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0:00 After nine years of drop shipping, over eight figures in revenue, literally tens of millions of dollars generated, I can confidently say I will never be starting a drop shipping store again. And in this video, I'm going to break down why I don't think you should start one either. And look, this is a weird video to make. Like, drop shipping completely changed my life. It was the first money I ever made. It has been so good to me. There's so many skills, lessons that I learned from drop shipping that really allowed me to become the person I am today. But there genuinely is an ugly truth about drop shipping. It's what I'm going to address in this video. So before you go run to the comments and freak out, just give me like two minutes to break down what I'm talking about here. Now, let's get into the ugly truth of drop shipping, dive into my store, and really just go over the profit margin and how hard I had to work in order to make the money that I did on this exact store. So on this store, I had a 20% margin, which
0:46 is very, very high when you get into the nitty-gritty of absolutely all the details. I promise you, anyone saying they're 30 or 40% profit margins on their drop shipping store is completely lying. Or they're doing 10k a month. Like when you get into the big numbers of doing millions, like our biggest month alone was 300,000 in sales. And it's like when you're at that level, you are not profiting as much at all when it comes to percentages. Now, you're still making good money. Like in one year, I made 385,000 from this store alone. But you really need to understand the entire scope of the drop shipping journey. And this is the ugly truth. This is what I want you guys to deeply deeply understand because by the time you get to the end of this video, you're going to understand exactly what I'm talking about. This is the typical journey. You build a store. You do product research for weeks trying to find what works and
1:32 what doesn't. Then you have to create video ads for your product. You have to post them on organic and hope it goes viral. And if it does go viral, you're leaning on a link in bio for conversions, which is absolutely awful. Then you start to realize if you want to make real money in drop shipping, you have to be bringing in ridiculous amounts of revenue. And the only way you're going to get to that is through paid advertisements. you start running paid ads, you're going to lose a ton of money at the start because first off, you've never done it and you have to really just learn what creatives work. So, you're going to have to spend at least three, four, five, maybe even $10,000 to get to the point where you're scaling your store. You found your profitable ads, you're seeing success, and now you're building it up. You could easily spend $10,000 kind of figuring that out. Now, ads are performing well, everything's going good, but your ads start to fizzle out. They have what's called ad fatigue. So, you have to be replacing ads sometimes on a weekly basis depending on how much you're
2:18 spending. Now, to do $300,000 in revenue, you have to be spending like $5,000 a day, absolutely minimum. And when you're running $5,000 to your videos, they are going to fatigue very fast. We even had $10,000 ad spend days. So, your ads aren't lasting that long. So, you have to constantly refilm ads or you have to hire UGC creators to make those ads for you. Now, we're getting into the very fun part. I didn't write this down, but you're going to get Shopify holds on your account. This is what absolutely kills every single drop shipping business. If you're lucky, you're going to keep 20% of the money that your store is actually generating and Shopify is going to hold the rest for sometimes up to 90 days or more just to validate that you're not scamming people and you're actually legit. It's out of Shopify's hands. They know that this kills drop shippers and they don't want to do it, but they have to do it through their payment processors, which I believe is Stripe that's running all
3:04 of this. So now you're having customer support issues. You're having some chargebacks come in. You still have to do email marketing, SMS marketing, and you have to run all your advertisements and make all this work when you're not even getting 50% of your own revenue. So, you literally just cannot afford to keep your business running unless you take loans out and put everything on credit because you could be profiting $5,000 a day. Your ads are absolutely pumping, but you don't have the revenue coming in. You're not getting the money from your Shopify store to keep everything running. So, a lot of the time you have to literally get small business loans, put stuff on credit cards, and you can get into a very, very, very dangerous spot if you overlever your advertising and your advertisements start to die and you're not getting any of your money. So, now you can't pay off these cards. Shopify could just hold the money forever if they don't like you. And you could literally get into some crazy debt
3:49 situations, some really awful stuff. And I haven't seen a single drop shipper ever talk about that. It is the biggest thing that kills every single store. I've had to go through it on every single store I've scaled. Thankfully, I've been able to build up a lot of money to be able to get past that. But if you're a beginner that just saw success, you're not going to really be able to manage that unless you take loans or have someone that's going to literally give you money and just trust you. It's absolutely ridiculous. So, you keep running your ads. And even if you're profiting, you're trying to scale. You have to start hiring virtual assistants, real employees, and really start building out a team to manage all the customer support. You have potential lawsuits, copyrights, complex corporate taxes, legal structures that you have to deal with. Then you finally come to the realization that if you want to really really make some ridiculous money, you have to build an actual brand, customize your products, and sell it. And that's what I've always taught. I tell people
4:35 that you're not going to be a drop shipper forever. The only way you're going to make real money is if you actually sell a company because just profiting 10 to 20% with for all of this work is really not worth it. I've talked to some very high up people, some names that you know, they all run big stores and big brands, and they all say that e-commerce is just not that profitable. It's the exits that they're really playing for. So, what happens when you start actually running a brand? You have to manage inventory. You start losing money if your inventory doesn't sell out. And managing inventory is the biggest nightmare ever. And if you're just coming from humble drop shipping beginnings, you are not going to understand how to actually manage inventory properly, manage your expenses, and really make these decisions. This is like big business level plays. And it's not something that you can just ease into. You have massive overhead risks. And again, you're hiring
5:20 real employees, not just contractors. The legal structures alone of having like an escort, having your IP of your company in separate companies and all these other things that you have to think about if you genuinely want to be running a brand worth a couple hundred million. It's really scary. And if your ads stop working and you have all this upfront inventory, all these expenses, your marketing starts drying up, there's a brand that's out competing you, you can really be screwed and go into debt even though you are making millions and then no one wants to buy your business because a competitor is outdoing you. Business is really, really cutthroat. And if you're not at the cutting edge 24/7, this is a reality that can happen. And the entire reason that I'm making this video for you right now is because you can make a 30% profit margin or more. And you do not have to run a store. You don't have to deal with paid ads, any inventory, customer support, payment processing. Literally,
6:06 everything I just talked about is completely out the window. You don't have to do it. All you have to do is go live or make content on Tik Tok shop. And I know you guys have seen me talk about this in other videos, but this is really different. I'm going to lay out the entire process of how you can use Tik Tok live as your starting ground just like drop shipping to then eventually run brands on Tik Tok shop and Amazon and really take this to a whole new level making ridiculous money in the new path the best path moving forward which now just is not drop shipping. Just give me a second. I will explain all of this. First thing you have to understand live streams. Tik Tok shop is in a ridiculous state right now and we're about to go to quarter 4 where this is just like mindbogling easy. You do not have to do anything when I tell you that you literally pick up your
6:51 phone, you point it at the product, and you talk about the product. This guy right there just pointing at the umbrella and he's making money every time he gets a sale. When I tell you guys that Tik Tok shop live streams is the easiest money I've ever seen in my entire life, I mean it from the bottom of my heart. I am not sugar coating this. This is genuinely insane. All you do is buy a Tik Tok shop account for a couple hundred bucks. You set up your phone, you point it at the product, and you literally talk about it. Tik Tok funnels you viewers because they make 7% per sale. And Tik Tok lives have a literal 10 to 20% conversion rate for every viewer in the live stream. It's ridiculous. But let's go back to this. So, all you have to do is click go live on Tik Tok, talk about this product with real people. Tik Tok shop is funneling viewers in. you're getting sales at a 10 to 20% conversion rate and literally just getting the money sent to your bank account in 1 to two days. But that is
7:38 just the beginning. I'm going to go through the entire strategy of how you can utilize this skill to make you hundreds of millions long term. So, I did live streams myself. And in my first 30 days, I made $6,500. But just one of my live streams right here. You can see it right there. Jordan Bound, I had 437 people in my live. I had 101 people purchased this Apple CarPlay. That's literally in my Ford Raptor. We got 107 sales in a three-hour and three minute live stream. My product sells for $37.99 and I get 30% commission rate, guys. And it is very common to get 30%. I've even seen 50% for people that are in quarter 4 trying to make their brand go viral. And guys, quarter 4 is coming up. When I tell you this is the easiest money. I am not joking. I was making $46 an hour. So, let's get into why this is so crazy. I mean, a 10 to 20% conversion rate is
8:25 absolutely ridiculous. Like Tik Tok shop has the sales, the volume, and the virality that like your drop shipping store could never ever have. And if you do get something like that, it's because you're going viral on Tik Tok. Like it's just direct on platform. Shopify and sending people to external links is a thing of the past. You do not want to focus on that. You will literally never see a 10 to 20% conversion rate in your life on your Shopify store. If you are lucky, you are going to get two to maybe 3% max. So brands that are selling products on Tik Tok shop are dying for creators to go live because Tik Tok shop funnels them viewers because they get paid and they know the conversion rate is there. So if you're literally just the creator that goes, "Hey, I'll go live on the product. They funnel views to you. You get 10 to 20% conversion
9:11 rates on that and you make 30% per sale, which also makes the brand a ton of money." And we'll get into brands and Tik Tok shop later in the video. But you as the creator, as the beginner phase, just starting out, you do this completely faceless. Your income is essentially guaranteed if you just show up long enough until your live streams start to get some traction. All you do is demonstrate the product, be genuine, have fun, and Tik Tok really does the rest, sending you all the traffic, and you get your commission rate for every sale that trickles in during this live. This is literally the future of online shopping, it is absolutely as simple as that. If you go look at China and what they're doing right now, you're going to understand that this wave of online shopping through lives is just getting started. Quick breakdown. All you do is open Tik Tok. You hit the little plus button. You get to this screen right here. You click go live. You add a product. And that's literally it. Now, I want to hop into Calo Data to show you
9:57 some of the numbers and really build out the plan of how you can actually become the brand selling the products online. Sell products on Tik Tok shop and Amazon and really scale this to the absolute moon. But you want to start as the creator. Let me just show you. So, this is Calata. I've shown it in other videos, but it basically shows you all the money that's being made on Tik Tok shop. Like if we go to the creators, the top 10 creators all did over a million. This girl did $1.7 million in 30 days and she's making 30% on this. I can prove it. One of her top products is this. Sells for $43 and you get a 30% commission rate. She just made 30% of 1.7 million. $510,000 in commissions that she received from working on her phone going live and
10:44 creating videos. This is real money. Let's go into her account and kind of try to prove this further. So, 30 days, 1.7 million. She did it all from videos. She didn't go live once. Absolutely insane. We can see the products here. These are all the products she was selling. 1 million in the Dr. Maxin. And we can literally go see the video ads that she made right now. Absolutely ridiculous. If we go to the product section, you can see brands are doing 7.6 million a month in 30 days just on Tik Tok shop. And all of these sales trickle into their Amazon as well. Dr. Maxin, the owner of this product, is getting a ridiculous viral effect off Tik Tok shop where now their sales in Target, Walmart, Costco, any retail place they're at. Their Amazon sales and their Shopify sales, absolutely everything is skyrocketing because they're going viral on Tik Tok shop.
11:30 Because some people just aren't going to buy on Tik Tok shop. they're going to buy on Amazon where they know they can get two day shipping. So, Amazon sales are usually 50 cents per dollar. So, when there's 7.6 million sales on Tik Tok, they did 3.8 million on Amazon. That's like almost guaranteed. All the top 10 products are doing over a million a month on Tik Tok shop. And we haven't even gotten into quarter 4 yet. When quarter 4 comes, I promise you, you are going to see plenty of brands crossing the 10 million a month mark. We can hit the live stream button up here as well and see that this person did a 8hour live stream. Oh, it's Jeffree Star. and made $415,000 in sales. We can also see another just typical creator. This isn't an influencer. This isn't someone who's famous. They did a three-hour and 10-minute live stream and made $85,000. So $85,000 in revenue times 30% which is her commission is $25,000 that she made
12:17 in only 3 hours and 10 minutes. So if we divide that by three, she literally made $8,500 an hour in actual take-home commissions. I promise you guys, you are never going to see those profit numbers. Even if you're running a successful brand on Shopify, you're not going to actually take home that much profit. To get 30% per sale, is absolutely ridiculous. And the only reason brands are willing to do this is because they're having the viral effect. Their Amazon sales are skyrocketing, their retail sales are skyrocketing, and they're having long-term brand value equity being created so they can make an exit worth billions. That's the big play here. But if your goal is making the easiest money online, this is absolutely it. But if your goal is to make the biggest brand
13:03 you possibly can and look for hund00 million or billion dollar exits, then the best plan you can do is learn Tik Tok shop as a creator. Then once you master Tik Tok as a creator, you can come in as a brand owner, find a viral product and promote and blow that product up through your own capabilities as one of the best creators on Tik Tok shop. Then just start selling your product on Amazon as well. look for retail connections, then sell that brand for hundreds of millions or a billion and make this exact play. Drop shipping used to be the first step to the e-commerce journey. Now, it is truly Tik Tok shop. This is a way better opportunity. The money's actually there. And I can promise you guys from the bottom of my heart, if I had to make $10,000 as fast as humanly possible, the last thing I would do is start a drop shipping store. I would start Tik Tok shop, make crazy money as a creator,
13:50 then start a brand later, sell that brand on Tik Tok shop as a masterful creator, then go to Amazon, ridiculously easy. I already have all the money for all of this through my crazy profits from Tik Tok shop as an affiliate content creator. Then start looking at selling the products in retail, which these retailers are going to be dying to work with your product if they know it's doing ridiculous numbers on Tik Tok shop like some of these other ones are. So that is the entire method. That's why I'm saying I really don't recommend starting with drop shipping. It is no longer the best first step on this long-term journey of making money online. And if you know, I have a program that teaches Tik Tok shop, but honestly, we have completely gotten rid of it. Phone of Freedom no longer exists. And for the past 5 months, I've been working on something that is absolutely ridiculous. This is truly the biggest project I have ever created.
14:35 It's a complete system that shows you everything I've been talking about. It's only going to be open to a very small group of people. And if you want first access when I announce this or you want to be the first person to hear about it, then I have a link in the description of this video if you want to join the wait list. But I hope you guys enjoyed this video and actually understand what I'm talking about when I say that drop shipping is no longer the best first step. But with that being said, I hope you guys enjoy this video and I will see you in the next one. Peace. [Music]
