106. How to Start a $100K/Month Dropshipping Business

0:00TikTok dropshipping may be the best way to make money online in 2024. and Stone Ross is an expert in maximizing its revenue potential. He's managed hundreds of e-commerce stores, generating over$3 million in revenue for himself and his students and clients. His proven techniques can do the same for dropshippers in any niche. This is Alex Freeman, and you're listening to the Upflip Podcast, where we uncover how great businesses are built, how they run behind the scenes, and how you can replicate their success. Stone got started with Shopify e-commerce in 2017, developing surefire sales funnels and marketing strategies that can grow an online business in any niche.

0:37He then applied that expertise to TikTok and Facebook dropshipping, helping to launch dozens of successful stores. In today's episode, we'll hear how Stone identifies and attracts the right customers for his clients, stores, and his advice for online entrepreneurs who want to maximize their revenue this year. Stone, welcome to the show. Hey, Alex. Yeah, thanks for having me. So to get started, can you tell the viewers just a bit about your background and how and why you started done for you? Yeah, of course. So I'm 29 years old. I'm from Pennsylvania. And I would say my first foray into entrepreneurship was shortly after I was a freshman in college at Penn State.

1:13For whatever reason, it didn't resonate with me and ended up dropping out early, for better or worse. But from there, I got first exposed to cryptocurrency, namely Bitcoin. And this whole notion of everything that cryptocurrency means in the world and our financial sphere really kind of changed my mind and kind of sent me down this rabbit hole of understanding alternate ways of generating income. And it definitely fueled more of the rebel side of me, once again, for better or worse. But all of these things ultimately led to where I am today. I mean, ultimately, it comes down to trading Bitcoin.

1:45I had created a course. I found this very interesting little arbitrage where you could buy and sell and make, I don't know, 5%, 10%, 15 % a day. Ended up scaling a community where I would teach everyone how to replicate this. And that taught me so much about online business. And that's when I got into Instagram, marketing, using softwares to grow. And then like you said, e-commerce came into my view in 2017, where I was learning about Facebook ads, the concept of dropshipping. If you remember those fidget spinners, when I first heard those, I was like, how are people selling these and making millions of dollars?

2:18It's crazy. So from there, it just sort of moved along wherever the wave of e-commerce went. So I then got into dropshipping on Facebook Marketplace and ultimately where we are here today with TikTok. Incredible. I love it. It's definitely been quite a journey for you. And I want to kind of go back to that beginning moment of your stepping out into entrepreneurship when you kind of made the decision to drop out of college. Was it a decision that was, hey, I'm going to go do this thing or college isn't working out. I'm leaving. What am I going to do next? Yeah, that's a really good question. It stemmed more from me going based on a momentum of my peers and also my family.

2:57It was the unspoken known that, yes, go to college, get your degree, get a job and align with this traditional American dream modality. But it just didn't vibe very well. Now, I definitely believe I was led astray by a myriad of factors, but it definitely sat in me that I wanted to do something non-traditional. I could barely even rouse myself out of sleep. And I was always a 4.0 student, took AP classes. It just didn't resonate. Yeah. And I think that we're going to touch on this point multiple times throughout this conversation. But obviously, there's when you diverge from the traditional path, there's both cultural resistance, but then there's also just like that kind of like internal fear, potentially.

3:41How much of that did you feel and how much of that do you feel on a regular basis? Because obviously, that's one of those big leaps that many entrepreneurs have to get over at some point? Yeah, I would say it's the prime foundation of, you know, it's our own mind. Our own mind is really our, you know, grandest nemesis or grandest ally. And it does go back to that. It definitely was scary. I mean, had I known that my passion was something that required a degree, of course I would have gone to it. But I had really needed a few years to really explore and develop myself and find out what my purposeful, you know, point was in life.

4:14So it does impact me slightly today. I mean, I would say no, because I've been so in this world of generating income and making money outside of our traditional societal job thing. But back then, it definitely was a major factor. It was a big leap to take. Are there any regrets that you have for not finishing your degree? Somewhat. I would say 50-50. If I would go back, I would have taken a couple of years before even going to school, I would have gotten whatever job I could have and just taken really time to explore my newfound mental thought processes. Our prefrontal cortex doesn't even stop developing until we're 25.

4:51So it's really a lot of pressure to put on someone who's 18. You're still a baby, even though you're 18, legal and whatnot. But I definitely would go back if I knew that it would help me get better. So I'd probably go back if I could and do finance or entrepreneurship or some major aligned with that. So after leaving college, you step out into what a lot of people might describe as the Wild West of Bitcoin. I'm curious what lessons in marketing or advertising that you learned during your time trading Bitcoin that ultimately helped you in the dropshipping business. Yeah, that's a tremendous question, Alex.

5:26So that actually has multiple rippling effects that I still align with today. So mainly it was Instagram marketing. I would use this follow Laker software back then where it would do this typical follow unfollow. And this was back when, oh man, Bitcoin was like 20, 30,$40. And there's a lesson right there. I mean, all the things I've done in the past 10 years, I could have just thrown everything away, taking the Bitcoin that I had back then, which by then was only a couple thousand dollars, just gone on some island and just screwed off for 10 years, just enjoying myself. And I'd be in a way better position.

5:59So first off, never sell your crypto, put it that way. But secondly, it exposed me in excitement to where I'm like, oh, wow, you can actually generate money a different way. And it It was just the most mind-blowing concept ever. And expounding on that, I was promoting just number one, what cryptocurrency was. I was kind of obsessed with it. And then number two, I made a little PDF course with my business community called Bitsclusive. And we would market it. We would teach people how to buy and sell Bitcoin. And through the FollowLaker software, I used to describe it as the most amazing law of attraction machine ever.

6:34Because through this little simple follow and follow thing, which Instagram doesn't even let you do now, I attracted the most amazing people into my life. It was the first time where I was meeting people, not from college, not from my community, but from all walks of life that I actually vibed with on a level I never thought possible. It's really hard to find people that you resonate with in your community that really think the same way. Of course, maybe one or two, but I was meeting dozens and dozens of people. I was hosting Zooms and really built this community and the camaraderie and being able to show and help everyone and for everyone to be able to co-create together something that can help all of us benefit our lives.

7:10I mean, then the vehicle was cryptocurrency. Now it's obviously e-commerce. That changed my whole perspective on life number one, but in business number two, it was the steady posting of content, leveraging automation technology to attract people to you and also saying yes to taking that phone call. Yes to getting on that Zoom call because you never know where it will take you. Let's talk about kind of that getting started into TikTok dropshipping. So if somebody is listening today and they're saying, okay, what is this? What is this TikTok dropshipping? What are those steps that they should be taking to get started, especially for somebody who maybe has zero experience in e-commerce?

7:44So first off, I would say educating yourself on what the concept of dropshipping is, number one, because there's many different ways to sell things online, dozens really. But understanding that the easiest way to get started with e-commerce is by finding items that people are currently buying, downloading the photos and descriptions and making an account on TikTok's seller center, because TikTok's the vehicle that's kicking butt, and reposting these photos. This is the most watered down version. Reposting these photos and listing these items, but you don't have any inventory. When you're listing it on your store and exposing it to people that are on TikTok, when they purchase from you, you go ahead and take your own money, order it on wherever you found that product from, whether it's eBay, Amazon, what have you, and ship it directly to them.

8:30That's the entire model. That seems fairly straightforward on the simple side of things. What are some of the common pitfalls that somebody maybe would fall into if they start dropshipping that you might advise they avoid? There's a myriad of them. There really is. Now, that's the most basic understanding of what dropshipping is, of course, but one has to understand that it's not in a vacuum. In order to sell on TikTok, you must have a business. Now, you can do it just with your social security number and register as an individual, but it's highly recommended that you start as a business. So, you know, one must understand what the business foundations of having an LLC is, having a business bank account, an EIN, maybe some of the tax incentives of it.

9:10But properly registering is number one. Properly understanding how to list products. And there's a whole compliance side of it that is masterful. And it may seem complex, but it is navigatable. And then number three, it is how to find proper influencers to sell your items. because this TikTok opportunity is very, very exotic and bizarre in that unlike traditional e-commerce stores, you don't need to pump a ton of money into ads. You don't need to make a website and learn how to do graphic design and make it all beautiful. You don't even need to have any online presence whatsoever other than a TikTok seller center account and products on the store.

9:49But besides that, you must get exposure somehow. And the weird part is you can actually create, and I'll show you guys very successful TikTok stores just by posting products and not even reaching out to anyone at all. But understanding that, you must understand the fulfillment process. And if you want to scale, you'll want to start networking with influencers and getting them to promote your products. So there's a whole lot of things that I teach within the mastermind group that I brought. You know, it certainly has been sold many, many times. The idea of dropshipping as being something that you can start with absolutely no money.

10:20I mean, obviously, at some point, someone's going to make that first order and you have to order the products. So you probably need some form of capital there to make that happen while the fulfillment occurs. But what is kind of the ideal startup budget? You mentioned you probably want to get an LLC, do all of those things, which costs some money. So what is that kind of ideal startup budget somebody should have? Yeah. So to get an LLC, it's a couple hundred dollars. It takes like a week or so. But I would recommend having anywhere from$5 ,000 to$10 ,000. It doesn't even have to be cash. I mean, frankly, I use all credit cards and just rack up the airline mileages and cash back.

10:57I mean, there's a whole little trick there you can do. But it's kind of funny. I would probably say minimum$5 ,000. But the challenge you'd run into is when an item takes off, you're going to run out of money. For me, it was three weeks after I started the first TikTok store in August. And And I was just learning how to do this model. I was very used to it. It's very similar to dropshipping on other places. But it was three weeks in, I was maybe doing$20 or$30 a day. Out of the blue, some influencer, this chick I had never known, never talked to, she bought a pillow from me, one of these memory foam pillows.

11:28And out of nowhere at midnight, my phone started blowing up with sales. So much so within 45 minutes, I maxed out the 200 orders that I could do in a daily period back then. So it was just the most mind-blowing thing ever. went from nothing for three weeks to$11 ,000 in sales overnight with one influencer. So it's proved the concept with a few thousand dollars, but the second it takes off, I would be searching far and wide for more capital. And is that something that you can foresee in any way? Or is that just, you know, at some point, one of the early products that after you've proven the concept, it's going to take off and you just got to be prepared for that moment to happen at some point in the future?

12:06I would say be prepared for sure. We were doing very basic daily algorithm of action where we would list 10 items a day. We were getting the items from Amazon. So we weren't even doing any ordering wholesale or using warehouses at this time. And just by doing that, working a couple hours a day, after three weeks, that's what happened. And it's since been duplicated multiple times. And for me, my challenge was always running out of capital or I had a credit card that was frozen and it created a headache. That always seemed to be it. But also, you can manage it. You can always manage and increase your price if capital is a problem.

12:39But it's kind of funny that the challenge here is not exposure, it's capital. It's a really funny and probably solvable problem. What do you think it is about TikTok dropshipping in particular that kind of leads itself to this great problem to have? And why maybe is TikTok dropshipping the best way currently to make money online? Because it's so new, Alex. because this is something that I see as akin to getting involved in Amazon several, several years ago, when it first moved outside of books. I was looking at the statistics. There's only around 30 ,000 people selling on TikTok, at least as I checked a few days ago.

13:18And you put in perspective, the resellers on Amazon, there's over like 2 million worth. So number one, it's very nascent and very new in the United States. Now, I know people have been selling items on TikTok for some time using things such as Shopify and running ads, but they just officially announced the launch of their TikTok shops section back in November. So we're two months into what their official launch in the US is. And even on a weekly basis right now, both Thailand and the Philippines surpass the amount of monthly revenue that they generate on TikTok shops, more than the US. So we know our position in the world is like the largest consumers ever, but that's how tiny this is right now.

13:57It is brand spanking new. Listeners, if you're looking for more advice on how to get started in e-commerce, check out the Upflip blog post, How to Start a 750K a Month e-commerce Business, where we share some insights from Ecom Crew co-founder Michael Jackness about how to make seven figures from an online business. Stone, you know, because it is so new, I'm curious what the expectations of a TikTok dropshipper should be in sort of maybe first year revenue. do? I am about five months in right now, and I can speak upon my own experience as well as seeing the other sellers that I've been communicating and networking with on the platform.

14:35It comes down to, I would say, what you actually want for yourself, like what your goals actually are. If you do want to build it into a seven-figure income, you most definitely can do it, but it's going to require definitely some out-of-the-box thinking. Now, if you're someone that's brand new with e-commerce in general, and you just want to make an extra thousand or a a couple thousand dollars a month, it is absolutely, positively something you can accomplish with this just by spending a couple hours a day, I'd say. Maybe three, four hours, but then you can hire out and outsource the work for$10,$20,$30 a day and have someone else do it on your behalf.

15:07I would say you can accomplish what you want with this platform. I have netted in the last five months around$70 ,000 after cost of goods on just one of my stores. Now, of course, I have prior experience and I do show step-by-step how to do all of this. And I hold everyone's hand that works with me. I'm a very transparent, open book, but it comes down to what people believe is possible within themselves. I don't even think I'm prepared for what's possible on this platform over the next couple of years. Using kind of your experience from other platforms and your five-ish months of experience on TikTok, like what are you finding are the best strategies to maximize revenue and scale the store?

15:47And how are those kind of differing from your past experience and other platforms? So the prior platforms I've done, I've done things from using chatbots back in 2018 to sell on Instagram for dropshipping. I've done tons and tons of Facebook ads for my Shopify stores. But what's very different here is it's very social-based. TikTok is kind of decentralizing marketing. It's a pretty beautiful thing that's happening, despite what listeners might have any skepticism regarding TikTok as a company as a whole. I think it's beautiful how they're allowing any person from any walk of life to empower themselves and generate income by helping brands.

16:25So the mindset shift of understanding that is the biggest thing, but there's a lot of tricks. There's a lot of tricks on what products specifically. We have number one, proprietary software we use for finding it, but then there's a couple others that you guys could even search and find that show us exactly what winning products are going, how much they're selling, what creators are promoting them. So we kind of ride the coattails, at least when starting out of what's already selling on there. And then we try to find suppliers that allow us to put, I don't know, I would say a 25 to 40 % margin and have us appear on TikTok shops like we're undercutting or very close to the competition.

16:59Because when products take off, other content creators will want to mimic the success of the larger content creators that are selling thousands of items. So they'll pick the other similar, if not the same items listed on shops. So by doing this strategy, and I call it kind of a shotgun blast strategy, if you will, where you just throw so many things at the wall and you see what sticks, that does work pretty well. And you keep the prices very, very low when you start. But when you start getting momentum, you can start raising the prices up incrementally so as to increase your profit margins. And I actually did that by mistake when I was first selling this pillow.

17:31I didn't realize that after the affiliate commission, man, I was losing a couple of dollars per. And so I was like, oh, okay. But besides that little blunder, it actually ended up being something great because that is the strategy that I'm seeing works super, super well. How important is it to niche down in a TikTok shop or is it that you want to kind of start out with as many kind of varied products as possible and see what takes off? How does that play out? So first you had seen how I had gotten, I don't know, very meager results enough to buy a cup of coffee a day, which, Hey, that's something.

18:01But once the product took off that one pillow and I sold like three or 4 ,000 of them, I noticed that my store started getting more organic sales. It seems to me like once you get one influencer to just promote one product, however you do it, TikTok will then prioritize your store. And it does seem that that first product that gains headway will be that inclination for what organic traffic TikTok sends you. So mine happened to be in the home supplies category. So now I'm selling all sorts of storage containers, LED lights, like any little thing that actually provides utility in people's lives.

18:34It's not one-off crud that we're selling. It's things that actually help people, which I can ethically get behind. So from there, that's basically how you niche down. And I will mention something here. My store, this store right now, it's a little slower after the holidays or around, I did around 40 ,000 in sales on this one. So it's funny because this store itself is number 20 in the US for home supplies. And the number one store in this niche is doing around 2 million a month. There's not many above me if that gives perspective of what's possible. And talk to me about building the audience. You know, you talked about the kind of the pricing strategy, but then is there also, do you need to be doing a lot of the like social audience building stuff that goes along with maybe a social media type influencer business, or is it get the products out there and they'll kind of exist in the marketplace?

19:22I would welcome whoever's listening to actually try that out because I hadn't even made a single video or made a post on TikTok and was still able to do this. Wow. Yeah, it's weird. It's weird. But I look at what would TikTok want? Like TikTok would want me to use their shipping methods. So we may be pivoting to that and doing wholesale. They may like if we have certain brand authorizations or especially if we use their platform. So I bet it would help, but I haven't really seen a need for it myself just yet. So that's interesting because when I've talked to people that have businesses that heavily rely on maybe Google SEO, you know, you talk about the ever evolving algorithm, like since this is so new, like what has been your experience with how much the algorithm maybe tweaks on TikTok and how aware of a change are you beyond like looking at the sales numbers?

20:09Every day, every single day it changes up. They're rolling out new policies and it's, it's a constant game of cat and mouse. Like I've been just testing so much that I've had so many stores shut down. And like right now I don't want to scare anybody, but right now I'm trying to figure out how to keep these stores open long term. Now, this method works beautifully. Not saying that, but I've been trying out so many things. I've been figuring out what has not been working. So what we're currently doing is because they'll roll out something new and they'll instantly deactivate you. And it's weird.

20:38There was a period of two weeks where we start a new store, list 10 products, and they would instantly shut you down. I'm like, really? Like for what? They don't even tell you why. And then you submit your documentation, just showing that you're legitimate business doing good, they'll bring you back up. So we've been trying to figure out what these kinks are. It's like they launch, but then they're trying to retroactively go back and legitimize. It's weird. But yeah, it's an ever-changing thing. But like most dropshipping, it's always like this. And we always find a way to come out on top. Yeah.

21:08With that in mind, how does somebody diversify the risk of the potential of like, they made a change and now I'm shut down and I got to figure out how to be not shut down? When they deactivate a store, it's similar to Amazon, if anyone is familiar with how that whole thing works, but you're more or less blacklisted. So you don't want to get deactivated. But what really leads you to being deactivated is if you're listing, let's say, counterfeit products or products that require authorization, and there's thousands of products that don't. So you want to make sure of that, or you want to make sure that you're very quick.

21:39You don't let items go a long time without shipping. A lot of people run into challenges because they have to ship items out within two business days. So you must make sure that you have a really good supplier that can ship quickly. But other than that, the main risk with this is, let's say, worst case scenario, TikTok does not like you and they shut you down. They can hold your revenue for up to three months. That happened with one of my stores, but they paid it out one week later. It's not like you can lose money in this, at least in my experience. So this is going to bring us to a section of our show that we call our Fan Blitz Questions.

22:10These questions come from our YouTube community. Listeners, you can go over to youtube.com slash upflip and post questions to future podcast guests. Stone, I've got five questions here for you. We're going to try and do in about a minute. Are you ready? Let's do it. All right. First one comes from at W7. What are those most profitable niches? Are they the most accessible niches for lower budgets? Home supplies all day. At Stanislav G. Nianov 7337. We talked about this a little bit earlier, but what's a realistic starting budget? I'd say between$5 ,000 and$10 ,000, whether in money in your bank or credit cards.

22:45At Malith Balasuria wants to know, what's the best way to do that market research and validate a product or an idea? Multiple ways. You can just pick your favorite items and list. You can use certain product research sites or just search keywords on TikTok or just go see what's best selling on Amazon and put those puppies up there. At DJ Wash X, is there a way for two to three people to do this together, pool their funds to get started. Oh yeah. And when I say five to 10 ,000, I don't mean that's, you can start with a couple hundred dollars if you want. I'm just saying to get meaningful results, but yeah, you guys can form a limited partnership or a partnership legal entity and go into business together.

23:22Absolutely. Last one here, sort of a piggyback on that question. This one from Shooter Shot Down, how to find investors in the most practical way. Interesting question. Different ways, I would say family and friends or posting on your social media showing what you're doing, showing results and attracting people to you that are interested. And when you get people interested and you help them solve a need in their own life, maybe you help them start a store, they'll conspire to help you out. I would say use your community. That's going to do it for the FanBlitz questions. If you're a return listener, you know that our audience for the Upflip podcast grows through word of mouth.