Literally anyone can get into dropshipping with hardly any effort or upfront cash. Regardless of what you're selling, you'll likely be competing with millions of other sellers in an extremely saturated market.
Plagiarism is rampant in dropshipping. It's far too easy for your competitors to copy your ads, your sales funnels, and even your Shopify store. Be assured that if you find a successful product, you will be copied and then undercut by your competition.
Advertisements have no guarantee of being profitable - and one should expect to occasionally have campaigns that fall short of expectations (which can cost thousands of dollars).
LOW PROFIT MARGINS
Facebook's ad prices have doubled this last year. Successful dropshippers can expect to profit roughly 8-15%, which only really works if you're selling major volumes of product.
The key to long term wealth is in building and owning valuable assets, but with dropshipping, you own nothing. You're an enslaved middleman to Shopify, Facebook, and Google. Their ad and metrics systems are unreliable and ever changing - and account deactivations are a way of life in eCommerce.
Ads must be developed and then monitored - and failing to do so could mean unprofitable ads or, even worse, ad account suspension.
Trending items are most often the only products that have a profitable ROI. Many businesses meet their ends on the fall of whatever trend they were capitalizing on.
Shipping from China takes six weeks, so expect lots of customer complaints and chargebacks (which are deducted from your bank account).
MARKET SATURATION & COMPETITION
You're going head to head with literally millions of sellers covering over 6000 different product niches. Breaking into an established niche is next to impossible - and finding untapped niches are becoming increasingly rare.
Start up costs require roughly $5000 in initial inventory, $10,000 in advertising, and $3000 in listing optimization, packaging, and branding. All in all, if you want to have a chance at success, you'll need to spend roughly $15,000 to $20,000 just as an initial investment.
Nearly all successful products are copied and resold by either Amazon or Chinese manufacturers who then undercut their competition at margins that only billion dollar companies can afford. Every time you see an Amazon Basics or Essentials product at the top ranked listing, it's likely that dozens of independent sellers went out of business.
The key to long term wealth is in building and owning valuable assets, but with Amazon FBA, you own nothing. You're an enslaved middleman to Amazon, who care only about market domination and making a profit. Remember, you're there to make them money - and your use of Amazon is a privilege they grant you; a privilege they can revoke at any time.
Between identifying products and suppliers, passing quality assurance, securing inventory, and then product ranking, you're looking at over a year before you even have a chance at seeing a net positive income.
Profit margins are extremely low, meaning the only real way to make money is through mass ordering. Successful Amazon sellers often make less than 10% profit off of their sales.
Amazon's terms of service are fickle and ever changing. Bans are frequent and can spell disaster for FBA startups and established businesses alike.
MARKET SATURATION & COMPETITION
There are tens of millions of ad accounts - and more independent FB ad agencies are popping up every day, all of whom are fighting for the same attention. In 2021, getting your advertisements seen is a matter of outspending your competition.
Ad prices have doubled in price over the last year. When you factor in ad development, split testing, and monitoring, a single ad campaign can easily cost thousands of dollars.
Effective ads are easily copied - and Facebook has little to no protection against plagiarism.
The key to long term wealth is in building and owning valuable assets, but with Facebook advertising, you own nothing. You're bound to the confines of an aging social media platform with an advertising system that is increasingly ineffective.
Facebook is quick to shut down advertising accounts - and their terms of service are ever changing. If 2 people report a single ad (for every 5000 impressions), it is likely your account will be suspended.
Facebook advertising does not provide passive income. You will work for every penny.
Facebook ads have grown increasingly ineffective, especially with Gen X, Gen Y, and Millennials. Ad blockers are becoming a standard feature of web browsers, too. Ask yourself: When was the last time you clicked on a Facebook ad?
Apple users will no longer see Facebook ads. They also can no longer be re-targeted by Facebook Pixel. To advertisers, this means that their potential reach has been cut by nearly 60% (Apple's mobile market share).
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