Drop Shipping vs Manufacturing Products For Shopify
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Drop Shipping vs Manufacturing Products For Shopify

– What’s up, everybody. Anton here from Drop Ship Lifestyle, and in today’s episode
of Drop Ship Weekly, I’m gonna answer a
question that came through on one of our recent episodes. Which by the way, if you
ever have any questions that you want to see me answer
on one of our weekly shows, just comment below this video. I really do check them
myself, and you know, if enough people want to here
about one specific thing, there is a very good chance that I will answer it in a future episode. So, yeah, just let me
know in the comments. But, regarding this episode, this question came in
from Keshawn, Kshawn, and he said that he wants know how I feel about getting products
manufactured to sell on Shopify, and he asked if I’d talk
about it in a future episode. Now, that discussion, right, of should you manufacture or
private label or drop ship. It is something that’s come
up before on Drop Ship Weekly, but obviously it’s been a while. Been making these videos for
like three or four years now. Probably longer. So, I’m gonna tackle
it again in this video, and kind of share my thoughts now, moving into 2019 of when
drop shipping makes sense, when private labeling makes sense, when even manufacturing
products yourself makes sense. So, with that being
said, let’s just go ahead and get into this week’s
episode of Drop Ship Weekly. (uplifting music) Okay, so I think the first
question that’s important to ask yourself if you’re debating on which to do is really why, right? Why would you wan to manufacture products, when you could just drop shift them? And I think there’s really
two different reasons that pop into people’s heads. And the first reason is typically, they think that they can
make more money, right? And, I’ll just use more
money as a net example, ’cause when I’m saying that, what I’m really talking
about is net profit, alright. So, net profit per order. Now, drop shipping as you know, there is tons of different ways to do it. All it really is, is a
method of order fulfillment, but typically with a drop
ship lifestyle store, when you use the lead value
optimization techniques that I use the goal is
to have a 30% net margin. Okay, so, I’ll use blue for
the drop shipping example. And with that, again 30%
is what you’re going for. So, let’s just say you
build a drop ship store, and your selling, you know, I have a desk back there
so you’re selling desks. And, let’s say you are
selling them for $1,000. Then, that means that
your goal, your target should be to make $300
in that per sale, okay. So, if you’re running a
store and you’re selling the desks back there for a thousand bucks, every time you get an order, after you pay for your cost of goods sold, after you pay for shipping, your traffic cost, your merchant fees, blah, blah ,blah ,blah ,blah,
your virtual assistance. You should be left with about that. So again, the first reason that
sometimes people think like, “Hey, maybe I should
actually start manufacturing these things or private labeling them.” is so that this number
could be more, right? Now, this is where, yes it can
be more and it will be more, but you need to like really take a look at this from multiple different angles. But, let’s just say, right, let’s say that this desk
that you’re making $300 on. Let’s say you’re getting
it from your supplier, your actual cost of good
sold is 500 bucks, right. And that’s very realistic, so I’m just going to put $500 here, okay. So, if you’re paying 500 for
it, you sell it for a thousand, then you have $500,
again cost of goods sold, shipping, virtual
assistance, if you have any. All those other expenses, and basically what that means is you have another $200 to play with, then to be left with that profit, okay. So, what you’d be looking for
if you wanted to manufacture, and you were debating
versus drop shipping, what should you do, is getting
this cost down right here, because the cost of advertising may go up, it may go down, it really depends. And, we will talk about that, but let’s just say that your goal with, I’ll just do MF for manufacturing, was to get the same or
similar desks instead of 500, let’s just say you wanted
to get them for 300, okay. And, if you got them for 300,
and if your other expenses, again like shipping, and
virtual assistance, and traffic. If they were made the same,
and they were 200 bucks. Then, in that case,
instead of making $300, you would make $500, right, per sale. So again, that’s the typical argument that you see people
make, and not argument, but that’s the typical thing
that people are thinking about. Okay, I can drop ship and I can process the orders,
I can take the orders, I can get the traffic, I can make that, or I could just find the person that’s actually making these things
like making these desks. I could buy them in bulk,
I could bring them in, I could get a warehouse or
fulfillment center or something, and then I could ship
directly to my customer, and instead of making
$300, I’ll make $500. Now, here’s the thing, it’s not that easy. As I’m sure you know,
if you’re watching this and you’ve ever thought
about manufacturing, or even building you own brands. There are more expenses,
and that’s the biggest thing because that extra 200 bucks, and let me just write this here, so everyone’s aware of what this is. This would be your cogs,
your cost of good sold. So, let’s just say best case scenario, you saved the 200 bucks there. Well, that’s not, it’s not that easy, this manufacturing,
they’re not drop shipping. So now, that 200 buck
difference that you would make, you do need to pay to
actually ship those items from China most likely, or
wherever you’re getting them. To get them to the states
right, so automatically factor in x amount of dollars per unit, for a container that you’re bringing in, okay, for the ocean freight charge. If you’re gonna ship them via
air, it’s even more expensive. Again that comes out
of that $200 difference that you’re making right there. Now after that, you have
to factor in the costs of actually having a place
that these items are gonna go. So, once your container gets to whatever port your shipping it to. It has to be unpacked, it has
to be taken off the truck, and either put into again
a fulfillment center, or into a warehouse that
you’re gonna have to rent. So, if you have to rent a warehouse, then obviously, you have that cost. If you need someone there beyond you, then you have that employee cost. If your going to fulfillment center, you need to pay them for space. You need to pay them per employee’s time. You need to pay them
per shipping fee, right. Per package that’s going out, they add on that handling fee to prepare it, ship it, to do all that. That’s how they make their money. So, all the sudden, that $200 extra that you were going to make, because of your difference
in cost of goods sold really isn’t there anymore. Now, I’m not saying that
you can take it work and trust me, I don’t want
anyone that watches this to think that they
should never manufacture or bring in their own products, ’cause I do think there’s
definitely a time and a place. And, for a lot of people
it makes sense to do this. But, just know that, it
doesn’t automatically at all mean that you’re
gonna make more money. Not only does that money have to go to those places that I just listed, you’re also gonna have to deal with things like returns yourself. They’re gonna go back to your warehouse or to your fulfillment center, right. There’s more hands-on work
that makes this all happens. So, keep that in mind, okay. But, that’s normally the first argument that you’ll see for people thinking again, “I should actually
manufacture my own stuff.” Now, lets talk about the other reason that people would want to do this. And this one, I agree with, and this is why I think
it does make sense. Okay, so this will be our second why. Now, this is, because honestly it’s unique, okay. With this first example,
like I just showed you, I don’t think it makes much sense from a straight up profit standpoint, but if you develop your own product line. Again, let’s say your selling desks, and you come out with a new brand, right, a new spin on things, maybe something’s unique
about the look, or the style, or how it’s assembled, or something, whatever you have your own spin on it. Well, then that’s good, because you can stand out
from your competitors. So, I would still recommend you drop ship everybody else’s stuff. I would still recommend
you make money with it, but I would recommend, that you introduce your own product line, your own physical products
brands onto your existing store. Now, what that does for
you is allow you to make that same money per sale
from everybody else’s stuff, to make hopefully a little
bit more from your own thing. But, even if you make the same amount with your unique brand
per sale as net profit. Even if you’re making that same amount, you can then take your unique brand and you could have all of
your competitor’s sale for it. So, let’s say your store, you’re competing with, let’s say, there’s 10 other online
retailers selling the same stuff. Well, if you have a unique brand, your competition starts selling your stuff. Now, what’s good about that, again is your making more money, right. You have more sales coming
through your business. You have another stream of income. Not only that, and this is kinda the
biggest reason I think it is worth it to manufacture
and have your own brands. But, you also have a new asset. You know, a big part of
building these stores that I love is the fact
that we could build them and sale them for a lot of money. Just the store with no
unique brand attached to it, and if you want to go this
route, you now have this asset, which is your store, which you can sale, and you have your own
physical product brand, which is your asset, another
asset that you could sale. So, do I think that
manufacturing is worth it? And, I think the question is, what are my thoughts on manufacturing on products for Shopify. Again, it’s a totally different business model than drop shipping. Even though a lot of the fundamentals and the foundations are the
same things like website design, things like conversion optimization, things like getting traffic. There’s a lot of overlap on both sides, but the actual business behind it. This part really is its own business. It’s basically a spin off. It’s something else. It’s a whole nother monster. Dealing with importing,
dealing with, ya know, even if you’re not importing, but dealing with warehousing
and fulfillment centers. And, I’m not just saying this,
’cause this what I think, I’ve literally brought in
dozens, and dozens, and dozens of 40 foot containers from China to all different ports
in the United States. So, I know what his model looks like. Again, I think that there’s
a time and a place for it, but if you’re watching this
right now, and your like, “Okay, I want to get
started with eCommerce, and I think I want to do drop shipping, but maybe I have some money to invest and I want to put it into manufacturing.” I would still tell you that
it’s not your first step. Doesn’t matter how much
money you have in the bank, or what you wanna just throw it into. My advice is still build
your drop shipping store using the Drop ship Lifestyle Model. Go ahead, make your money, you know, get extremely profitable there. Then, when you’re ready,
when you’ve made the decision that you really want to commit to actually running two
businesses in tandem. Once, you made that
decision then it makes sense to start manufacturing, bringing
in your own product lines. Your own unique, they can’t
just be ripoffs of other people, but your own unique stuff, and then from there again
you’ll sell it on your store. Your competition will
sell on there’s as well. And you’ll have a whole new asset, whole new revenue of stream, whole new business you
could sell in one day. Should you ever want to. So, those are my thoughts on
manufacturing for Shopify. Again, it makes sense, but it’s kind of a right
time, right place scenario. Definitely not for everybody, but something that hey, if you
wanna do it, this is the way. That’s the path. Again, I hope you enjoyed that. Any questions on this, just
let me know below the video. Obviously, we keep doing
these Drop Ship Weekly things, so more than happy to
answer your questions. The next couple of weeks are probably gonna be more
like vlog style videos, because I’m leaving on Monday. I’m flying out to Bali for our fifth annual Drop
Ship Lifestyle Retreat. I’ll probably just be showing
you some behind the scenes, out of Bali, what it’s all about there. Got about a hundred people
coming out to join us, but after that we’ll be
back with Drop Ship Weekly. Back to our normal training videos. So, if you got value as always,
please give it a thumbs up. Let me know in the comments. And, I will see you all in the next episode of Drop Ship Weekly or maybe out of Bali. Talk to you soon, bye! (energetic, playful piano music)

About Ralph Robinson

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9 thoughts on “Drop Shipping vs Manufacturing Products For Shopify

  1. Hey Anton iam going through the blueprint i found 3 winners and I need your email for assistance if don’t mind sharing it thanx you 🙏

  2. Hey Anton, do you think $7,000 is enough to start making money from High Ticket online dropshipping? I mean after buying your premium $5000 course (I'm planning on buying it), along with google shopping ad costs and shopify expenses, shipping, etc. How much money do you think we should start with/have before getting into high ticket dropshipping?

  3. In those calculations, does the 300 USD hypothetical profit assume that the item is also sent from China ? It seems that drop shipping large items (such as table) from China would yield very little profit due to the very hight shipping cost.

  4. I would like to hear some real talk on product and our niche selection. It seems like everyone
    touches on it but at the same time avoids it. I get the parameters you give for products but how
    involved do you guys get in product selection with your students/clients? I have been looking
    for a good product that matches your parameters for 30 days now and am still lost. Thanks

  5. I got 2 questions I need to be answered: 1. Do I need to trademark a dropship company name and logo? And 2. should an online store be made for a product 1st or go ahead and trademark a name and logo then dropship thru the company?

  6. I have a unique brand that I'm about to launch via shopify but does not involve dropship. Can you give me advice on how to do that? I'm supplying my own product. thank you!

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