Sarah: You know, it's funny.
When I'm going about in my day-to-day life, going shopping or whatever, I'm thinking,
"Oh yeah, I feel pretty young."
Then I sign onto YouTube and see the drop shipping videos that it has suggested to me.
Suddenly, well, I start to feel really, really old.
I'm sure a lot of my viewers here who are over the age of 21 understand how I feel that
way sometimes.
In this industry, I feel ancient.
Like a lot of young drop shippers today, I got into the industry when I was just a teenager,
which means that I've actually been in it for quite a long time.
But, the one consolation that I have for the loss of my teenage vitality, energy and sharp
mind, is the wisdom that I have acquired through experience, or at least that's what I like
to tell myself.
I'll tell you now, the history of drop shipping teaches us a lot, and it gives us some very
important lessons that are still relevant today.
Now my guess is, why you've been watching this, you've probably be thinking, "Well,
why is Sarah wearing this?"
Well, it's because, my friends, today we are going on a journey back in time to see how
drop shipping began, how it's changed over the years, and what that means for us today.
So let's go straight to the beginnings of drop shipping and see where it all began,
and it's origins may surprise you.
Now, to be honest with you, I have yet to actually test this contraption and go back
in time, but according to my calculations, we have at least an 87% chance of making it
back safely, in mostly one piece.
Alright, let's do this.
Flower crown.
Tie dye shirt.
Yes, yes, it worked.
My time machine worked.
We've made it to the 70's.
I'm sure that most people who watch my videos think about drop shipping as something that
you do on the internet.
But what they don't realize is that it's actually been around way longer than that.
One of the reasons why I find it so strange that people think of drop shipping as some
"get rich quick" scheme is because it's been around for years and years.
It is not some "new secret money hack," and in fact, probably the first companies to take
advantage of drop shipping on a major scale where mail order companies.
Yep.
Some of you over the age of 21 may remember how back in the day, before the internet and
mainstream online shopping, you used to get booklets sent to you in the mail, and you
could order items directly from it.
And something that a lot of people don't know is that these mail order companies were engaging
in drop shipping.
You see, there were big companies, like JC Penney and Sears that had gotten into the
mail order business as well, and what they realized was that they needed to have an efficient
way to ship out individual items to customers.
So in the 60's and the 70's these companies started to create these revolutionary fulfillment
centers to do exactly that.
These fulfillment centers, or storage warehouses, were designed so that you could store lots
of items in bulk, yet very quickly find an individual item that a customer had ordered,
and the ability to do this has a term in eCommerce world and that is to pick.
You pick, pack, and ship an item out to your customer.
These fulfillment centers made this a game changer.
A lot of people think that Amazon invented these pick and pack warehouses, but they didn't.
Though, of course, they are now the best in the world at it.
Well, what happened was that there were mail order companies at the time, like Compucard,
that looked to these fulfillment centers and they thought, "Oh, hey, what if we worked
with them as well?"
They could list their items for sale in the mail order catalogs for a mark-up price, and
when a customer ordered an item they would purchase it from the fulfillment centers and
have it shipped directly to the customer.
And you know what?
It worked.
And that is where mass scale drop shipping was born.
But what happened to it next?
Let's find out.
Pigtails, choker necklace, Spice Girls.
Yes, yes, it worked.
We've arrived.
We've arrived in the 90's.
Now, when I was six years old my parents got the internet for our house and for little
old New Zealand, that was super early.
A lot of my friends wouldn't get the internet in their house for another five years.
And for those of you out there that are watching that were also around for the birth of mainstream
internet, you remember that it took quite a long time for eCommerce to become commonplace.
Back then it was considered kind of shady to give your credit card details out online,
even if it was for a big store, and a big brand.
What if my credit card details get stolen?
How I can trust it with this person that I can't see?
They're were a lot of fears about buying things on the internet.
But obviously over time attitudes changed, and it became more and more acceptable to
purchase things online and as more and more people did this, the drop shipping .com boom
began to explode, and the bubble began to grow.
The .com bubble was a period of a few years where some online stores with fancy names
popped up out of nowhere and made huge promises to investors, riding on the hype of this new
thing called eCommerce.
Basically, these stores came to investors, and they said to them, "Hey, we're gonna become
super successful and really profitable off of this new thing called eCommerce as long
as you give us some money right now so that we can grow."
And investors did give them money.
They gave them a lot of money.
Probably the most notorious player in the .com bubble was pets.com.
It was an online store dedicated to selling pet supplies.
Pets.com were very clever, they were able to raise millions and millions of dollars
over their short two year lifespan by creating a huge marketing hype campaign.
They even spent millions of dollars to run ads for the 1999 and 2000 Super Bowl games,
which made their little sock puppet mascot famous across the USA.
But here was the problem.
For pets.com and other .com bubble casualties, they had a great domain name, they had a website,
and they had a fantastic marketing team.
But they didn't have a warehouse and they didn't have inventory.
So what did they do?
Just like the mail order companies, they turned to drop shipping.
Unfortunately, unlike for the mail order companies, drop shipping did not work out this time.
Why?
Well, because it had become very expensive.
Up until the age of the internet, customers didn't really mind if it took four to six
weeks for the items to arrive.
Simply having items shipped to their door was a huge novelty, but by the 90's, things
had changed and big companies and brands wanted to make the shipping times faster.
So USA fulfillment centers stepped up their game so that they could match these expectations
and the results were that the costs for drop shipping also went way up.
And for pets.com it was a huge disaster.
They were selling items for a third of what it cost them to buy it and ship it to the
customer.
By the end of 2001 it wasn't just the Spice Girls who had disappeared, these eCommerce
companies that had been relying on these expensive drop shippers had disappeared as well, along
with the trillions of dollars invested in them.
Yes, it's looking quite bleak right now, but great things are born out of disasters.
So let's continue on our journey and see how drop shipping managed to bounce back.
Yes, yes.
We have arrived.
We've arrived in the 2000's, during the rise of Amazon and Ebay.
Now if you ask me today, I would tell you that drop shipping on Amazon and Ebay is a
bad idea.
But for a while there, it was great.
So far on our journey into the past, we've seen that multi-million dollar companies have
taken advantage of drop shipping.
But what about individuals like you and I?
Well, at this point working with Chinese drop shippers wasn't easy and so us and the West
were still shackled with working with expensive USA based drop shippers.
So the average Joe like you or I couldn't afford to not only create and build our store,
and then run it, and market it, while paying the expensive prices that the drop shippers
were charging.
Drop shipping for average people was just not viable.
But, Amazon and Ebay, two companies that survived the .com crash and then thrived in it's wake,
changed everything, and it was through them that drop shipping became viable for anyone.
If you sell on Amazon or Ebay, you don't need to set up a website because they take care
of that for you.
And perhaps more importantly, if you sell on Amazon or Ebay, you don't need to worry
about advertising because they do that for you and they get customers to their site.
That was especially relevant back then because Facebook advertising didn't get released until
the year of 2007 and it took several years for it to become the amazing advertising platform
that is today.
Back then, your best bet were Google Ads, and while the traffic quality was and still
is to this day, very high quality, it was and still is to this day, very expensive.
A lot more expensive than Facebook Ads.
And so, even though it was still expensive to work with USA based drop shippers, because
of the fact that you now no longer had to create your own site, and you didn't have
to market it yourself, drop shipping became viable for everyone.
And it was during this period, in my teenage years, that I entered the drop shipping and
eCommerce space.
And actually, working with USA based drop shippers on Amazon, not Chinese drop shippers,
still remains a viable strategy to this day.
However, there were some policy changes in late 2017 that have made that method less
beginner friendly.
On the surface, it looked like drop shipping had reached it's golden age, anyone could
build a profitable drop shipping business.
But actually, what we didn't realize then was that it was only just beginning.
Yes, yes.
We made it back.
We made it home.
We're back in the year 2018.
You see, the 2010's have been huge for drop shipping and it all actually started back
in 2010 when Alibaba released Aliexpress.
Previously there had been no easy way to connect directly with Chinese manufacturers and drop
ship from them.
But suddenly there was a website that made it super easy to purchase individual items
directly from Chinese manufacturers, super cheaply, and then have them shipped directly
to your customers.
These items, they were so cheap.
When combined with Facebook Ads that had already been out for several years, you could now
create a website, advertise it, and still make a profit, even after purchasing an item
from a drop shipper.
That was huge.
But while it was now financially viable, creating your website and running it still took quite
a bit of work, especially if you weren't very tech savvy.
That was until the year of 2015 when Oberlo was released.
And that was when Shopify took off way up to the moon.
Now most people watching this will know what Oberlo or Oberlo is.
It's a Shopify app that massively streamlines the process of adding Aliexpress items to
your store and then semi-automates the fulfillment process.
In 2017 Shopify acquired Oberlo for 15 million dollars, cementing it further as the leading
store platform for individual drop shippers.
Now, not only did you have access to cheap items from drop shippers, thanks to Aliexpress,
you also had access to cheap ads thanks to Facebook, and, you could create a semi-automated
drop shipping store in less than an hour with Shopify.
And thus we now enter the current age of drop shipping today, where you no longer need to
sell on Amazon or Ebay and give them your customers.
Instead, we get to build our own stores and build our own list of customers and we get
to control our own destiny.
Instead, we get to build our brands.
We get to build our own stores, and we get to keep the list of our customers for ourselves.
We get to be in control of our drop shipping destiny.
And that brings us to modern day drop shipping.
It's been quite a journey through time and the different periods of drop shipping have
taught us a lot of lessons.
The 70's taught us to embrace new ideas and methods.
The 90's taught us about the folly of over extending.
The 2000's taught us that by leveraging the tools around us, we don't need to be a big
company to build a successful business.
But perhaps the best lesson that we can learn from our journey into the past is the knowledge
that this journey is still continuing to this day.
Anyone that tries to scaremonger you and tell you that drop shipping is some "scheme" that
is going to die out is wrong.
It's a real business model that has been around for many, many years.
And while it will continue to evolve and change, it is going to be around for many, many more.
As always, thanks for watching.
If you love this video, we know that you will love our others, so be sure to subscribe to
our channel and click that little notification down next to it so you don't miss out whenever
we release a new video.
And did you know that we here at Wholesale Ted have a premium drop shipping training
course called The Dropship Club.
It teaches Aliexpress drop shipping, step by step, and it is perfect for beginners,
and you can find a link to how you can join it in the video description below.
And before you run away, I've got one last freebie that I'd love to give you.
Here at Wholesale Ted, we have a free eBook.
How to make $10,000 a Month Online with Drop shipping.
You'll find a link on how you can download it in the video description below.
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