The UGLY Truth About Starting An Ecommerce Business That No Guru Will Tell You

in this video I'll answer all the most commonly asked questions about selling physical products online and running your own e-commerce store including the questions that most people won't give you a straight answer on there are a lot of e-commerce scams and get-rich quick schemes out there and I will give you the real story behind everything what's up everyone my name is Steve cheu and I've been selling physical products online for the last 16 years over at Bumblebee linen.com which is a sfigure online store I've also been selling on Amazon since 2014 and I've run an annual e-commerce conference called the seller Summit for the past 8 years now as I mentioned earlier e-commerce has developed a reputation for being a get-rich quick scheme because of all the scammy videos about dropshipping that you see online so my goal today is to give you the fact straight up and provide you with a realistic view of what it takes to succeed selling online today so first off you have to choose the right business model and you basically have three choices one you can drop ship this is where you make an arrangement with the supplier so that you don't have to store inventory or ship out any products yourself you simply take orders and the supplier fulfills them for you two you can sell other people's products and carry your own inventory and handle your own shipping and fulfillment and three you can sell your own branded private label products now let's talk about Drop Shipping first because that's the business model that everyone wants to start out with because it's cheap and easy well I hate to tell you this but drop shipping is the worst business model out of the three because the margins suck typical Drop Shipping margins are around 10 to 30% and because you are selling someone else's product there are probably hundreds if not thousands of other people selling the exact same thing which always leads to price erosion also because your margins suck you can't really afford to run paid advertising profitably the people you see online who are making money Drop Shipping have either developed a large audience on social media Media or they are Hawking cheap trinkets from China for a quick Buck now don't get me wrong you can make money Drop Shipping but it's not the best long-term business model because you don't have any control you don't control the customer experience or the product the margins are horrible and usually it is a race to the bottom in terms of price let's talk about selling other people's products with inventory next this is the traditional business model that most of you are all familiar with you find a product from a brand that you like and you sell it in your online store now this model is better than drop shipping because you can get better pricing from the manufacturer and typically your margins are around 50% which allows you to have more flexibility with advertising and traffic generation now if you don't want to deal with inventory yourself you can find a 3pl or a thirdparty logistics firm to handle storage and fulfillment for you which makes this business model kind of like Drop Shipping but overall it costs more money to start an inventory based business business because you have to purchase your initial products to sell outright also because you're selling other people's products you will probably be competing against other sellers based on price as well now the final e-commerce business model is selling your own private label products and it's in my opinion the best and only way to go if you want to run a long-term e-commerce business I've been running bumblebe linen.com for 16 years now we own our own brand and we control a good portion of our entire supply chain because we've established a brand over the years it's much harder to compete with us based on price because no one else sells the exact same products that we do our margins are upward of 90% plus and we have full autonomy to create our own packaging set our own prices everything so if you plan on starting your own e-commerce business you should work your way up to private label if you want to survive in the long run now it's important to note that these three business models are not mutually exclusive you can actually do all three at once if you are strapped for cash start out Drop Shipping and then carry inventory for your best sellers and if there's a product that's killing it you can consider making your own private label version of that product under your own brand by the way if you're enjoying this video so far make sure you sign up for my free 6-day e-commerce mini course below let's talk about startup cost next how much money do you need to start each of these business models well for Drop Shipping you can literally start for $3 a month by following this tutorial here as I mentioned earlier Drop Shipping is by far the cheapest and easiest way to get started which is why it's the source of most internet scams now if you want to sell other people's products and don't mind carrying inventory the cost to get started is typically a couple hundred per product for inventory you will likely be sourcing from wholesalers in your country and the minimums are usually between $100 to $200 per product and finally if you want to create your own private label products your minimum startup cost will be around $33,000 remember every business model has its own risk reward ratio the more you are willing to spend the more money that you will make and in general the students in my class who do private label May significant money way faster than the other business models which is a great segue to one of the most commonly asked questions that I get how long does it take to make money with an online store or e-commerce business and the true answer is that it depends on many factors and what I always tell everyone who who joins my class is that you should set your expectations for at least one year do not listen to the get-rich quick scammers out there who tell you it can be done in a couple weeks or a couple months because you will be disappointed and give up the speed at which you can make significant money also depends on your business model and private label is the fastest way to make money for example my student Amanda who drop ships dollhous Furniture took several years to make a sixf figure income contrast that to my student JK who sells his own private label HomeGoods who made well over six figures after about one year so I mentioned earlier the more money you are willing to risk the faster your returns will be and private label is the fastest way to go now this next question I'm often asked is does e-commerce require a seller's permit and business license well in the United States you absolutely need a sellers permit in order to legally sell online and Most states require you to charge sales tax to customers where you have an economic Nexus even if you are Drop Shipping and if your locality requires a business license then you must buy a business license as well remember e-commerce is simply a method of order fulfillment your e-commerce business is a real business and must be registered as such now can this business model be automated and do I ever have to touch inventory well e-commerce can be more or less automated except for customer service if you don't want to handle inventory or ship your own orders you can find a 3pl or a thirdparty logistics firm a 3pl is essentially a fulfillment center that will store and ship orders on your behalf for example Amazon FBA is probably one of the largest 3pls in the world now even if you sell your own private label products you can have your products shipped directly from the factory to Amazon or your 3pl for fulfillment without ever having to touch anything now where can you find suppliers for your online store the best place to find suppliers for your e-commerce business depends on your business model if you're looking to start out Drop Shipping there are four main ways to find Drop Shipping suppliers depending on your budget and the types of products that you want to sell first you can use a drop ship supplier directory a Dropship directory is a quick and easy way to access a library of suppliers organized by category and by paying a fee you can perform a search and instantly have access to hundreds of preved suppliers you can also use a Drop Shipping Company a Dropship company acts as a middleman who automatically connects you to a Dropship supplier you simply list the products that the drop ship company offers and they handle the entire fulfillment process as a result you do not have to find or interact with any suppliers next you can go to a trade show by attending local wholesale trade shows you can form Drop Shipping Arrangements face to face and finally you can use a print on demand company print on demand companies allow to print your own designs on select merchandise to sell online without any upfront cost now in my experience the easiest way to find drop ship wholesalers is by using Google a directory like worldwide brands or by attending wholesale trade shows now many wholesalers are reluctant to drop ship for your store unless they know you can move product there's a brand who refuses a drop ship for you at first you should purchase and sell their products wholesale to start and then once you've demonstrated a track record of sales you can request A Drop Shipping Arrangement now if you want to sell other people's products and carry your own inventory you can use these exact same methods to find wholesale suppliers as well most suppliers who drop ship will give you a discount if you want to purchase their products outright and manage your own inventory now if you want to sell your own private label products you have to find a factory or a manufacturer and the easiest place to start to find a factory to create your own branded products is to use a service like Alibaba Alibaba is a search engine for suppliers in Asia who will make custom products to your exact specifications and place your brand on that product now I have a number of videos on how to Source Products from Alibaba from my channel that you can watch but keep in mind that you do not need to be a product designer or an inventor to create your own private label products most of my students send in pictures of what they want to create to the manufacturer and iterate from there you absolutely do not require product design experience to do this however the main thing to keep in mind is that you are responsible for your own quality control so make sure that you hire an inspection service like Kema to inspect the goods at the factory before you have them shipped to you otherwise you could be sent a bunch of defective Goods now if you want to make private label sourcing infinitely easier you can also hire a sourcing agent to find a factory for you now for more information on sourcing agents watch this video here a sourcing agent will typically charge you based on a percentage of your cost of goods or Bill you hourly but is 100% worth it especially if you want to save time now how do you pay your suppliers for most Drop Shipping and wholesale suppliers you can typically pay by credit card a or direct trans for or payment terms some suppliers will offer you payment terms which means that you do not have to pay for your products until 30 or 60 days later now if you're creating your own private label products payments are typically made by wire transfer only you typically put 30% down to start production and then pay the remaining balance upon completion now if you find your private label manufacturer through Alibaba you can also opt to pay by trade Assurance which is alibaba's escrow service basically Alibaba will hold off paying your supplier until you receive your goods to prevent fraud now where can you find profitable products to sell online more than half the battle of starting a successful e-commerce business involves finding the right products to sell and the best way to find profitable products to sell online is to leverage sales data from Amazon because Amazon owns over 50% of e-commerce you can get an accurate view of the supply and demand for practically any product sold online to perform product research on Amazon I recommend a tool called jungle Scout jungle Scout is a software tool that tells you how much revenue a product listing is generating on Amazon for the last 30 days all sales information is collated for you in a nice table for your review here's a video I put together that gives you a quick demonstration now the million-dollar question is is e-commerce a good business model for 2024 and I can say without a doubt that e-commerce is here to stay and will continue to gain market share over brick and mortar stores now a better question to ask yourself office is whether you should start out Drop Shipping or start your own private label brand now if you are on a budget start out with dropshipping find out what sells and then invest in your own private label product because private label is the best way to go if you want to start a long-term business by being control of the product design in the entire supply chain you can future proof your business and command the highest profits now that you know the real truth about running an e-commerce business watch this video here for my list of the best private label suppliers

Channel: MyWifeQuitHerJob Ecommerce Channel

Views: 14,466

Keywords: shopify dropshipping, make money online, dropshipping, shopify store, the ugly truth about dropshipping, private label, selling wholesale, dropshipping for beginners, dropshipping products, e commerce, selling private label products, selling wholesale products, product sourcing, product research dropshipping, product research, finding suppliers for dropshipping, finding suppliers, ecommerce business, ecommerce business for beginners, online store, online store business

Id: iZrScaa-JdE

Length: 12min 31sec (751 seconds)

Published: Tue Nov 21 2023