Don’t dropship with Shopify. Create a Kickstarter campaign instead.

You may have come across the concept of setting up an ecommerce website based on dropshipping products.

There are loads of people online who will talk you through how easy it is to make a fortune doing it.

A lot of their claims seem to be too good to be true. As I’ve written about before in the context of crowdfunding, when things seem too good to be true, they very likely are.

There are lots of similarities between running a crowdfunding campaign and with ecommerce more generally, so I find this an interesting area to look at.

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As there is with Kickstarter, there’s an active community of people on Reddit who share advice and experiences about selling online. One particular subreddit is where people post links to their Shopify stores and ask for feedback.

In the same way that people sometimes set up a Kickstarter project without doing their homework, I see many people who create an online shop and expect customers and revenue to just come rolling in.

Perhaps people have been taken in by the YouTubers and TikTokers selling their secrets of easy ways to make a quick buck. Arguably even Shopify and Amazon themselves should take some responsibility here. Or maybe they’re just the smart ones selling shovels to the proverbial gold miners.

Getting traffic but no sales

The results are predictable, but sadly they seem to take people by surprise. Here’s a typical example of a disappointed first-time online shopkeeper.

As with a poorly-executed Kickstarter project, it’s not enough just to put something out there and expect to get sales/customers/backers.

The dropshipping dream

A common strategy is to look for a niche product that you think is underserved by other online stores and source it from a platform like Alibaba. The dropshipping part comes in when you don’t buy a load of stock and hold the inventory yourself, rather, when one of your customers places an order on your site, it gets shipped directly from the (typically) Chinese supplier.

So the process goes like this:

You do the work to filter through the literally hundreds of millions of products on Alibaba. (If you think shopping on Amazon is a horrible experience full of identical products from made up brands, you should try Alibaba!)
Then you make a nice-looking website
Nail your paid marketing to drive traffic to the site
And boom - you’re making passive income and will be well on your way to your first yacht!

I not saying there’s anything fundamentally wrong with the dropshipping model. It is indeed a relatively low-risk, low-cost way to set up an ecommerce business. But it’s not the easy way to make money online that some people would have you believe.

By definition, the low barriers to entry that make it appealing in the first place, make it hard to do exceptionally well, and it can easily become a race to the bottom.

The Shopify store

Here’s what the website that was getting traffic but no sales looked like.

`A single-product dropshipping online store`

It’s not a bad looking website. Shopify undoubtedly offers decent tools that enable almost anyone to create a passable online store. But a pretty website doesn’t automatically mean a good business.

In this particular case, the cracks soon start to appear. Firstly, this site doesn’t even have a proper domain. A ‘myshopify’ domain doesn’t inspire much confidence in me as a potential customer.

Fake reviews and slow shipping

Delving deeper into the content on the site, there are other warning signs. As they’ve already admitted, this store owner has had no sales yet. So where are these reviews coming from?

In this case, I suspect the reviews were imported from the source supplier. Strictly speaking, you could say that some of these reviews aren’t outright ‘fake’, but they’re disingenuous at best. Although some of them may even be real, they’re only valid if they refer to core product features, not things like delivery and customer service.

As with a Kickstarter project page, the creator’s job is to build trust and confidence.

Sites like these often have no ‘About’ page and often don’t even mention what country the store owner is in. In this case there are a few sparse details in an ‘Information’ section, but the English is poorly-written and there’s nothing about who you’re doing business with. The only contact is a Gmail address.

The nature of dropshipping is that shipping times are likely to be pretty long. In this case ‘8-20 business days’. Again, this isn’t necessarily an issue - Kickstarter products can take a year to ship! But it does mean that customers must really want your product.

The product

And that brings me to my final, and most fundamental, point.

Instead of using this dodgy website you’ve never heard of, you can buy pretty much the same product on Amazon - cheaper and delivered tomorrow. As bad as the shopping experience on Amazon has become, at least I trust them to deliver and to be accountable if they don’t.

As with running a Kickstarter campaign, when embarking on an endeavour like this, you have to put yourself in your customers’ shoes: as a customer would you buy from an online shop like this? I guess some people might, but I certainly wouldn’t.

Why would anyone risk using a site without a proper domain, with nothing about who they are, showing fake reviews, and selling a single product that you can get on Amazon?

Some basic economics will tell you that this is not a way to create a sustainable business. Profit incentivises competition among businesses. If you start doing well, someone will just come along and race you to the bottom.

The gurus on YouTube might say you can then take your skills to rinse and repeat with another product. Maybe. But ultimately it’s a fight you’re not going to win. In this model you don’t own any intellectual property and you’re up against Amazon and any other schmuck who’s willing to lose their money trying to get rich.

Do a Kickstarter instead

Yes, setting up a dropshipping store on Shopify or elsewhere is a relatively low-risk, low-cost way to start selling generic products online. And it clearly works for some people. But if you want to do something more meaningful, I think you’d be better off considering a Kickstarter project.

Crowdfunding offers a great alternative to make something genuinely new and create a sustainable business. For the same money it takes to set up a Shopify store, you should run a Kickstarter campaign instead.