How To Start A Dropshipping Business | The Growth Booth #33

Today we're talking about dropshipping. I've got a pretty long personal history with dropshipping, having sold pretty much everything you can imagine. I think the first product I ever sold was a pregnancy pillow. We've also sold bird cages, train horns, pitching machines, barbecues, and everything else that you can imagine in between.

If you've been tuning into the show, you know that on episode number 30 we spoke to Hjalmar who is one of our students who has built a business that does hundreds of thousands of dollars per week selling accessories. You can sell almost anything dropshipping. But as always, there's an easy way to do it and there's a hard way to do it. There are tools that are going to make your life easier and there are tools that are going to sort of potentially even derail your progress. What I've done, what I thought we could do in this episode was have a chat about dropshipping, debunk a few of them, and point you in the right direction for how to start building a dropshipping business in 2022 and beyond. This is the first of a two-part sequence that we're going to be doing, a two-part series around dropshipping and how to make hundreds of thousands of dollars from a dropshipping business. I'm going to be joined in both of these episodes by a good friend and long-term business associate who now happens to be the CEO of Cartzy. Cartzy is the e-commerce platform that we recommend everyone uses to build a dropshipping business. And by the way, it's something that we own and we can make sure that we look after you if you want to build a dropshipping business. So that person is Mark Chaney. 

AIDAN

Mark, thanks for being here.

MARK

Yeah, absolutely glad to be able to show up.

AIDAN

You’ve got quite a history with e-commerce, having sold lots of things as a private label seller, having sold lots of things on eBay, and now obviously involved in the trenches every single day helping with Cartzy and that project. I thought no better person to have along here to share a little bit more about dropshipping, fill in a few of the gaps that some of our audience may have. Interestingly enough, dropshipping is probably the number one topic that we received questions about from people looking to build an online business. Maybe we could find out just by sharing what is dropshipping?

MARK

Yeah, it didn't seem, I think, so obvious to us. We live in this space. But I get asked that very simple question so often. And to boil it down, dropshipping is just a simplified kind of way of selling products online, e-commerce. The biggest benefit is that you don't have to have any of the inventory yourself, you don't have to have a garage full of inventory (like my wife does). What you're doing is you're essentially taking products that another seller or distributor supplier has. You take their photos and listing information and put it on your store, and as soon as you sell it, market it for sale and sell it, then you notify the supplier, and they ship it to your customer, John Doe, and wherever, and they handle all of the shipping and all of that, and you get paid essentially as a middleman.

AIDAN

So what's the alternative to dropshipping having just given an example of what dropshipping is, what is the alternative form of e-commerce then that’s not dropshipping?

MARK

A lot, probably a lot of different niches. But the way it would set up if you really wanted to get involved in e-commerce, the most simplistic look at it is you're taking a thing, a remote control, and you take a physical product, and you're going to sell that on your store and ship it to someone. What would be involved is I would need to acquire 100 units of this product, so there would be initial capital outlay. You have to buy it; you have to ship it to a warehouse. You have to store it; you'll have to touch it when you ship it. There are a lot of aspects of traditional e-commerce that are cut out of the equation when you do dropshipping. 

AIDAN

I guess to really hammer home the big difference there, dropshipping means you don't hold any inventory and you can sell other people's products. If it's not dropshipping though, then you might end up with a garage full or a warehouse full of your products, and you'll ship them out once they've been sold. In that case, you would also be buying inventory in advance. You mentioned a moment ago that your wife has a garage full of stuff. What's the deal there?

MARK

Well, you had mentioned earlier and you know some of my history. My wife is a really big eBay seller and has been for 18 years or so. It started as a hobby. She would garage sale and find unique little things that people were getting rid of. And she's a reseller, so she collects inventory. Someone like me that does dropshipping, all I need is a laptop and an internet connection. That's the difference. I keep trying to sway her over to my side, but she does get satisfaction from going shopping on Saturday mornings at a garage sale.

AIDAN

You got a garage full of weird and unusual products.

MARK

Yes, I park out on the driveway instead of nestled nicely in the garage, but it's all good. Yeah,

AIDAN

I mean, there are lots of ways that you can sell using e-commerce. And what we do at Cartzy is really make it easy to sell in any kind of e-commerce. If you do have your own garage full of your own products, or if you got your own brand of products and are sitting in a warehouse somewhere, it doesn't really matter what we're doing with Cartzy, you can sell any of those types of products. It just so happens that I think if you're getting started right now for the first time in e-commerce, then the path of least resistance is probably dropshipping because you can bypass the need to buy inventory upfront, you can bypass the need to store it, you can bypass the need to have to deal with shipping and logistics. These are things that are all handled by other people. You don't actually buy the product until it's actually been sold.  

I think about some of those things, then some of the pros of dropshipping really become quite obvious. I can't really think of many cons to dropshipping and many downsides to dropshipping. Any that comes to mind from your perspective there, Mark?

MARK

Yeah, probably the single largest one. But all of these cons, in my opinion, can be overcome if you know what they are and you know which direction to take to overcome them.

A lot of people say that the profit margin is very narrow dropshipping. To that, I'd say, well, where we see most of the problem with that is people are trying to sell $15 items. I say that when you look for certain products and they are out there, you can really find ones. I think people shy away from trying to sell maybe a $200, $300, $400 item, but there are customers out there for $200, $300, and $400 items. And the greatest benefit of dropshipping is you can sell those items and not have to pay for the capital expense upfront of acquiring a palette full of inventory.  I think most people that start early on with dropshipping kind of get into that little narrow vision start and they look at those lower priced items. I don't care what business you're in or what industry you're in, if you're selling something for $15, there's just not a lot of money to be made there.  I think exploring outside of that gives you some great benefit, and that's what dropshipping is all about.

AIDAN

I think on a personal level, when we are looking to add new products to our dropshipping site, we don't really want to be selling something unless it's got at least a ten or $15 margin built into it. If you sort of a reverse engineer, that probably means that you're selling in the $30, $40, $50 plus range. I think that would be a good recommendation for folks that do get started with dropshipping.

Coming back to your point about selling higher-priced items, I gave a bunch of examples at the start of some of the types of products that I've sold in my different stores over the years, including things like pregnancy pillows, crane horns, bird cages. But the one that really came to mind just now when we spoke about that was barber chairs. Not only were these things like $400 and $500 each, but they also weighed about half a ton each, literally. They definitely were not your textbook lightweight products. But I think it just goes to show that you don't need lightweight products.

Another product that was also in the more expensive range, which I sold a lot many years ago, was welding machines. And these things are heavy and some of them sell for a couple of through dropshipping I was able to sell big brand welding machines. Now, if I wanted to go out there and build my own business around my own welding machine, that would potentially be quite difficult because I would probably need some expertise. I would need to figure out how to put these things together and assemble them, manufacture them in the first place, which could be done, but it would be a lot more complexity in that. And here I was with a really good store that sold a lot of welding machines, and I was able to piggyback on all of these big brands. Every single big brand welding machine in the United States was in my store. And it was something that I could set up in just a matter of weeks. I think that's pretty hard to beat with any other form of e-commerce.

A couple more thoughts. I guess one of the others, if I really have to try to dig out a negative of dropshipping, is oftentimes you are selling other people's brands as opposed to building your own brand. However, I think the website in itself can become its own brand, and there's a lot of value in that. You're really building up an asset and it could be markswearhouse.com or marksuperows.com, and that can turn into a thing of real value. But some people who do want to have their own personal name on their products, that might be a downside.

MARK

Yes. Just think of Footlocker as a shoe store, right? They sell Adidas and Nike and Reebok, right? All they do is sell other brands. Yeah, Footlocker itself is a brand. That's exactly what you're saying, and that's exactly what you can create through dropshipping.

AIDAN

I want to talk a little bit about some of the ways or things that people have to consider when building a dropship business. Obviously, you're going to need a platform, and we can talk about some of the types of things that Cartzy does and help people with there, but what about finding products? How do you go about finding a product? What should you look for? What are the textbook products? We've said that the rules are made to be broken and you can sell big, heavy, expensive products and so forth. But for someone getting out, how would they start out? How would they find a product? And what should they look for in a product?

MARK

Well, that's kind of two different answers I could give. There's a traditional way, and then there's a way that we do it with Cartzy. Shameless plug. I'll kind of start by describing things that you would do traditionally, and I mentioned or alluded to them earlier, where you could go and find products. You could literally just go onto just about any website, eBay, Walmart, Amazon, just some of the major once layups right target any of the big brand names. You could also go to a lot of the smaller players and doing something like this would be kind of a retail play.

Most of these websites, especially Amazon, Walmart, and eBay, they're really comprised of individual sellers. If you are able to identify a product there that fits your model, your business model, we can touch on that for a second. The nice thing about dropshipping is you can start a whole store in let's say, you're a camping enthusiast, right? You can start a whole camping store and fill it full of camping products basically with a flip of a switch. If that were the case, then you could find these types of items on one of these platforms like Amazon etc., and take those products. When you find a seller or a product that's selling well, you might even be able to go back and approach a seller to negotiate some coupons or a little bit better pricing. That retail strategy is to go out and find products that fit that model.

Another way would be probably a little more advanced, but another way would be to go out and find actual suppliers that have products that kind of fit in line with what you want. Again, if we go along with that camping explanation, there are a ton of suppliers out there that have the product in that niche that you can set up a business with them. Some of them even have dropshipping models built into them. That's what they do and that's what they accept. That's kind of how you would go finding that.

To answer your question about what the perfect product looks like? I don't care about the weight, I don't care about the size and those types of things, which we would definitely care about if we were warehousing them ourselves, right? Those are the types of attributes that we care about. When you were listing some of the ideas or products you had sold, the barber chair, I got one store that sells kayaks, they're huge, right? But they don't care. They don't have to pick it up, they don't have to wrap it or ship it or touch it. It doesn't matter.

AIDAN

Someone out there doing all of that matters is the bottom line, and if you can sell a $1,000 kayak and it's huge and it's got $200 shipping on it or something, but you're getting a couple hundred dollars potentially of profit on the sale, then that's all that really matters. You've got the sale price, you've got the expenses, and you've got the profit that you're left with. I guess it's making sure from the get-go that you are going to get enough profit.

Another thing, I guess you mentioned the different types of models and different types of ways you can sell. That's really important. And in the next episode of The Growth Booth next week we're going to be really doubling down on the Facebook Marketplace. But there are ways that you can get free traffic and then there are obviously lots of ways that you can buy traffic using Google Ads, Facebook, Microsoft, and so on and so forth. And if part of your strategy is paid ads, then you also need to make sure that you've got enough profit margin in each product to be able to cover the cost of that. There are a few different variables, I guess, and it does vary as well depending on the model that you are using. You mentioned a little bit about a retail model being able to leverage eBay and Amazon and Walmart as suppliers or sources of product, and you started to mention, I guess, the wholesale model. When I was getting started with e-commerce, and I had these different stores that were specializing in one product or one type of product like barber chairs for example, I did the niche research, to begin with. I made sure there were enough people searching for these products, and enough demand out there. I manually reached out to different manufacturers or distributors of these barber chairs which would involve doing a Google search to find out who they were, picking up the phone and calling them or sending them emails, and getting in touch with them that way. That was another way that in the past we've found suppliers.

MARK

Yeah, you can definitely roll up your sleeves and do the work. Right. And at the end of the day, you're building a business.

AIDAN

That could be an easy way to do it.

MARK

Then there's certainly an easier way. Right, that's a great segue. There's certainly an easier way. The easy way of doing it, in my opinion, is using Cartzy. We have a tool inside of Cartzy that's called Profit Spy. Profit Spy is a tool that allows you to just log into your system and go browse a kind of curated database full of millions of products, right? Just about anything that you can imagine, all products, by the way, that have been kind of stripped from any of the restricted types of items on these marketplaces. Right. Some of these marketplaces you sell on restrict certain things, guns and things of that nature. We've removed all those from our database and it allows you to simply click a button, click a couple of links, and it pulls that whole listing, all of the images, all of the text, everything that you need right into your Cartzy store, and then it's ready to be pushed out to whatever marketplace you want to sell on. So that is definitely the easy button or easy staples, easy button version of doing it.

AIDAN

There's an easier way that you can do this, right?

MARK

Absolutely, there's an easier way. The easy way is when you sign up for Cartzy and utilize Cartzy. And that easy way really is to utilize the power of Cartzy. Basically, there's a tool inside of Cartzy called Profit Spy, and what Profit Spy is all about is we have it linked to an enormous database of products, millions of products, and they're all safe products, meaning that they've been removed from restricted categories like firearms or alcohol and things like this. All you see are really good, usable products, and what you do is you browse through it just like you would be shopping at Walmart or something along those lines. You could filter and do different searches, and find products that kind of match along with or meet kind of your requirements. Again, going back to the camping example, if you wanted to add camping type products there, you would just click a few buttons and it would pull all of the images from the supplier. It'll pull the description, pricing, and all of the critical information that you need and it sucks it right into your product database on Cartzy. From there then you're ready to post it out for sale in a marketplace of your choosing.

AIDAN

Yeah, that is definitely the easy version. Yes. And I love the fact that we can shamelessly give a plug there. Obviously, we're pretty passionate about it.

On a serious note, the thing that I really do like about Profit Spy is a couple of things. One is that it serves up completely random products.  Some of the very best products that I've sold over the years have been products that I probably couldn't have really got to unless I just stumbled upon them if you like. That's exactly what Profit Spy allows you to do because you can browse through millions and millions and millions of products. A lot of people in the e-commerce space have traditionally gravitated to similar types of products, like “I'm going to sell something related to fitness,” and they will gravitate to those silicon drink bottles, or “I'm going to sell something related to golf or cooking,” and they gravitate to salad spinners or whatever the product is. Profit Spy absolutely eliminates any risk of that because literally you can browse through millions and millions and millions of products and you can also do it very quickly by using different filters.

Traditionally the way that you would identify a product is you come up with ideas for a product. However, if you did that, you'd see what you could buy it for and then you'd have to work out what's your shipping, where is the supplier, and ultimately what is your profit going to be. And that's something that could take you a couple of minutes if you're really speedy, or it could take 15 or 20 minutes, depending on how hard it was to get that information. But Cartzy and the Profit Spy all serve it up to you in just a couple of seconds.  I think it's an absolute game changer for that. I also love the fact that it does serve those metrics up because it allows you to see at a glance, literally at a glance, whether or not something is going to be profitable or not, and you can move on to the next. And then thirdly, the other thing that's really, really easy with Profit Spy because it's built into Cartzy is that if you find a product that you want to sell in your store at the push of a button, that product can be listed in your store. It really does streamline from finding products, which is fun, to seeing the type of profit that they can get and then ultimately getting that product on your store and then being 100% ready to sell.  I'm sure I missed a few bits and pieces there, but it's something that's really cool.  And if you want to test that functionality out for yourself, you can actually test it out for free. You can go to thegrowthbooth.com/Cartzy. Even if you don't end up using Cartzy ultimately, and you just want to play around with that tool, there's a free trial that you could use. I can always guarantee that you're going to be able to find some really amazing products there. In fact, we were looking over some numbers recently and we've got thousands and thousands of people who use Cartzy now, thousands of active stores up, and those thousands of people have sold literally hundreds of thousands of different products, uniquely different products that they've sourced through Profit Spy. So, pretty exciting stuff there anyway.

MARK

Yeah, there is. I just recently looked at those numbers too and it never stops astonishing me how many different types of products there are out there and available. I think, again, back to my earlier thing, I think people kind of get in this narrow scope, but when you really take a step back and you start doing some searches, my goodness, the number of times products that are out there and I'll tell you this, they sell, right? I mean, products sell. You could think of the weirdest gasket for a boat engine. It sells. People need it.

AIDAN

A few episodes ago in episode number 30, and I mentioned it earlier, I interviewed Hjalmar, one of my students, and he's built a business that does multiple hundreds of thousands of dollars per week selling sewing accessories. He shared a little bit about his niche and so forth in that interview. If you want to check that out, then head over to episode number 30 of The Growth Booth.

Getting back to what we're talking about here, dropshipping, we've given people an idea about some of the important things to look for, given people some ideas about where they might find products that they can sell. Maybe we could change up a little bit here and talk about what to look for in a store platform. Some of the things that have been the most important features, perhaps of Cartzy and whether you use Cartzy or not, just some ideas for people to think about when they are building out a dropship store, what does the store absolutely need to have to make sure that they're making as much money as they can from their visitors?

MARK

Right, probably there's a healthy list of needs that you would look for in an eCommerce store. If you think about it, at its very core, what is an eCommerce shopping platform? Probably the biggest thing is the ability to collect money and payments and do all that in an automated way. I mean, they really are used, the term used as a shopping cart, right? And the shopping cart is tied to a payment processor. Now from there, you're probably going to want to look for certain automation that is important. Again, just like we shamelessly talked about, Profit Spy, but the process of almost automating the whole process of getting products into your store, I mean, I've been doing dropshipping and e-commerce and wholesale and all kinds of things for decades.

AIDAN

I can speak to the effect of it's almost like the stone tablet days, right? It was a lot of hours putting these products into our store and doing the processes manually. Automations just interrupt your flow there a little bit. There were definitely no digital tablets when you started. I'm pretty sure Steve Jobs, I don't know if he made the first tablet, but it didn't exist 15 or so years ago.

MARK

Yeah, exactly. We didn't have a lot of automation but it's really nice now. If you think about the process of an eCommerce business from start to finish, like I was alluding to bringing in products, automating those processes because you have to think your most valuable commodity that you as an individual have access to is your time. If you can be more efficient in your processes then you can either sell more or maybe spend more time with your family, whatever is important to you. Automating the input of products is a critical component. And I know firsthand that there are a few shopping platforms out there that do it, and it amazes me to this day how many still don't have functions that automate that process.

AIDAN

One of the big gripes that I always had with different shopping platforms that we've used, and I've used pretty much all of them, starting with WooCommerce many many years ago, BigCommerce, Shopify, and many others in between as well, is that many of them out of the box didn't have some of these features that you're talking about. Like most of them enable you to be able to take payments, but that's fine. That's sort of at the foundation of it all. But then talking about the seamless sort of automation and streamlining at Shopify, we were paying $1200 a month for the store to function with all the automation that we needed because we needed to add on like a dozen apps. And that's not an exaggeration. I mean we had one for Upsells, another app for the spinning wheel to capture people's email addresses, and so on, another app for doing all of these other things and following up, and it gets expensive and it also gets clunky because you’re like cobbling a whole bunch of things together that maybe aren't designed natively to work together.

That was one of the first things that we thought about in building our own shopping cart and shopping platform was that you need a full suite of things that are designed to work together. I think another whole category of things to look for in a shopping cart is things that will boost conversions. Because having a 1% conversion on the traffic that comes in, like one out of 100 people actually buy, or having a 4% conversion, four out of every 100 people buy, that's a huge difference. And highly likely that could be the difference between a winning store and a winning product or winning business, and one that clearly does not win.  I think a lot of the functionality around conversions is just absolutely critical. Yeah. Do you want to share some of the main conversion-related tools that we use?

MARK

Yeah, for sure. I'll say this first leading into that and it dovetails off of what you just said, is just increasing your conversion rate from 1% to 2%, effectively doubling your revenue, like you said, on the same amount of traffic coming in. You spend all this time, energy and effort trying to get an audience or eyeballs on your product. I think I have two kinds of main things that you would want to focus on in an eCommerce business in this talk, is increasing your conversion rate and increasing your average order value. If I can get that same audience member, that same traffic, that same person to buy the main product that they came for and then maybe add on another supplemental product that they're going to need, if I'm selling a camera, maybe they need an SD card or something along these types of lines. Average order value increases and conversion increases, so to speak. On those, some of the things you just mentioned, right? The spinning wheel to capture email addresses, etc., so that we can then do some email marketing down the road, that's something that Cartzy has built-in. It's probably good to say this too before I get into some of those features, which is kind of the main goal. I guess we could really ask the question, why Cartzy? Why did you want to build a shopping platform? What makes Cartzy better ultimately than some of the other ones? Why would you go head-to-head with Shopify in this realm?

I think you really hit the nail on the head that Cartzy is all about really bringing all of the tools that you need all baked right in and they're not made by third-party developers, but they're all made in-house. Everything is native to Cartzy, basically, like you said. If there are twelve apps that you would need in your WooCommerce store or your Shopify store, all of those things are built right in, natively, right out of the box with Cartzy. You don't have to pay $1200 a month. It's just all baked in. And like I said, with it being in-house, it all works by itself because there are no third-party plugins. That's a great benefit of Cartzy. And I think that’s where Cartzy really stands out and shines in the marketplace is its value proposition.

AIDAN

I think if anyone listening to this is an eCommerce seller, then if you're not using Cartzy, then you should just head over and check it out for yourself. Because I don't think we're really going to do it justice on a 30 minutes podcast episode. But if you do go to the growthbooth.com/cartzy, we'll share a link in the show notes. Or you can just go to thegrowthbooth.com/cartzy or you can just go to cartzy.com and you can get signed up for a free trial and see all of this stuff firsthand.

It'll become pretty apparent that you can get a store up and running or transitioned over, I should say, from one of these other platforms if you want to, really easily. If you do ever need any help with anything like that, then I and Mark and our whole team are here to help you.

I think we've covered the types of products that you could potentially sell, and what to look for in a shopping cart. What about the kind of money that you can make? Any thoughts around what you've seen some of our users doing? Obviously, I've mentioned hundreds of thousands of dollars a week. Just wondering if you've got any thoughts or any data points, really, to deal with people.

MARK

Well, just like anything, right? The guy that's doing $100,000 a week, he's quite literally doing multiple million dollars of sales and you get everything from kind of A to Z. And I would say that we can see some of the activity that happens in the store. It's just like anything, if you put in the work, then you'll see the results. We have a ton of stores that do five figures per month in sales. We have stores that do $2 a month, right? But that person logs in once every 60 days and they're not really running a business.  I think you really have to weigh yourself with realistic expectations. If you're going to spend using the efficiencies that we have built-in and sit down and use profits, buy and pull product in, if you're going to go through the motions and set things up, the sky's the limit. And that's the beauty of dropshipping because it literally costs you nothing to have a fully fleshed out, robust store in any niche that you want.

AIDAN

I always try to think about the what-if questions. What if you're not in the United States? That's clearly not applicable here because you can sell from anywhere in the world. And if you're not in the United States, you can sell in the United States. The reason you might want to do that is just that it's such a huge marketplace there in general.

What if you don't have the money to start? I mean, we've spoken about how one of the beauties of dropshipping is you really don't need money to start because you're not buying inventory upfront. And if you just want to compare that to private label, my private label business that I've got as well, and we sell hundreds of thousands of our own branded products every year. But guess what? There are millions of dollars in inventory every single year that we have to buy there. If you don't have money or much money to invest, then I think dropshipping is a great way to go.

In the next episode, where Mark is going to be joining me, we'll talk about what is arguably the number one traffic source. Free traffic source, which, again, I think ties in nicely for people who are on a very limited budget. So come back next week to make sure that you check that out.

Any final thoughts there, Mark? Anything that you want to share with people who might be thinking about building an eCommerce business or considering different shopping platforms and so on and so forth?

MARK

Yes. I'd say to the latter, if you're considering other shopping platforms, don't just use Cartzy. Well, I think one thing that I run into a lot too, outside of just dropshipping, people that are looking to or are in an ecommerce business just because you have an e-commerce business, maybe you have products in your garage, or maybe you have products or you're already doing an ecommerce business, dropshipping is really a great way to kind of supplementally test new product ideas before you go and spend money on inventory on kayaks or whatever that product may be. because if you're going to buy 100 kayaks, you're going to get a better price point on them and make more margin. You're going to have to deal with more things we talked about. But I think dropshipping will allow you to test out maybe your audience's acceptability of that type of product. Dropshipping is a great tool or technique to use for that. I think a lot of people kind of overlook that. They think, “Oh, I have to be a dropshipper, and that's how I'm going to do my business,” or whatever. I think that you can really kind of mash-up these ideologies really well.

AIDAN

Yeah, I think having sold in every type of eCommerce that really exists and continue to sell, and in all of them, dropshipping is really the Holy Grail of eCommerce and definitely one of my top two online business recommendations that I would ever give to anyone. It's either between dropshipping or a very unique type of affiliate marketing that you can do. That can be the topic for another episode, but I think we'll wrap this one up here.

Thank you for tuning in here. Make sure you tune in next week to the next episode, which will be at TheGrowthBooth number 34, because we'll be diving into how you can exploit the Facebook Marketplace and how you can leverage a lot of free traffic and get selling really fast. That will be a great way for you to take the next steps in your ecommerce journey. We'll see you here again on the next episode of The Growth Booth. Bye.