Have you heard about dropshipping? This business model looks attractive as a passive income stream because you don’t need an inventory to start selling products. You only need a platform to accept orders and forward them to the manufacturers. Ken tried it, alongside sponsoring a semi-pro Poker player, and failed. The silver lining of these failures, though, is that it brought Ken and I together. No one knows if we’ll be here sharing our e-commerce experiences had Ken not encountered the dropshipping model.
Listen to this episode and learn from Ken’s experience as a dropshipping owner!
[00:01 – 03:44] Opening Segment
- We introduce our topic for today
- What is dropshipping?
[03:45 – 13:00] Starting a Business Online
- How to start a business online
- Platforms and tools that used
- Why Ken spent 20 hours in YouTube research
- The Power of Facebook Ads
[13:01 – 24:24] Sponsoring a Semi-Pro Poker Player
- Want some Amazon refunds? Check out Getida
- Promo code: FTM400
- How Ken realized that his dropshipping business failed
- Ken’s reasons for sponsoring a semi-pro Poker player
- Lessons learned from this experience
[24:25 – 27:04] Closing Segment
- Start a business or buy an existing one?
- Ken weighs in
- Connect with us. Links below
- Final words
“Do something whether you think that your business idea is good or not.” – Ken Wilson
“Even though I only made 3 sales…it was like a spark that ignited something in me.” – Ken Wilson
Do you have a similar experience? Send us a voice message and let’s see how we can help you!
Email us –> firstname.lastname@example.org
Real quick before we get into the show, I wanted to share a new service called Getida that Ken and I have been using that has made us over $10,000 in Amazon reimbursements. The service requires no monthly subscription, and Getida collects a small percentage of the money they recover for you. It takes less than five minutes to set up and works on all Amazon marketplaces. Go to getida.com GETIDA, and enter promo code FTM 400. That’s FTM for firing the man 400 to get your first $400 in reimbursements commission free. How much money does Amazon owe you?
I think out of all of those 60 days of that drop shipping business that was live. I think I had three sales. And I think one of them was my nephew. It doesn’t mean that it doesn’t work. It just means that whatever you’re doing is not working. So fix it and try it again. And then rinse and repeat that process until it works because you can likely figure it out. Granted, it was three sales. It was a few bucks, but it was like a spark that ignited somewhere in me
Welcome, everyone to the firing the man podcast a show for anyone who wants to be their own boss. If you sit in a cubicle every day and know you were capable of more than join us, this show will help you build a business and grow your passive income streams in just a few short hours per day. And now your hosts, serial entrepreneurs David Schomer and Ken Wilson.
Welcome everyone to the firing the man podcast on today’s episode, we talk about Ken’s failed drop shipping business. Today, we’re gonna dive into what drop shipping is how Ken’s business failed, and key lessons that he took away from the entire process. Welcome to the show, Ken, what’s going on?
David? How are you? Man? It’s great to be here in studio.
Absolutely. Absolutely. You know, when we started talking about this episode, I want to commend you on being vulnerable, right, in showing, you know, obviously we talk about what goes right, but talking about what went wrong, because there are some really valuable lessons here. And I am just really excited to dig into this.
Yeah, absolutely. Me too, you know, and you’re right. Like, it’s really valuable to talk about lessons learned and mistakes we’ve made. And you know, some are costly, and they sting. And you know, you pick up and you move on. So yeah.
absolutely. So let’s start off with what is drop shipping?
Sure, sure. So one of my first businesses that I ever started, actually, my first one that I ever really started was a drop shipping business. And with drop shipping, its main idea is to not hold inventory. So you have a website, usually and you send customers to the website, and they make a purchase. And then that purchase is sent, usually via automation to a distributor or a vendor who then drop ships the product directly to the customer. So you don’t ever have the product. And one of the main advantages is that you don’t hold inventory. So you only buy something when you make a sale after you make a sale. So it’s pretty great in that sense that you’re not holding inventory. So that’s kind of the basis of drop shipping.
Absolutely. You know, it was about a month ago, I was on Amazon and I ordered a Patagonia hat and showed up in a box from Dick’s Sporting Goods and had a Dick’s Sporting Goods receipt in there. And I realized that somebody must have saw deal on Dick’s sporting goods, and then listed this Patagonia hat for a higher price on Amazon, honey talked me into buying it. And all of a sudden, I’ve got a Dick’s Sporting Goods showing up on my front porch. And so that was an example of drop shipping and good reminder that next time I buy hat, I need to check out Dick’s Sporting Goods.
Absolutely. Yeah. And I had one recent incident where I was on Facebook, and I saw an ad for this product. And it brought out an emotion that I had at that point in time and I bought it and you know, it took four weeks to get there. And it’s like two days after I bought and I got a random email with this weird checkout stuff. And I thought I’ve been had. I got swindled into a dropship so it’s out there a lot. I’m sure a lot of the listeners have purchased products that were drop shipped. But yeah, it’s an interesting business model. So kind of getting into it, you know, I always want to so I started this drop shipping business back in late 2017 you know, full time engineer working a full time job, had a family and I’m like, okay, I want to start a business and you know, like get away from working full time. So this was kind of my first go forward. And you know, I had been watching a lot of YouTube channels, a lot of research like how am I going to do this and I definitely knew that I wanted an online business. You know, I wanted something where obviously I didn’t want to go in and you know, be a bartender or whatever, I wanted an online business, something I could scale, something that was easier remote, I can do it remotely. You know, my background is in tech, I went to college for technology. I did a lot of, I did some website design in college, I wrote websites in HTML and whisky wig editors back in the day, I know I’m dating myself there. But, uh, so I had some experience with websites. And so I thought, Oh, this is not going to be too bad. Let me try this, and kind of see how it goes. And so that’s really, it seemed to be a pretty good fit with my background, like, you know, I think I had the confidence like, I could try this and succeed. And so that’s kind of when I went all in on it.
So what did you do to get started with this business?
Sure. So I didn’t need a whole lot. You know, with the drop shipping business, you know, you need a website, so for a website, you need a domain name, you know, www dot, whatever, whatever. So I registered a domain name. And I used Shopify was the hosting provider, that the platform that I used for the drop shipping website, so I got a Shopify account, you know, I used Shopify to host the domain name, and then comes the interesting part. So this is where I kind of got sucked into Shopify a lot. And it was apps, after apps, after apps, plugging all these apps into shopify, you need, you know, all of these apps to make this work. And which you likely do. The main one, I’ll just run through a few of them that I remember the main one that I used, which was kind of the glue that held everything together was oberlo. And that app basically, we discussed earlier, the automation from sending an order to a distributor or to a vendor. So oberlo was kind of that glue that app there that it would take an order that came in, and it would basically send it directly to the vendor or distributor automatically. And also, you know, you could use oberlo to, that’s how you would pick the products that you wanted. It would port the products in from like an Alibaba or another platform, you could kind of scroll through and look and see and then kind of select them, map them or port them over to your Shopify, and then it would kind of function as that entire, you know, basically the infrastructure for the dropshipping site was oberlo. You know, then it kind of got down to like, conversion optimization, you know, because you’re paying to get people to the site. And so you want to convert them. So there was, you know, security, badges, McAfee, you know, these little like, you know, encryption, images, all these things that were apps or reviews, you could port in reviews, upsells, cross sells free plus shipping, there was even an app that I had, you know, it was Sally from Rhode Island purchase x x x yesterday, you know, that pops up in the window, you’ve probably seen those. So anyway, the Shopify apps, which I believe were over $250 a month in subscription fees, just for those apps, that was one of the main expenses for running that. And then lastly, to kind of round all that out a Facebook ads account, and then that kind of that whole ecosystem. So get the Shopify store set up, get it mapped with all the products, and then get your Facebook ads account and then start running traffic to your Shopify site. And so all of those, that’s kind of the the equipment, the services that I used.
Before we move on, I want to circle back to the apps, the Shopify apps and regardless of what platform you have your website on, you run into this, I know I have where there seems to be a solution for every problem out there for 9.99 a month. And it tends to be a kind of a cash flow suck on your business. And I’ve signed up for these apps, I’ve cancelled these apps. And Ken your sweet spot is building websites. So what would you say to somebody like first getting into either private label or drop shipping? You know, keeping in mind that cash may be tight? What would be kind of the bare bones Shopify store or WordPress site in terms of like additional apps?
Yeah, no, that’s a great question. And, you know, I continuously run through every month, the expense report, do I need this? Do I not? Because I have shiny object syndrome. A lot of people do, they want all these fancy tools. You know, however good the marketing is for that SAS service or that plugin, but you know, especially if expenses are tight, budgets tight, you know, the top ones that I recommend are just go to the basics. You know, you need a functioning site. You want it to be secure. So you want to have some kind of security app on there. You want backups. So if something happens, you can kind of revert back. And really that’s about it. I mean, there’s a lot of free plugins out there. And I would say if expenses are tight, try a free, you know, app or plug in whatever you’re on Shopify WordPress, just try the free ones and try to go with a minimalist approach. And then as you scale, you can add more plugins or apps and test them and see do they add value or not, or you’re just plugging in a shiny object. And so I would just say start with a minimalist approach. But definitely using security, and you know, backups, those kind of standard features, you’ll be in good shape.
Alright, so you’ve got your domain registered, you’ve got a Shopify store setup, you’ve got $250 worth of apps linked up to your Shopify store, you’ve got your Facebook ads account, what’s next?
Yeah, absolutely. So, I’ve got everything going. I’m hard charging, you know, I’m working late at night, my family goes to sleep. And I’m sitting in there. And, you know, so I mainly used YouTube research to kind of get all this stuff connected, I learned from, you know, a bunch of different YouTubers out there that were posting drop shipping. So I probably did 10 20 hours of YouTube research, to figure out how to actually get everything connected and set up properly. And once I did that research, it probably took me two to four hours to actually get the Shopify site, set up integrated, get all the apps in there, and get it ready for, you know, customers. And in that process, also, I spent a lot of time doing product research, because with drop shipping, you know, like, if you don’t have the the hottest products or something that people want, then you know, you’re pretty much failing out of the gate. So I spent a lot of time doing product research, finding ways to find out what was popular at the time, what do people want? Because at the time, I wasn’t into like a specific niche, it was just like, hey, how can I make this profitable? And how can I make money at this, there was no other really strategy there other than turning a profit. And so I spent two to four hours probably doing product research on oberlo getting products plugged into the Shopify. And that was so two to four hours product research, I probably had, I think, at the peak, I probably had 25 30 products on that site. And each one of them, you know, I spent a good, I don’t know, 10 15 minutes on kind of researching figuring out Hey, does it sell? Is it selling somewhere else? Is there profit? And can I automate it, and then if that fit the mold, I plugged it in,
Okay, and what types of products were these?
These were like, if you would go on to, you know, Amazon or any of the popular shopping platforms, these would be products that would be in like your top 10 best sellers, trending products, like fidget spinners, things that people were buying, that’s what kind of products these were. To round that out. The last piece of that puzzle is Facebook ads, and I spent a good 10 to 20 hours of YouTube research and fumbling through it myself to just get the Facebook ad account up, get some ads created. You know, I did a little bit of research on marketing and targeting and things. And so that was another aspect of that, I would say yeah, all together before the site went live, I spent 10 20 hours on YouTube research on Facebook ads. And so I didn’t buy any courses for drop shipping. I basically did my research on the internet and YouTube to get everything connected. So all in, you know, probably looking at about 30 hours 30 40 hours to get this operation up and going.
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So you know I was a little bit hard headed and you know, at the time I had a full time engineering job so money wasn’t a crunch. I wasn’t looking at these expenses. I didn’t even have books on this business. It was just more or less Hey, let me just try this thing and see if it works and I truly enjoy. I’m a problem solver. You know, I really enjoy solving problems and troubleshooting. And so it took longer than what it should have. I know you’d mentioned before, run a proof of concept early on to see if it works or not I should have, it took me about 60 days before I really kind of like pumped the brakes a little bit. I was spending about $25 a day. And it was, you know, I think out of all of those 60 days of that drop shipping business that was live, I think I had three sales. And I think one of them was my nephew. And the reason why it was my nephew, this is kind of a funny, a sidebar here. I was going full out on this business. And so at the time, my nephew shout out to Tommy, he was traveling on a, I guess a Semi Pro poker tournament schedule. So he would go to different cities playing poker. And so I thought, well, these were like, regionally televised events. And he was placing, you know, top 10, top 20. And I’m like, hey, let me I’ll sponsor you, you can you know, wear my merch and you know, get on these, this good marketing, right? So he’s like, yeah, and so he, you know, we got some caps, some hoodies, some shirts, you know, spared no expenses, got him all dialed up. And so I think maybe one of those sales came from my nephew. But yeah, so I think when the dust settled, after, you know, two months, I had all these expenses, Facebook ads, you know, poker tournament sponsorships, all these Shopify apps. And I think, you know, I was all in, I think around three, probably three or $4,000, I kind of looked at this, and I thought, yeah, you know, I think it’s time to pump the brakes on this, because I don’t see any light at the end of the tunnel
sponsoring a professional poker player, that’s a hilarious story. And, but I have to give you credit, like some people would sit on the sidelines. And not try things like that. And you don’t know until you try. And so I remember, early on in my business had printed off like 1000 business cards for 10% off use this promo code. And I gave them to my brother, he loves to ski. And I said, Every time you ride up on the ski lift with someone, you know, ask them if they have a pet, and then give them this card. And we converted zero sales from that, but it was like, it was a low investment, and you just don’t know if that’s gonna work. And so, tip of the hat for sponsoring a poker player, and lesson learned.
Yeah, absolutely. I think there’s always you know, if you don’t try something you’ll never know.
For sure. So what were some, like key lessons that you learned?
Yeah, absolutely. So I would say one of the top ones, and I kind of go back and forth on this one. But don’t listen to YouTube gurus, you know, I did a lot of this research on YouTube on drop shipping. And, you know, I saw these success stories, you know, oh, hey, I’m making, you know, five grand a month drop shipping, I’m making 10 20 50 grand a month drop shipping. And, you know, it’s super easy, you just do this, this and this. And that’s all you do. And then you know, at the time, you know, super naive, I’m, I’m gonna jump off full bore and do this. So, you know, looking back on that, that was almost four years ago. Now looking back on that, what I would have done differently is probably, you know, buy a course or hire an expert, you know, maybe hire a consultant that’s an expert or mentor in that field, and then even for an hour of their time, just kind of bounce a bunch of stuff off of them, say, is this viable? Does this work? How do you do it, you know, that’s one of the main ones. Another thing that I found out is, you know, looking back on that, you know, I was 3000 $4,000, deep in ad spend, and all kinds of other stuff. And I really just kind of walked away from it. I was kind of frustrated at the time. And, you know, I actually had found another business model that I kind of wanted to go into, but looking back on it, what I could have done was optimize, you know, because what I was doing wasn’t working. And so I just kind of like, Oh, this isn’t working. Let me go do something else instead of like, you know, troubleshoot what wasn’t working, fix it and try it again. Right. So that is a lesson learned that I use in my businesses now is if something’s not working, it doesn’t mean that it doesn’t work. It just means that whatever you’re doing is not working. So fix it and try it again. And then rinse and repeat that process until it works, because you can likely figure it out. Another lesson learned on this one, and again, this was back in 2017 and 2018. This was pre Cambridge Analytica, which is was a, I believe, a Facebook leak or you know, this was when Facebook was selling user data. And they really clamped down on what data advertisers could see after that this was pre Cambridge analytica so the mapping of targeting customers was wide open at the time. I mean, you could literally drill down into, you know, someone who drives a white Chevy Spark that lives in Philadelphia that makes you know, $80,000 that goes on vacation twice. I mean, you could drill in and target so much. And so I learned a lot about Facebook ads during that process. And that was the lesson that I learned. I mean that I still do Facebook ads today. The next lesson learned and this is one of the biggest ones is do something, whether you think that your business idea is good or not, or whether you know, your friends or family say it’s not going to work, do something, because if you don’t, you’re likely going to regret it later on in life thinking, oh dang, I wish I would have tried that, or I wish I would have done that. So it was a lesson learned. Because it was very powerful. And it kind of led me on to doing other things. And so do something. Take action. The last lesson learned was and this was huge. For me, it was, even though I only made three sales. I was like, oh, wow, like I could do something else that would generate money. And now granted, it was three sales. It was a few bucks, but it was like a spark that ignited somewhere in me like, oh, wow, this is there’s really other options out there. I had no, I don’t have any entrepreneurs in my close family or friends. And so this was foreign concept to me. And then so a couple of sales that went into the bank account. And I’m like, oh, wow, like this is reality. And so it was just a small little spark. But it was a lesson learned that carried on to today.
Absolutely. And it probably, you know, once you were going through this, it probably made you realize like, Oh, I do have time, like once family goes to bed, I do have two hours that I could, you know, use for something productive. And I think there’s value in just starting something outside of like the financial success of that. I think there’s you just kind of prove to yourself like, Oh, I do have the time I do have the energy and mental fortitude to follow through on something. And I think you learn something about yourself just by taking that first step.
Yeah, absolutely. For sure.
You know, one other thing that you had mentioned was don’t listen to YouTube gurus. And I would provide that same advice. And one thing that you had mentioned, like alternatives to that. And I think one thing that people do, myself included, I watch a lot of YouTube, is undervalue their time. So for instance, say just to use easy numbers, say I value my time at 10 bucks an hour, I will watch 25 hours of YouTube on a given topic, but I would probably hesitate to talk to a consultant for two hours, that costs 125 bucks for each hour, and I would probably, you know, learn a lot more from that call with an experienced consultant. But it’s free. And I’m putting free in air quotes here on YouTube. And so that’s the first spot to go. And so anyway, it was interesting hearing you say that, and I actually had a problem this week that I was trying to solve, of course, went right to YouTube. So it’s a good reminder to everybody, that sometimes the free resource isn’t always the best resource.
Yeah, absolutely. And if you translate it into Yeah, how much is your time worth? Is it gonna take, you know, four hours of YouTube research to find that answer? And is that answer, right, versus, you know, kicking out a couple 100 bucks for a consultant or an expert? So yeah, that’s great.
Definitely. So knowing what you know, now, do you think that you could make this business successful?
You know, I would say probably, and the reason for that, I would switch things up from the lessons learned, you know, with the drop shipping business traffic, you need to get traffic. And so I would likely spin up multiple traffic sources. At the time, I didn’t, I only did paid traffic, whereas now you know, I have more experience, I would have a source of organic traffic. And I would also either hire an expert, or I would hire a consultant that’s really good at either Facebook ads, Google ads, one of the ad platforms to get paid traffic that was highly targeted, and that converted really well. So those are what I would do differently. And I do think that I could make it succeed. On the other side of the coin, I would like to point out, you know, since that business, I’ve also learned that, you know, there’s another method to getting a business and that’s entrepreneur, you can acquire a business. And so I don’t know that I would start another drop shipping business, I would rather purchase one. And as an example, I saw one on, you know, one of the brokerages had one for sale a few months ago, and it was a low seven figure drop shipping business. It was high end furniture. And this, you know, this was I’m kind of against the drop shipping model in terms of an investment. But this business had been they had been in business for almost 10 years. And so this was a legitimate, it had a lot of length to it, you know, it was seasoned and so I I don’t know that I would start a drop shipping business from, you know, from the start, but I might look into buying one.
Can we dig into why you don’t think you’d buy one? Or probably start there?
Yeah, so starting something versus acquiring something that’s already spinning out cash, you know, two whole problems there like, so how much of my time is it going to take to get a dropshipping business working, you have to figure you have to get the tech side of it up and going, you have to find products, you have to get, you know, like I talked about, you have to find someone that’s good at ads that converts versus you can jump into a business that’s already producing cash. And you can also leverage SBA or any other assets that you have to buy this business, someone’s already figured out all those problems. And so they have it operating well. I mean, you know, you shouldn’t buy a business that’s not operating Well, unless you want to return it. But yeah, it’s already functioning, they’ve already solved most of those problems. And it’s just producing cash. And so you can just kind of come in, step in and take over the business that way. And to me, that’s a lot better ROI and a lot better return on my time I come right into a business that’s producing cash.
So obviously, your business failed. If you could go back in time, would you still have done it?
Yes. And the reason for that, that small project, trying a drop shipping business, you know, it actually led me down the path to starting multiple e commerce companies that I own and operate today. And if I would have never tried drop shipping, I would still have a job today and wondering what if.
And one final question, had you not started this drop shipping business, do you think you and I would be sitting across the table right now recording a podcast about e commerce?
No, absolutely not.
All right. Thanks, everyone, for tuning in. Thank you everyone for tuning in to today’s firing the man podcast. If you like this episode, head on over to firingtheman.com And check out our resource library for exclusive firing the man discounts on popular e commerce subscription services that is firingtheman.com\resource. You can also find a comprehensive library of over 50 books that Ken and I have read in the last few years that have made a meaningful impact on our business, for that head on over to www.firingtheman.com/library. Lastly, check us out on social media at firing the man, and on YouTube at firing the man for exclusive content. This is David Schomer
and Ken Wilson. We’re out
Before you go we wanted to share a new service that Ken and I have been using called getida that has made us over $10,000 in Amazon reimbursements. The service requires no monthly subscription in getida collects a small percentage of the money they recover for you. It takes less than five minutes to set up and works on all Amazon marketplaces. Go to www.getida.com GETIDA.com and enter promo code FTM 400. That’s FTM for firing the man 400 to get your first $400 in reimbursements commission free. How much money does Amazon owe you?
Transcribed by https://otter.ai