- Hi guys, Neil Waterhouse.
One of my favorite Warren Buffett quotes is,
"It's good to learn from your own mistakes however,
"it's better to learn from other people's mistakes."
In this week's video,
I'll show you the top eight drop shipping mistakes.
For anybody new to this channel, my name's Neil Waterhouse.
I've been selling on eBay for 24 years
and I'm the author of
"Million Dollar eBay Business From Home"
and creator of Dropship Formula.
So let's launch straight into it.
After coaching literally thousands of people
over the last 20+ years
through my books, seminars, courses, et cetera
you just can't help notice the patterns of people
making the same drop shipping mistakes over and over.
After much reminiscing,
here are the top eight drop shipping mistakes.
Number eight mistake new drop shippers make is
they try to be a jack of all trades.
Life does not reward us for being a jack of all trades
life rewards us for what we master.
So many times I see drop ship newbies
trying to juggle too many things at a time.
They want to drop ship on eBay, drop ship on Amazon,
they want to import a product and sell on Amazon FBA.
They want to get into private labeling.
They want to open a Shopify store.
They want to learn PBC marketing, et cetera.
Now don't get me wrong, I'm a huge fan of diversification
but one baby step at a time
because life doesn't reward us
for being a jack of all trades
but instead rewards us for what we master.
I always recommend, finishing each business first.
By that I mean, make sure each marketplace
that you drop ship on is fully automated
and running by itself first
before moving onto the next marketplace.
To generate the most revenue from each product,
each product should, in a perfect world
be listed on eBay, Amazon and your own website
like a Shopify store.
And you can also import yours
or your competitor's top selling drop ship items.
But one step at a time
and it's all about small continuous baby steps.
As well as spending 10% of your profits on
low cost overseas virtual assistants
to leverage your time, automate the business,
and grow the business for you.
Number seven biggest mistake is
don't use overseas drop ship suppliers.
Buyers hate it when items arrive late.
Yes in a perfect world
you can use companies like FedEx, DHL, et cetera
to get items from China to first-world countries
like Australia et cetera, in three business days.
However, we do not live in a perfect world.
Over the last 30+ years of importing
I've seen hundreds if not thousands of reasons or excuses
as to why parcels have been held up and arrive late
therefore missing the expected delivery dates
that customers expect on the eBay and Amazon
show to their customers.
These delays can be from customs delay in China,
customs delays in the receiving country,
or a multitude of other reasons including volcanic gas,
bad weather, missed flights, random inspections, et cetera.
Bottom line is, when items arrive late
it's your account that suffers.
For that reason we only ever use local suppliers
for drop shipping.
If you're in Australia you only use Australian suppliers,
if you have a business in the U.S.
you only use U.S. suppliers,
in the UK, UK suppliers et cetera.
If you need more local suppliers
I'll put a link at the end of this video to a free
list of over 900 drop ship suppliers.
Number six mistake is, just focusing on cheap items.
The vast majority of drop ship newbies
just focus on cheap items however,
it takes the same amount of time to list a $5 item
as it does to list a $200 item.
Personally, I would prefer to make
a $50 profit on a $200 item than a $2 profit on a $5 item.
For this reason, we focus only on items
that sell between $50 to $2,000.
Number five drop ship mistake is,
only focusing on small items.
Again, the vast majority of drop ship beginners
all focus on small items
as they believe they're easier to ship.
However, the crazy thing is with drop shipping
the suppliers do all the hard work of packing, wrapping
and shipping the product direct to your customers for you.
Again, it takes the same amount of time
to list a small USB cable as it does to list a bar fridge.
As a general rule because most beginners
focus on small, cheap, lightweight items
there's far less competition and more profits
with more expensive and heavier items.
Number four drop ship mistake is
only selling items with free shipping.
Beginners love free shipping as it's easier
and many drop ship sellers only focus
on items that have free shipping
from their drop ship supplies.
This of course is good news if you're willing to learn
how to set up a rates table
that automatically charges your buyers shipping
based on their post code.
It's really not that hard to set up a rates table
and I'll put a link on the screen
and below to a previous week's video
showing exactly how to do that.
The good news is many of your competitors
will not take the time to do this.
Number three biggest drop shipping mistake is
lack of automation.
Most people when they build an online business
whether it being a drop ship business,
or any other online business,
they'll simply just build themselves a job.
However, they'll rarely admit it.
The secret to lifestyle is time and money.
Some people believe having plenty of time
and that money can work however,
this is very rarely the case
'cause almost everything costs money
even saving the whales cost money.
The way to automate is first
use software wherever possible to do a task.
And if a task cannot be done using software,
then allocate 10% of your profits
to low cost overseas virtual assistants
that you can get from $1 an hour.
Now using the 10% rule
as your business grows each month so do your profits
and therefore each month your VAs work more hours,
there is more items and your business grows
even while you're sleeping.
Leveraging a time is a ticket to building
a six, seven and eight digit drop ship business fast
and just as importantly, building a business
that runs without you.
So you've got time to enjoy the things in life
that you enjoy doing most like your hobbies
and spending time with the family.
I'm not going to go into how and where to get VAs in this video
as I've done that before in a previous week's video
but if you missed it
I'll put a link on the screen down below.
Number two mistake is niching down.
If you're an expert in a certain niche,
or you have access to a lot of products in a certain niche,
then specializing in that niche may be a good thing
but if not, then locking yourself into one niche
can be like adding a massive rod to your back.
When building a new drop ship business
the focus should be on profit
not having a love affair with a product or a niche.
The problem with locking yourself down to one niche
is you have to say no to all the other products
that are making good profits.
When doing product research,
you and then your VAs will continuously come across products
that are making good profits
and have sold multiple times in the last 30 days but
you can't sell them because they're not in your niche.
This is why I encourage drop ship newbies
to focus on profit and not a niche.
The number one drop mistake is,
getting item not received cases opened by your customers.
In the industry these are known as INRs
which is short for Item Not Received.
These are cases where customers purchase products
from drop ship sellers on marketplace
like eBay, Amazon, Shopify, et cetera,
but they never receive what they ordered.
Marketplaces like eBay, Amazon keep a very close eye on INRs
to make sure buyers get what they order.
They know what the average INR percentage
is for all sellers on their marketplace.
If a drop ship seller is continuously canceling sales
'cause their supplier ran out of stock
or for any other reason that seller's INR ratio,
Items Not Received ratio will be much higher
than that of an average seller.
This is why it's critical
to have a sound methodology in place to automatically
continuously check your supplier's stock levels.
So if your supplier runs out of stock of any item
your eBay, Amazon or Shopify listing goes to zero
so you don't oversell it.
The good news is that these days
we can fully automate the supply inventory checking task
using software so that if a supplier runs out of stock
the software will automatically make your listing go to zero
so you don't oversell it.
And also, as soon as the supplier gets more stock
the software automatically adds more inventory
so you get more sales.
The software that we use to do this is scarcity manager.
I'll put a link on the screen down below.
If you need help finding hot selling drop ship products,
make sure you check out this video up here.
That's all for this week, if you have any questions
please leave them in the comment section below.
And if you found any value in this video
please give it a thumbs up as it helps the channel
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how anyone can make a full-time living
from their home using less than $100.
Until next week stay safe, lease more, sell more.
This is Neil Waterhouse.