do this kind of stuff for you. And it's pretty simple. Your supplier will send like a CSV file and that will give you the ability to automatically update your website

for every single SKU that the supplier offers. So it's a good way to go. Definitely recommend doing that. Use a tool like Zapier. Zapier is an automation tool and you can use that for bookkeeping because whenever you get an order, you should definitely be adding it to a spreadsheet. Don't use QuickBooks because it's going to be hard to figure stuff out. One row of a spreadsheet can be for all the order details and then same thing

for refunds and returns, same thing for chargebacks. So keep track of all this stuff. Every month, you can add up all your sales and your profits and you know how much you're actually making. Because when you start taking back orders specifically, you're going to have a lot of cash going into your checking account and you might think you're making a lot of money, but in reality, you're not. You are only really making the profit.

So use your bookkeeping sheets as accrual accounting and your checking account credit cards will be more of like a cash basis accounting. And then definitely get an accountant. I use Bench. Bench is a great tool. You can sign up with them, ecommerceparadise.com slash bench. They only cost a few hundred bucks a month and they'll do all your books for you, just cash basis. So checking account, credit cards, stuff like that.

Now with accrual accounting, it's different. You should do accrual accounting for your internal bookkeeping and cash basis for your external, because the IRS, it's just easier to report taxes with cash basis accounting, but make sure you keep your books because you got to know like what you're actually making in as far as profit each month. In reality, you're not like, you know, Oh, I'm making a hundred thousand dollars.

No, you're not. You're only making about 10, right? So you've got to save money and put it away to pay the suppliers, to pay your advertising, to pay your team, to pay your software expenses and apps and to pay your taxes. Of course, at the end of the year as well. So don't pay yourself too much and end up going into debt because you can use business credit cards and get cash back rewards and travel points and stuff like that.

And there's a whole nother world of travel hacking by using one of these businesses to get tons of points and live this luxury lifestyle. But if you're paying a lot of money in interest every month to carry over debt, it doesn't really make sense, right? So definitely try not to get to the point where you're forced to sell your business because of cashflow problems. I've I've been there before and I've made this mistake. So that's why I'm telling you guys try to avoid that.

You just have to stay on top of things and you have to make sure that you're making money every month. If you see yourself not making every money every month with this dropshipping stuff, definitely keep your full-time job or look for full-time work or just start other side hustles that do make money as well, because you've got to pay your bills every month.

If you're going negative, negative, negative month after month, you're just going to be accruing more debt, more debt, which means more interest because you're going to carry a balance. And one of the best ways to get out of it is to sell the business. Because if it has good cash flow and it's profitable, you can always sell your business online for like a two to three X your yearly profits.

But you don't want to get in that position because you're going to have to sell probably for less than what you want to sell it for if you're in that position. And don't wait until your business starts declining to sell the business. Sell your business when it's making the most it's ever made before because somebody is going to be willing to pay more for it, right?

All right. So other ideas for scaling include expanding your product offerings, getting more suppliers, adding more categories to your website. But keep in mind with niche stores, you usually want to keep them niche because it's easier to market to a target audience, a niche audience, than it is to market to multiple niche audiences in the same store. It makes advertising easier. It makes content marketing easier. It makes SEO a lot easier. Google likes niche stores as well.

And niche sites, they understand like they have authority in a particular niche topic. And so they're going to rank you better for those particular keywords. So keep your store niche. I would say three to five main categories in a single site is plenty. 20 to 30 suppliers is plenty. You'll want to definitely just grow your SEO and get backlinks, do internal links, get content, get free traffic as much as possible, because that's going to raise your profit margins a lot.

Focus on SEO for sure. Get ads going, but don't rely on them. Focus on SEO. Have a baseline of content marketing for social media, but don't put all your effort into that. Just have some basic social media stuff going on. You don't have to focus on that constantly because that's not really what's going to bring you sales. The thing that'll bring you sales is people that are searching for the products that you have to sell and they want to buy it right now.

And they're going to find you through ads and through organic rankings on the first page. So you want to get to the first page on the organics and you want to get your shopping ads going. That's the main thing. And then email marketing, retargeting, that kind of stuff works really well to get people to come back and place orders. All right. So some common mistakes to avoid. I already kind of went over some of this to reiterate.

A lack of market demand or oversaturation with competition. Like I said, it's really hard to sell in a product where there's just not a lot of demand and where there's just like big box retailers or like way too much competition. So try to find somewhere in between. Another one is dealing with suppliers that have poor product quality or, you know, they always like deliver, they take forever to deliver or to fulfill their products or just have poor customer service or poor warranty.

So try to avoid dealing with those types of suppliers. Another one is neglecting customer service.

Definitely respond to inquiries right away and deal with issues promptly. Don't put them off. Don't wait to respond to stuff. Your business is just going to do worse because of it. Even after hours, if you get a request after hours, definitely respond to it right away. Way, don't wait because, you know, someone might buy from you just because you respond to them at 7 or 8 p.m. As opposed to the other store that just doesn't respond till the next day. Okay. I've had that happen a lot.

And then lack of planning. So, you know, when things increase a lot and you just don't know what to do, it's usually a good problem to have, but you just have to have a plan in place.

Like, okay, once we get to this milestone, we're going to hire another customer service agent. Once we get to this milestone, you know, we're going to hire another other content marketing person because you've got to be able to take on more talent as your business grows or everybody's just going to get overwhelmed and completely overworked and burnt out. So you got to be able to scale your team as your business scales and be willing to do the work and then have an exit strategy.

A lot of people start and they have no exit strategy and they don't have to do any bookkeeping work in the beginning and stuff like that. And then it just becomes a nightmare to sell their site if they have to. What I would do in the very beginning and start with a solid foundation of bookkeeping so that as you grow the store, it's able to be sold at some point, especially when it's really high.

And you can sell it at the best time, at the best moment. One of the best ways to make money with dropshipping, especially high ticket dropshipping, is to sell your store. If you get your store to 100,000 in revenue per month, hopefully you're taking home at least 10% of that. It's 10,000 a month. You know, and if you multiply that by two, by a year, that's 120,000 a year.

If you multiply that by two to three years, you know, that's a really good sales amount, you know, $250,000 or something like that or more. So, you know, 350,000. So that's why you want to be able to scale the stores and have an exit plan is because then you can make the most money possible. And then it's up to you whether you want to continue dropshipping or put your money into something else or take a a little mini retirement,

you know, everything's up to you. I've done all of that in the past and I have lots of experience. I've been doing this for 15 years. I've been through multiple and, you know, build and scale and exits and multi, many retirements before, and I'm kind of still doing it today. So I love doing this stuff and I love teaching about it. And I have a free offer for you. That is a free niches list where I talk about the best niches for high ticket dropshipping, best product categories.

So kind of, you can start your, you know, research really easily by having a list of niche ideas already. And what you can do is just put them through the filters I talked about and then decide the best ones for you. So go get that at ecommerceparadise.com slash niches. You'll get the niches list.

You'll get a free video training on niche research. And then below that, you'll get access to my free mini course, which goes through all the stuff I talked about in this video and more about building these businesses. And then I'll have a special offer for you at the end of the mini course for my high ticket dropshipping masterclass that you can only get through there. So definitely check that out, guys.

And make sure you subscribe and leave a comment below if you have any questions about starting, running, scaling, exiting one of these dropshipping, high-ticket dropshipping businesses. And definitely share this with anybody you think that would find it valuable. Thank you so much for watching, and I'll see you next time.