STOP worrying about these 7 dropshipping myths! (Yes… 6:13 should be IMPORT duties, whoops!)
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***OTHER LINKS MENTIONED IN THE VIDEO***
How to Blindly Dropship: https://www.youtube.com/watch?v=-edMSxkCxJI
Why Long Shipping Times Don’t Matter: https://www.youtube.com/watch?v=sBuiN-CVxE4
How to Pay Sales Tax: https://www.youtube.com/watch?v=UzjlI50ZTuI
10 Things To Do Before Dropshipping: https://www.youtube.com/watch?v=YPKvNTly7Pg
Dropshipping Myth #1: Don’t I Need to Hide that the Package Comes from China?
No: because you can’t hide it! When customers use the tracking code we give them, they’ll quickly see that the package is coming from China.
It is true though that if you were to advertise that it was going to be sent from China, that people would be less willing to purchase. So do not advertise that it’s going to be sent from China, but don’t try to hide it from the customer either. If a customer gets upset about it coming from China, say that you’re shipping the item out directly to them to expedite the shipping process so that they get their item faster, as there has been huge demand for it.
Myth #2: What About South Dakota vs. Wayfair Ruling for Dropshippers?
In June 2018 there was an important Supreme Court case for dropshippers (and online retailers): Wayfair vs. South Dakota. In it, South Dakota won their case that they could require online retailers who don’t have nexus (in other words, a physical presence in South Dakota) to have to collect and pay sales tax. This was a huge ruling as previously in the USA, you had to have nexus in a state to collect/pay sales tax.
Luckily though – this won’t affect most retailers, including most dropshippers. Why? Because the ruling only applies to LARGE retailers who do a lot of sales in that one, single state. For South Dakota, the threshold is you need to be doing either $100,000 in sales or 200+ transactions within South Dakota in a year. For other states to implement thresholds significantly lower, they will have to go through the courts again.
Myth #3: Won’t I Need to Pay Tariffs or Import Duties?!
No – as a dropshipper, you do not pay tarrifs/import duties. It is your customer that will be required to pay them. However, there are very few times where orders from Aliexpress will attract import duties, as most countries have a very high package value threshold before they charge tarrifs. In the USA, it is $800. So neither you nor your customer needs to worry about it.
Myth #4: But Don’t I Need to Register a Business to Dropship?!
Most countries/states in the world will let you sell as a sole proprietor, otherwise known as a sole trader. As a sole proprietor, you do not need to register to start selling online – you can just create a store and start selling. When tax time rolls around, you may need to register for a separate tax ID, but it will depend on your local jurisdiction (please do not ask me what your local rules are, I know a lot about New Zealand’s laws because that is where I live, I don’t know about each individual country/state). In time you may wish to register a company because there are lots of bonuses and benefits to doing so, but it’s usually not a legal requirement.
Myth #5: Won’t People Track the Store Based on the Address?!
Firstly, customers won’t do this because there is no reason or incentive for them to want to Google the address of your supplier on the package. Secondly, even if the customer did do this, they would probably find nothing: usually the address of the suppliers is not posted online for us to access. And Aliexpress stores do not list their addresses, so customers won’t find the store you bought it from (and thus, not find the price you originally paid).
Myth #6: Won’t the USA/China Trade War Kill Dropshipping?
Donald Trump’s White House has announced plans on March 22, 2018 to increase tariffs on Chinese imports to discourage people from importing from China. This is unlikely to impact dropshippers though, as the packages we ship are below the tariff threshold in the first place. And there has been no announcement about lowering the threshold – and if it was lowered, it would be unlikely to go below the original threshold of $200.
Myth #7: Wait… Oberlo Doesn’t Buy the Items for Me?
Almost. Oberlo semi-automates the process for you by taking control of your screen and in seconds, adding the item to your cart and preparing it for purchase. But you still need to click the “Order Product” button to do this. And you still need to click the “Confirm and Pay” button on Aliexpress.