I closed the doors on my 9-month drop shipping odyssey
This past week I finally closed the doors on my 9-month drop shipping odyssey.
If you don’t know what drop shipping is, you can find out more here.
The plan was simple. I wanted a second income stream to complement my writing income. When a lot of your work is freelance, it’s essential to diversify your income streams. If one business is lagging — and there will be periods where one does — you can always count on another project to keep you afloat.
I decided to cut back on my writing for a month and develop a drop shipping business focused on retro video game handhelds.
Why retro video game handhelds? I love gaming and wanted to sell a product I knew a lot about. Successful writers write about subjects they know, so I thought that would translate well when it came to sales. It’s a sound strategy that would have succeeded in the hands of someone who knew what they were doing. (A hint for what’s to come.)
I knew the product. I knew the market. The next step was executing my vision.
Shopify is the default choice for most drop shipping entrepreneurs. It’s easy to set up, and I had a working website design using one of their free templates in minutes.
My favorite part of the project was crafting a website people would love to shop at.
Designing a logo was easy. I used Canva to create a logo. Looking back on it now, the design wasn’t great, but it was mine, and I loved it.
The logo design would inform the color palette for the rest of the website.
Next, I needed a vendor.
Sourcing the Product (Mistake #1)
If you’re unfamiliar with retro gaming handhelds, I will give you a brief rundown. These aren’t licensed products from Nintendo, Sony, or Microsoft. Instead, they are devices designed to play copies of classic games from the 80s and 90s. You download the games, drop them on an SD Card, and these retro handhelds will play them.
Judging by the research I had done, it’s a booming business. New products are being released weekly, to much fanfare. Retro gaming is all the rage these days.
Like most drop shippers, I sourced my product from a Chinese vendor. I used Ali Express because I had purchased from them before, and they had all the products I wanted to sell.
This was my first mistake.
I had done my research and selected sellers on Ali Express that were highly regarded. That wasn’t the problem. The real issue came down to constant price fluctuations. I posted products to my site with a 20%-30% markup to cover expenses, shipping, and profit.
Most of the prices were in line with my competition at first.
I started receiving daily updates from my vendors informing me of price increases and decreases that would affect my margins. Sometimes these fluctuations would be to my benefit, but often they would eat into my profit to such an extent that I was forced to raise the price well above that of my competitor.
What were my competitors doing correctly?
Without knowing their full story, I imagine my competitors worked via signed agreements with vendors. Probably the same ones I was working with. Yet, these agreements secured them a flat rate that fluctuated far less than the prices I was dealing with.
It’s my error for taking the approach that I did. I wanted the entire process to be as hands-off as possible, so I could focus on my writing. Well, that wasn’t the reality of the business.
Understanding My Audience (Mistake #2)
When writing, it’s important to understand the audience you’re writing for. The same is true when it comes to drop shipping or any sales business, for that matter.
As a gamer, I had my audience demographic and interests sorted out. I knew my audience. That wasn’t the problem.
The mistake I made was not listening to the voice in my head telling me the obvious.
“You wouldn’t buy these retro handhelds from a third party drop shipping vendor when you know you could just buy them from Ali Express for 20% to 30% less.”
I convinced myself my audience wasn’t as smart as I was when finding the best source for purchasing my products. I lied to myself, and that is the biggest mistake you can make.
Yes, the retro gaming market was booming, but it was filled with older, savvy gamers who had a good grasp on the industry and knew where to spend their money.
Sure, I made a few sales, but frequently I would get messages from potential customers asking where my products would be shipping from. Of course, they knew I was drop shipping. They knew exactly what to look for because I knew exactly what to look for. There was no way to hide it. I wasn’t fooling anyone.
Advertising & Building a Brand (Mistakes #3 and #4)
The site was running. Prices were fluctuating. But I was still getting sales, even if they were few and far between.
The next step was to cast a wider net and try to build my brand. I didn’t want to just focus on the core gaming community with my products. I wanted to expand the niche and find people who had not played video games in years but were intrigued at the prospect of playing those old classics.
This was my first foray into advertising using Facebook and Google. I did a decent enough job. My click-through rate (CTR) was around 3% on my advertisements, and my research indicated that was above average.
My ads didn’t feature anything special beyond some copy and a selection of products.
I made the mistake of being conservative about how much I was willing to spend on advertising.
I wasn’t willing to spend more than $5 a day on each platform I was trying to advertise on. This would get you a few hundred impressions at best. When trying to find your audience, this is like using a fishing rod in the ocean. Sure, I caught a fish here and there, but if I had cast a wider net, I would have caught hundreds.
Again, this all fell in with my strategy that I wanted to keep my drop shipping business as ‘low impact’ as possible. The main goal was to have another income stream to complement my writing. I wasn’t willing to spend the money needed to make it a success.
My other mistake was not taking advantage of the more modern advertising models.
These days real advertising success is found on social media.
Like I said, I wanted to keep it low impact. Sure, I had a Twitter account for my business and tried to engage with the small community I had, but ultimately without a large following, I wasn’t going to generate many click-throughs to my website.
The savvy businesspeople are paying social media influencers to advertise their brand for them. That is how it’s done these days. If you want to get your product in front of a lot of eyeballs — fast — you need to pay a social media influencer.
I wish I was better at social media. I really do. That’s where the real money is if you know what you’re doing and are willing to put yourself out there.
I am willing to put myself out there, but only in print. I freeze up in front of a camera.
The Panic Move (Mistake #5)
My income wasn’t covering my monthly costs. Hell, I was making more money via my passive income from writing than I was from drop shipping.
I was only a couple of months in, but it felt like the sky was falling. I thought I could make drop shipping a success and fast. That wasn’t happening.
It takes time to cultivate a business, and I was being impatient. Part of that was due to wanting to get back to writing. I had focused so much on drop shipping that my writing output had suffered.
So, what did I do? Instead of sticking with the project and seeing it through, I decided to double down and create a second drop shipping site.
This one would be a general store with no niche. I spent money on sites that followed product trends hoping to catch the wave on the next big thing.
My second site, The Smarter Life, was a smattering of various products, from pet supplies to garden gnomes. Each of these were curated based on social media trends and drop shipping influencer recommendations.
The Smarter Life was the dumbest idea of my life.
I didn’t know anything about pets. Why the hell was I selling pet products? Garden Gnomes? I hate gardening and gnomes!
You write what you know! You sell what you know!
It was clear at this point I didn’t know what the hell I was doing and now I was paying double the price to Shopify for two stores that were making zero profit.
Drop shipping derailed my writing.
The worst thing about this whole project was that I wasn’t writing. Drop shipping was supposed to be in service of doing what I love, but instead, it dragged me away from it.
Looking at my writing history on Medium, you will find a four-month gap when I barely wrote anything. That’s when I put my heart and soul into drop shipping, and it almost destroyed me.
I look back on that period and think of the audience I could have cultivated. The writing brand I could have continued to build.
Instead, I squandered my energy on something I wasn’t very good at. What’s worse is that I wasn’t willing to get any better at it either. I didn’t care about drop shipping.
It was a means to an end that I underestimated.
While I got back to writing, the depression set in. I let my drop shipping sites sit there and collect dust while Shopify and other utilities collecting money from me. I didn’t want to admit defeat.
Finally, a few weeks ago, I discontinued The Smarter Life. And now I finally put Retro Handhelds out of its misery as well.
It’s not a total loss.
Failure is a learning experience.
I learned a lot about myself during this entire endeavour. I learned that if I am not willing to put my heart and soul into something, I shouldn’t be doing it.
I also learned and improved on a lot of transferable skills:
- Website Design
- Using Canva
- Video Editing
- Social Media Advertising
- Using Sales Software
- SEO Writing
- Product Research
So, it wasn’t a total loss. If I could go back and stop myself from doing it all over again, I wouldn’t.
As an experience, even though my drop shipping business was a failure, it gave me knowledge on a subject I knew very little about. It added value to my growing list of skillsets and improved my understanding of an entire industry.
If that’s failing, I can live with it.
Author: Chris Carabott