TLDR;
Jordan Bown explains why he no longer recommends starting with dropshipping, despite its past success for him. He highlights the low profit margins, the extensive work required, and the financial risks associated with scaling a dropshipping store, including ad fatigue and Shopify holds. He proposes TikTok Shop as a superior alternative, emphasizing its high conversion rates and the potential for significant earnings through live streams and affiliate content creation. He outlines a strategy to leverage TikTok Shop as a creator, then transition to building a brand and expanding to platforms like Amazon and retail, ultimately aiming for a lucrative exit.
- Dropshipping is no longer the best first step for making money online due to low profit margins and high risks.
- TikTok Shop offers higher conversion rates and easier money-making opportunities through live streams and affiliate content.
- The strategy involves starting as a TikTok Shop creator, then transitioning to brand ownership and expanding to other platforms for a potentially large exit.
Intro: Why Drop Shipping Is No Longer Recommended [0:00]
After nine years of drop shipping and generating millions of dollars in revenue, the author states that he will never start a drop shipping store again. While drop shipping significantly impacted his life and taught him valuable skills, he acknowledges its "ugly truth," which he will address in the video. He urges viewers to consider his points before reacting negatively.
The Ugly Truth of Drop Shipping: Profit Margins and Hard Work [0:33]
The author discusses the profit margins and the amount of work required to make money through drop shipping. He mentions that a 20% profit margin is considered high in the drop shipping industry, and those claiming 30-40% are likely exaggerating or operating on a smaller scale. Despite generating $385,000 in one year from a store, he emphasizes the importance of understanding the entire scope of the drop shipping journey.
The Typical Drop Shipping Journey: Challenges and Risks [1:27]
The typical drop shipping journey involves building a store, conducting product research, creating video ads, and hoping for organic viral reach. To make substantial money, paid advertising is necessary, which often leads to initial losses while learning what works. Ad fatigue requires constant ad replacement, and Shopify holds can restrict access to revenue for extended periods. Customer support, chargebacks, and marketing efforts must be managed without consistent revenue flow, often necessitating loans and credit, which can lead to significant debt if ads fail or Shopify withholds funds.
Transitioning to Branding: Inventory Management and Legal Complexities [4:10]
To make substantial money, drop shippers eventually need to build an actual brand with customized products. This transition involves managing inventory, which can be challenging for those with a drop shipping background. There are also significant overhead risks, including hiring employees and dealing with complex legal structures. If ads stop working and inventory doesn't sell, businesses can face debt, especially if competitors outperform them.
TikTok Shop: A Superior Alternative [5:53]
The author suggests that a 30% or higher profit margin can be achieved without the challenges of running a store by using TikTok Shop. This eliminates the need for paid ads, inventory management, customer support, and payment processing. He describes how live streams on TikTok Shop allow creators to simply showcase products and earn money, with TikTok funneling viewers and facilitating sales.
TikTok Shop Live Streams: Easy Money and High Conversion Rates [6:57]
TikTok Shop live streams are presented as an easy way to make money, with conversion rates between 10-20%. Creators can purchase a TikTok Shop account, set up their phone, and talk about the product, with TikTok providing viewers and handling payment processing. The author shares his experience of making $6,500 in his first 30 days, with one live stream generating over 100 sales and earning him $46 per hour.
The Power of TikTok Shop: Virality and Brand Building [8:21]
TikTok Shop offers virality and sales volume that drop shipping stores cannot match, with brands eager for creators to promote their products through live streams. Creators can earn a 30% commission per sale, while brands benefit from increased sales and brand awareness. The author suggests starting as a faceless creator to guarantee income and then transitioning to brand ownership.
Calo Data: Real-World Examples of Success on TikTok Shop [9:55]
The author uses Calo Data to demonstrate the potential earnings on TikTok Shop, highlighting creators who have made millions in 30 days. He shows examples of top creators and brands, including one creator who made $510,000 in commissions and a brand doing $7.6 million a month on TikTok Shop. The viral effect on TikTok Shop also boosts sales on Amazon and in retail stores.
The Strategy: From Creator to Brand Owner to Retail [12:59]
The best strategy is to learn TikTok Shop as a creator, then become a brand owner, find a viral product, and promote it through your creator capabilities. Then, sell the product on Amazon, seek retail connections, and eventually sell the brand for a significant profit. TikTok Shop is now the best first step in the e-commerce journey, offering a better opportunity than drop shipping.
Conclusion: TikTok Shop as the New First Step [14:10]
The author concludes by reiterating that drop shipping is no longer the best starting point for making money online. He would choose TikTok Shop to make $10,000 quickly, leveraging his profits to start a brand and expand to Amazon and retail. He mentions a new project he has been working on and invites viewers to join the waitlist for more information.