“Is drop shipping dead?” – so many blog posts in 2018

We’ve recently encountered a paradox of sorts.

If you type “is drop shipping dead” in a Google search bar and hit enter, you’ll notice that the first page is chockfull of blog posts with that exact same title. This could only mean that people are catching on the thought that the drop shipping business model is pretty much in a bubble, and if it hasn’t already burst, it’s most certainly about to.

The arguments on those blog posts against the merits of drop shipping echo our own. That is why we focus on a business model that is sustainable and won’t go anywhere anytime soon—building a brand through private labeling.

Then Dave stumbled upon something interesting while doing some research for a blog post. He found that the average monthly Google searches for “drop shipping” was about 400k in 2016 when drop shipping was at its most successful. Come January 2018, and the searches for the same phrase was at a whopping 1.2 million. If blog posts are questioning the merits of drop shipping, why is there an increased interest in drop shipping?

This issue caught even more of our attention when someone from a site selling drop shipping courses reached out to us asking to come on the podcast. If this site is earning more than $3 million dollars, is drop shipping, in fact, not dead?

Interestingly, Dave and I have different opinions about this. I believe that drop shipping is not sustainable with very razor thin margins and is not worth it. Dave, however, thinks that there is still some opportunity left.

So we decided to take it to the recording studio and have a debate about whether or not drop shipping is dead, and if private labeling is definitely the way to go. This episode is the result of that debate.

Some conversation points:

  • Our own experiences in drop shipping
  • Why I decided to stop drop shipping and sell my own products instead
  • The pros and cons of drop shipping
  • Too many courses from drop shipping “gurus”
  • Reasons drop shipping is right for you
  • Reasons drop shipping is not right for you
  • What you need to do to survive with the drop shipping business model
  • Is drop shipping really dead?

This has been an insightful and fun episode. Dave does’t come on the podcast enough, but when he does come, we usually debate about something we have different opinions on.

This episode will hopefully give you an insight to the two sides of the coin. In the end, the choice will be yours. What’s important is that you know what you’re getting into, and that you don’t buy into the hype simply because of the hype.

Resources mentioned:

MyEcomCrew
State of the Merchant report
CB Radios
Trollingmotors.net
Survivalfood.com
E121: How Ezra Firestone Spends Money Growing His Businesses
Global Sources Summit
EcomCrew Hong Kong Mastermind

Thanks for listening to this episode. Until next week, happy selling!

Full Audio Transcript

Mike: This is Mike, and welcome to episode number 132 of the EcomCrew Podcast. You can go to EcomCrew.com/132 to get to the show notes for this episode. And today I’m excited to have my buddy Dave Bryant back on the show with me. Obviously Dave hasn’t been on that many podcasts lately because he has been over in China. And while he’s there, he’s been wagging his tail off.

So if you guys haven’t had a chance to go to EcomCrew lately, there is tons of really great content that has been putting out. Join the EcomCrew newsletter, get notified whenever a new article goes live, and definitely check that stuff out. Like I said, it is just awesome content and I want to thank Dave for being so dedicated to getting that stuff done.

When we first started doing the stuff together, I promised him I’d write some articles. He promised me he’d be on the podcast. I’ve written almost no articles. He has been on almost no podcast. But it’s worked out pretty well. So without further ado, let’s get right in today’s episode. We’re going to be talking about is drop shipping dead? What’s today’s drop shipping landscape look like an e-commerce? Let’s jump into it right on the other side of this break.

Mike: David Bryant in the House. Welcome back to the show my friend.

Dave: Thank you Michael Jackness.

Mike: It’s always good to get you on the show man. I know you’ve been over in China and the internet has been tough. So we’ll get you on obviously way more. Your picture is on the artworks, so got to be on more but…

Dave: I’m back in a month though. I finally figured out the internet here and as you know I’m going back to Canada.

Mike: It’s like so frustrating. It’s been tough but I know how big of a struggle the internet is there. And I’m looking forward to doing a few podcasts in person with you. We have a couple of things scheduled over there. We’re going to be seeing each other live in, well from recording this a couple weeks, two, three weeks. So, definitely looking forward to that.

Dave: Yeah, hopefully if anybody is going over to China, try to hook up with us then. And if you are going to China, make sure you have a data package with a nice roaming plan because you’re going to need it. Don’t rely on Chinese internet.

Mike: Yeah. And speaking of that, we have a live event over there. If you go to EcomCrew.com/mastermind, you can check that out. April 21st, it’ll be a full day. We’re going to include lunch. It’s in Hong Kong. So if you happen to be in that neck of the woods at that time, come spend a day with us and hang out.

Dave: Yeah and looking forward to it. It’s our first event actually, our mastermind that we’re doing in April 21st. So yeah you guys have a chance to come out. Definitely just go to EcomCrew.com and register there, cool.

Mike: So I wanted to get you on today. We’re both talking about this back and forth. Number one, you haven’t been on the podcast last. So we want to get you on the podcast as much as possible. But the podcast is more fun when you’re on it, when we have something to debate about. And the best episodes I think that you’re on are things that we don’t agree on. And a topic came up. Recently someone actually e-mailed us. That’s basically a drop shipping expert that wanted to come on the podcast.

And we had a difference of opinion on whether or not we should have them on. We’re still kind of mowing that over. But I think we’re going to probably end up doing it. But I have one philosophy about drop shipping being someone that’s done drop shipping with treadmill.com. And I think you have a little bit different philosophy. And drop shipping still probably got to be, I don’t know Dave, what do you think 25 — I’m just pulling a number out of my butt. But I imagine 25% or more of e-commerce businesses. What do you think?

Dave: I really have no idea. I mean when I was writing up an article for EcomCrew.com, on is drop shipping dead, I was amazed. I actually did a Google search to see how many people were searching for drop shipping. And in 2016, it was 400,000 people. Any idea what it was in 2018 generally?

Mike: No.

Dave: 1.2 million. So that kind of gives you an indication of where people are looking for I guess business opportunities. So it’s grown three fold over the last two years, which is kind of contrary to what I would have thought, because I think more and more people are kind of going the private label route manufacturing your own products. But according to Google drop shipping is still increasing in popularity at least for people who think that they can make a lot of money there.

Mike: So I had this idea. You can tell that Dave and I don’t do a lot of prep for these podcasts. But I was just thinking as you were talking about it, why don’t I go look at the Ecommerce Fuel State of the Merchant Report. And I knew that Andrew had this data in there. You guys should go to EcommerceFuel.com/ecommerce-report-2018, or go to EcommerceFuel.com and click on the blog.

Andrew does an amazing job of this thing every year. And drop shipping on here is 16.4% of e-commerce businesses on the state of the merchant report.

Dave: I wonder how much of that is the legacy for the fact that e-commerce feels started in 2013. That was kind of I guess the high of drop shipping, and I think there is a lot of legacy people on Ecommerce Fuel. So I wonder how many of those people kind of first joined Ecommerce Fuel way back in 2013 when it was kind of at the high end. I don’t know if that’s necessarily indicative of the number of people starting new drop shipping businesses and whether that’s kind of a state of things right now. It seems high to me, I don’t know.

Mike: Yeah. I mean it definitely does seem a little bit on the higher side. But let’s just say it’s somewhere between 10 and 20%. I think that’s probably fair based on this data. So it’s still a sizable amount of e-commerce businesses are doing drop shipping.

Dave: Yeah I mean one thing I’m amazed by that we – I know we have mutual friends that have pretty successful drop shipping businesses. And we have our own private friends that are doing drop shipping. There’s still people making a lot of money off it. And I guess that’s kind of the debate here, how much money can you make off it, because the people I know that are doing drop shipping businesses.

And this is maybe where a conflict came in with this guy who wanted to do an interview with us too is that drop shipping really is it’s more of a lifestyle solopreneur type business. And that’s not neither good or bad, but to build a really sizable scalable business I think it’s really tough with drop shipping. I don’t think you can be a 20, 30 million dollar company with a bunch of stuff doing drop shipping.

Mike: Yeah. I mean there are definitely some exceptions. I just saw…

Dave: Wayfair.

Mike: Yeah it was a Wayfair or some big case study that just came out that was like a multi 100 million dollar business doing nothing but drop shipping. So there definitely are places out there, but they are probably spending hundreds of millions of dollars in advertising as well, or tens of thousands of dollars in advertising to build a brand like that. So there’s a lot of other things that go into it.

But my general philosophy on drop shipping, it can definitely be successful in a very narrow niche. And to me that niche is if you’re willing to take the longer road and really work on organic traffic and build a brand and expertise around something and we’re already picking on Andrew Youderian here in this podcast.

But he’s a perfect example of someone that saw success with drop shipping because he had very niche sites that he was able to create really valuable content around that was in the CB Radios market and the trolling motors market where there’s a lot of really interesting facts or stats or configuration options or how to install your CV, or the difference between CBA and B.

Amazon is never going to have this content. So you have to rely on someone that actually knows what the heck they’re doing. And Andrew definitely has a background in this stuff or took the time to learn about it and write really good content that ranked organically and actually answer people’s questions, and they happened to already be on his site at that point. And then the buying decision is a lot easier for somebody. I think in that world, there definitely still is a win for drop shipping.

Dave: Yeah and I think that’s a big key is that you can’t rely on paid advertising. That’s kind of the crux of drop shipping is that you have to be purely organic or getting your traffic in some non paying way. You can’t be paying 20% of your revenues for advertising just for the fact that there are no margins there.

And I know that was my experience of my previous company. We drop shipped about 10% of our products, and there was no way to ever turn on a Google AdWords campaign to drive traffic to that page. It was just you would drop that product into the negative in no time.

Mike: Yeah, and that’s the thing that worries me about a lot of these courses or the things that you see out there now. It seems like every other ad at my Facebook feed is start a drop shipping business, you’ll be a millionaire overnight. And the whole premise is basically like we’re going to provide you a catalog of things you can get from one of these hundreds of drop shipping retailers out there. You just run some ads to a Shopify store and magically you’re going to start getting sales overnight.

Dave: Yeah, I was in this way back to Shopify, I got on the platform earlier in the year too.

Mike: Yeah exactly. And I just this is a trap because for a lot of reasons. I mean number one, if hundreds of people a month are learning the same thing that you’re learning, and there’s no defensibility because the catalog is out there for everybody, pretty quickly like your lane is going to evaporate really fast.

And I also believe that there isn’t enough room there for ads. The whole premise is basically again you put up a Shopify store, you start running some Facebook ads and magically you’re going to start getting sales. I just don’t buy it, like I mean I absolutely don’t buy it. I do believe you can get sales. I just don’t think you can generate enough sales doing a drop shipping business with that lower margin to actually make a living.

Dave: Well I think the problem is, you kind of touched on it too, it’s the catalogs. Now a lot of these courses and whatnot are advertising, oh well we have a drop shipping directory, we have a drop shipping catalog of manufacturers that you can reach out to. The problem is when you have those catalogs and directories, everybody is using it, and every kid in their basement is going on there trying to start a drop shipping business.

And it worked for our company in the past, I basically had to go out and knock on doors and talk to the different manufacturers I knew in my niche and convince them to drop ship for us. They weren’t advertising in any category or any catalogs or directories. So when I actually found a manufacturer that was willing to do it, I kind of had monopoly on that manufacturer at least for anywhere from six to twelve months.

Mike: Yeah that’s pretty cool and that definitely helps obviously. But then you run into other challenges which I also don’t like about shop shipping which is if you get an order and then find out after the order has been placed that maybe they ran out of stock which is really frustrating. That was happening to us all the time with treadmill.com.

Or you communicate the order to them and it takes them two, three, four days to get a tracking number back to you. And people just don’t have patience for that in this day and age. I mean if we don’t get a tracking number in someone’s hands within 24 hours, we get e-mails, where the heck is my tracking number?

Dave: And that’s the problem is that with drop shipping, when you find the guys that aren’t in the catalogs or directories, they’re pretty unsophisticated. So they’re the guys that you send an order to them and they say, okay I will send that out in three or four days. That obviously doesn’t work in e-commerce anymore, especially if you’re selling on Amazon and you’re shipping things three or four days later. You’re going to get your account suspended in no time.

Mike: Yeah absolutely.

Dave: So that’s kind of the issue that you run into. You’re trying to find these guys who aren’t drop shipping with a million different other competitors. And when you find them, they’re just so unsophisticated like you mentioned. They don’t have real time inventory that you can dig into. So when they run out of stock, you basically run out of stock. That means you’ve sold the item and they tell you, sorry, we can’t ship it.

Mike: Yeah and the ironic thing is we’re going through this again because we purchased survivalfood.com a couple of months ago and just got that reliability…

Dave: By the way good job on the new site. I saw that the other day.

Mike: Thank you, I appreciate that. We did all internally and Mike Fredericks, #mikefredericks, one of the guys in our office did that whole thing. So definitely proud of him and him getting the whole thing up and running. But yeah I mean it’s 100% drop ship site. We brought in one of everything to our warehouse just so we had it here to test it and take our own photography and stuff because we don’t really want to use a lot stock photos.

But we just have one here and everything else right now is drop ship as we didn’t want to bring a bunch of inventory in for something that we didn’t really know like what the good sellers are going to be, and things like that. And already it’s just a bunch of frustration because placing orders with these guys — every manufacturer has a different way of receiving the order. And again, typically what ends up happening with survival food there’s always runs on it.

The unfortunate thing is that people need it during events like the hurricane in Houston or Puerto Rico or whatever. And those are the times when I think there is like there’s just very little stock. So you get an order or something and then find out that it’s not available. That’s like really embarrassing and frustrating to me.

Even though obviously we can refund somebody, it doesn’t help our bunch of credibility for a site like that and just not having the control. I mean I am a control guy. After running treadmill.com and now back in the survival food thing again, not being able to know for sure if things are in stock or to get that tracking number quickly is frustrating as can be.

Dave: So you track without getting you to kind of rebuild the whole firm on your business model, are you drop shipping orders coming from distributors like basically middlemen between the factory and you, or are they coming mostly from the manufacturer?

Mike: Both. So depending on the manufacturer. So some of the smaller manufacturers are doing it directly, and then the larger ones there’s a distributor in the middle that the only way you can get the product period is through a middleman like they don’t sell direct to a distributor or to you as a retailer.

Dave: Yeah that was what I experienced in my last company was a lot of products we had to go through distributors where they were the ones that were sophisticated and had the inventory feeds and they had real time pricing and all that. But the problem was then you’re having such a markup on the products that again eats away at your margin. You want to go through a distributor for the fact that they are just more sophisticated, but you throw away your margin and then you can’t really sell the products at a huge profit. You are not going to make a huge or make any profit.

Mike: Any profit yeah. So I mean our whole philosophy with this, the reason we got the thing back up and running, I mean we’re trying to rank on the first page for survival food. So that was kind of like goal number one is just to get the traffic back to the site, get the thing ranking. I’m proud to say as we’re recording this podcast, we are now on number 11 for survival foods. We’re getting very close.

Dave: I’m checking it out.

Mike: We’re there, number 11, I just looked.

Dave: Who is number one? Is Amazon number one?

Mike: Lt me go back and look at number one there. I think we’ll get back to number or get to number one sometime before the end of the year or early next year. But yeah, Amazon is number one, the wise food. So I mean our goal with the site is not to be a drop ship for long term. That was not the reason we purchased it. But I wanted to get a site up there and running to start collecting some data, and get the thing like I said, get it ranking.

But our goal was to create our own brand of survival food. So just so people don’t think that I’m going back to the drop shipping lifestyle, the whole idea here is for us to create our own brand of food. I think that we can make a really big mark on this industry. And the thing that’s really interesting about this is right after I purchased this; I got an offer for 3X what I paid for it. And then actually just the other day, I got an offer for 10X what we paid for it. And I still won’t sell it because I think that it’s that good of an opportunity.

Dave: So I’m just thinking here too, so the conclusion is I’m a guy who is kind of pro drop shipping. I have the drop shipping business — now I don’t have any drop shipping business. And you’re the guy who’s been private label and your own brands and everything, you just bought a drop shipping business, but you’re negative about drop shipping.

Mike: Yeah. Again we’re going to going to switch away from drop shipping. It’s not the long term business model for this thing is really the key here. But I mean yeah, we did buy a drop shipping business as of right now. And I want to actually be really clear about this. I mean I don’t want to be just down on drop shipping 100%. I’m jealous of people that have successful drop shipping businesses.

I’d much rather be in that business model. You just have less worries, less staff, you don’t have inventory to buy. I mean there are definitely successful drop shipping businesses out there. A lot of the people that I know that are having success with this stuff is typically larger products and furniture type things. There’s a couple of people I know that do that. But there’s also people that I know that do more niche things. I don’t want to give away these other niches.

But the few people that we know in the Ecommerce Fuel forums for instance, that’s all they do is drop shipping and like I still scratch my head. And even the two sites that Andrew sold are still very successful. And it does make me jealous. For me and what we’re looking to do with our business and our life right now, that doesn’t really fit into the cards.

I want to build something that’s really defensible, that’s got our own on intellectual property and brand associated with it. And that’s what we’re looking to do long term because I do think if I was looking at things on a scale of like what’s going to get applauded and be challenged first and the most, drop shipping would be first in line to kind of get knocked down or have challenges.

Dave: Yeah I think the big key that I kind of touched on before is that, again you can kind of speak to your experience there. Any drop shipping company I know that’s successful, it’s a one man show just for the fact that you’re kind of just getting paid for your labor. You’re getting paid for your article writing, you’re getting paid for finding those manufacturers. You can’t afford to pay somebody to write a bunch of really high or gutter breaking articles and hope to make any profit after that.

Again it’s not like the way for example that’s a multi-billion dollar company. Do you know anybody with a real business – I shouldn’t say a real business because even a one man show is a real business. I’m a one man show, so I hope I’m a real business. But do you know anybody that has stuff with a 100% drop shipping company?

Mike: There’s a couple of people that do come to mind again in the Ecommerce Fuel forums, but they’re not large operations. They are definitely not large operations, and I agree. I mean just the nature of the business may not to be a rocket scientist to figure this out. I mean drop shipping by its very definition has one more layer in between the customer and the product than if you were doing it yourself in some capacity.

And that other company has to make money. And if they’re making money that means you’re making less of the sale. There’s only so many jelly beans to carry around. So inherently it’s going to be a lower margin business than if you were either selling them, you’re warehousing and selling the product yourself, or manufacturing the product yourself, private labeling or whatever you want to call it. So that’s going to be inherently just be lower margin.

So therefore with a lower margin business, there’s going to be less you can do in your business, because a higher margin business — if you have a higher margin business like an Ezra Firestone, definitely we’ll link up to that episode in the show notes. He’s spending money like crazy on employees and advertising because he has a 500% markup on his product versus in drop shipping you might make 20 points.

And if you’re making 20 points, there’s no room for advertising, there’s no room for employees, there’s no room for content marketing or all these other things. And as Dave was just saying, I mean for the most part you’re going to be as close to a one man band, or a very thin organization as there is. And it’s not necessarily defensible. There’s a couple of things I want to talk about too. But I just want to take a break and let you kind of talk about that for a second.

Dave: Yeah, when you talk about 20 points too I think that would be exceptional if you can make 20% off drop shipping. In my previous company, we were I would say probably pretty close to 10% after everything was said and done. And we drop shipped our products largely just to kind of fill out our website. I think I had a bit of an identity crisis. I didn’t know like do we want to be this big massive voting retailer or do we want to just simply be a brand. You come to our website and buy our brand products.

And that’s where I kind of had an identity crisis. I didn’t know whether to fill out our catalog or not. And when we did fill out the catalog, it turned out a lot of these products were actually selling at a loss. Whether that actually helped our other products sales, I don’t know. But at the end of the day definitely on a per item basis, we were selling them at pretty close to breakeven.

Mike: Yeah, and I do agree that you’re getting stuff as a drop shipper, it helps you fill out your website and makes you look more legitimate and things of that nature. That’s a perfectly acceptable reason to do it. It’s exactly the reason why we’re doing it right now with the survivalfood.com quite frankly.

Dave: Well the other thing that you can do too is what you’re kind of doing is you get a lot of back data that you collect from other brands without making a $50,000 order or some survival camp food dish. That’s one advantage with drop shipping for sure is that you can have a pretty low risk way to gather a bunch of data on what are more or less going to become competitor products.

Mike: Yeah. I did something to tell you, this will take — it’s actually kind of funny that’s the exact number. $50,000 is the exact number that we’re looking at as we’ve already done construction and have the co-parker lined up. And we’re comfortable with it number wise.

Dave: Is that for one item?

Mike: It will be multiple items. So they will let us do multiple items with that. Yeah but that’s the minimum order that they will entertain to start up the brand basically. And again I’m fine with that. But we’re still not going to do it right this second.

Dave: Yeah and there’s the other thing too with drop shipping, there is no investment costs. So you open up yourself to a lot more competition. Obviously you’re going to get a manufacturer of your product like you’re trying to do. A $50,000 order is going to scare off a lot of people. Even me probably I would not. Let’s say there’s almost guaranteed of success. I would not want to commit that much money to try it out.

Mike: Yeah but I eat $80 crab, so doing a $50,000 item [overlapping 00:23:48].

Dave: I want to be able to tell people that story.

Mike: That’s an inside joke. I didn’t intend to order an $80 crab, let’s just put it that way, but that was a pretty funny story.

Dave: An $80 crab from a Hong Kong shark that had no other item over five dollars.

Mike: Right yeah. We were eating with roaches and still I just figured out how to order an $80 crab. The other thing I want to talk about just real quick, you already kind of mentioned it here but the things that scare me as well is that the vast amount of competition. When you’re talking about drop shipping, regardless if companies have let’s just say map pricing rules of minimum or maximum — minimum sorry, minimum advertised price — just having a brain fart, minimum advertised price.

So let’s say a manufacturer says, you can’t sell this widget for less than $50. If you get one person selling on your behalf, there’s a pretty good chance you’ll probably follow the rules. You get ten, the likelihood goes down. When it’s a 1,000 there’s a pretty high chance that someone is going to be like F that, I’m going to just sell it for whatever I want. So you end up with those types of issues as well.

And that was one of the biggest frustrations we had with treadmill.com, because what ended up happening was these companies had map pricing and we stuck with the rules because we’re treadmill.com, and it was pretty obvious who we were. But a lot of companies masked like second sites or other things that they would hide their who is and do other types of games. And they would be selling at map pricing on their main site, but on other marketplaces they’d be selling below map pricing.

And you’re competing against other people that are selling a commoditized product. That’s all you’re ever going to be selling as a drop ship is some sort of commoditized product that hundreds or thousands of other people can get their hands on. And if you’re doing nothing but competing on price, it’s a very tough place to be because you don’t have the margin to compete on price and someone else is always be willing to sell it for less than you are, which is a really tough spot to be in.

Dave: Yeah. And like you say, you can either compete on price, or you can compete on really exceptional service or photography or videography. We have a good friend, a mutual friend does amazing videography for all his products, and he does pretty well all his business. But you can’t afford to pay a professional photographer $100 an hour or whatever it is to get those production shots remade and again still have balance to put this money in your pocket.

So yeah I think that’s kind of the key is you either have to compete on price which is just going to be a race to the bottom in the long term, or I don’t know you’re really got to milk your labor for what you can get out of it and you basically just making a salary at that point.

Mike: Yeah and he is another — you responded and we will not talk about the exact nature or anything — another perfect example of a one man band, right? He doesn’t have — he has a couple of VAs now helping out with some things here and there, but it will never be a big infrastructure type company that’s doing eight, nine figures or something, which is the path that we’re trying to be on.

And there’s no right answer either way. I mean again, I think I’m very jealous of that other lifestyle because I have had that before, just not the mind that we’re in right now. So it’s not to say that it’s a bad business model or anything, just that the challenges that it presents are not what I want in our business right now, you know what I mean. It’s something different for us right now.

Dave: And that’s one thing I’ve actually considered even as I’m recreating a brand is kind of the cost of money in this, thinking the downside of the businesses that we run both me and you. When you’re investing $100,000 or $200,000 or whatever you’re investing, that money has an opportunity cost. And even if we can double our money in a business, all that money, the stock market up until recently last year, the SMP went the return of 25 or 50%. When you start investing that amount of money in your business, you do have other things that you can invest in. With drop shipping, it is a basically zero dollar sum that you invest into the company. So it’s beautiful cash flow.

Mike: And it’s definitely one of the things I miss dearly about the affiliate marketing business. That was — it definitely took me multiple years to kind of get my head around this whole inventory based business and cash flow because as I used to say in the affiliate business it was basically like money would just fall magically out of the sky in our lap. There was no cost of goods to anything. It was just like here’s money.

And there was no bills to pay, the money would just show up. And it was a pretty lovely situation to be in; versus an inventory based business is the opposite of that. There’s never any actual money in the bank account because we keep on investing it in growing our business

Dave: I know, I know it’s terrible, that’s true. That’s a big part of why I had to sell my previous company. I had all this money tied up in inventory, and the only way I could get that money out really is to sell the company. It’s kind of with downside.

Mike: I agree. I mean I think that’s basically a trajectory that we’re on. I mean we’re looking at a couple of years from now leveling things off to what I turn into a cash flow machine. And I do think that we’re positioning ourselves in a really good spot to do that. And we’re looking at financials a lot closer now just because Jacqueline is here our new COO. And we’re looking at this a lot more than I was previously, and we’re in a great position for that.

But yeah it’s scary between now and then, because the reality is that if some major catastrophe happened economically or Amazon shutting us down, or you never know how quickly technology can turn a dime and who the heck knows what can happen. Let’s just throw out some worst case scenario, we’re playing musical chairs right now with no place to sit in a lot of ways.

Dave: Yeah so what’s the conclusion here, that we just sell our businesses and buy drop shipping businesses?

Mike: Maybe, maybe. I’m not ready for that yet. I’m really happy with what we’re doing, like it’s been rewarding and like I said, I mean like I think it’s just more this is an episode of…

Dave: The pros and the cons.

Mike: The pros and the cons, you make your own decision. And again I’ll be very jealous if you can create a long term sustainable drop shipping business and make a living with it. I absolutely think that that’s better than what we’re doing in a lot of ways. But you’re only going to get so far. So it depends on your goals in life and what you’re looking to do right now. I do think that there is definitely limitations that we’ve talked about. There’s no way around that.

But from a quality of life and lifestyle, I mean you could literally work anywhere in the world, you pick up your bags and move from city to city every week if you wanted and your business will continue to run without any problem, versus the situation we are in. I mean we are locked down in our office and smartly somehow I made sure that that was in the best city in my opinion in the country in San Diego. So at least I’m someplace I want to be day in and day out. But it is definitely a commitment.

Dave: Yeah, yeah. I mean I think it just boils down to you’ve got to know what you’re getting into. I think you like you mentioned before, don’t just buy into the hype simply based on hype. At least know what you’re getting into.

Mike: Yeah, excellent. Well that wraps up today’s show for drop shipping. Dave can’t wait to see you in person my friend. Again just a reminder to everybody, Global Sources is right around the corner. If you’re going to be in Hong Kong, I don’t have the exact dates but it’s mid April if you’re going to be there for that.

Dave: April 18th through the 20th by the way.

Mike: Thank you, I appreciate that, April 18th to 20th. Dave and I are both speaking there, and both of us are going to be hosting a mastermind at Global Sources. So definitely come check that out if you’re in town. And then on the 21st we’re doing that mastermind, EcomCrew.com/mastermind if you want to sign up for that. Again it’s a full day with Dave and I talking about importing and then also doing basically unlimited Q&A.

We’re having a place to be that night, so we plan on helping out as much as possible. There is actually a meet up that evening as well. So we’ll be taking everyone out for some drinks and stuff afterwards, so EcomCrew.com/mastermind. And then after that we both head to China for a couple of days and then you head back to Vancouver after that, or what’s your next stop over?

Dave: I’m headed back, we’re heading back to Beijing for a week just to see my wife’s family and say our goodbyes, and then we’re heading back to Canada.

Mike: Then we’re going to be in the same time zone again, that will be cool.

Dave: I know, in the same continent.

Mike: That will be awesome. All right guys, well that’s it for this week. Until the next episode, happy selling and we’ll talk to you then.

And that’s a wrap. I want to thank Dave again for coming on the podcast today. It isn’t easy for him to do this. He has to get up at ridiculous o’clock, I think like 5:30 to do this before his daughter wakes up and starts to make a lot of noise around the house. And I know it’s not easy for him. I definitely want to thank him for coming on. And I think that we had a great debate about drop shipping today, definitely looking forward to seeing him in person in just a couple of weeks.

Just as a reminder you can go to EcomCrew.com/132 to get to the show notes for this episode. We’d love to hear your comments about drop shipping in here. Are you a drop shipper, or what you think drop shipping in 2018 looks like and beyond? So until the next episode everyone, happy selling, and we’ll talk here then.