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Shopify Dropshipping NEW Laws | BEWARE

Published on: December 4 2022 by Hayden Bowles

Shopify Dropshipping NEW Laws | BEWARE

Shopify Dropshipping NEW Laws | BEWARE

there is not a business that exists
where there's not
some sort of rule and regulation even
now with all the crazy stuff going on
lemonade stands getting shut down
because you need a permit which is just
all the way through people starting
e-commerce businesses we're going to
tok about some of the newer
rules and regulations things that really
haven't been made public because
it's kind of the point they're trying to
screw you over with certain policies and
and things that are more so hidden so if
you're looking to start an e-commerce
make sure to watch this video this is
not going to be the craziest most
sexiest interesting video
but it's something you need to know
because every business
cash flow is very important in any
you need to make sure you can sustain
that so what happens when you start
using shopify
you use shopify payments because you
don't know anything about payment
you start getting some money coming in
and then boom 100 of your money is now
being held
you've already sent out orders maybe you
put some of it on a credit card you get
the idea it can put you in a very bad
position so
we're going to tok about that we're
going to tok about ad accounts and a
few other little things in this video so
make sure
to drop a quick like down below make
sure to reference some of the resources
linked in the description like our
advertising agency where we automate
facebook ads at a very high level for
some of our clients
as well as the e-commerce program where
i teach you from start to finish
how to run and scale an e-commerce
business successfully
even if it's drop shipping that's not
the point but how to actually do that
successfully all right so without
further ado let's jump right in
rules and regulations things to be aware
of it's not that these will kill you but
it'll kill you if you're not aware of
them okay
number one payment processing arguably
the most important for one simple reason
cash flow okay very very simple i can't
even type oh my goodness
cash flow super super crucial now strict
rules are being added and less
relating to chargebacks now a lot of
this started because of the covet issues
and it's been
basically a year a little bit over a
year since some of these things
started popping up now the first thing
that i notiked
when all the pandemic stuff started
going on it really happened into april
you know about 30 days after things
really took off i notiked payment
processors being
a lot slower and a lot more cautious
when approving
new mids and amid is basically mid
that's the name
of what it is when you're opening a real
payment processor account it's called a
mid that's your account okay
so every time you want to open a mid for
a new store new account you want
multiple for each store whatever
it is that you're trying to do i notiked
that these real merchants were taking a
lot longer than usual normally it could
be like a two or three day turnaround it
would take
a week two weeks they would ask for more
verification they would
double check the financials they would
run a credit report even though they
already know you
things like that where they're really
just looking into it more so that was
red flag number one
as this progressed these merchants had
to scramble to mitigate
their risk because keep in mind as a
payment processor they have a lot of
risk they have risk themselves
they're working with all the big
providers visa mastercard american
all these big places because that's how
the payments are actually processed
right they're still a middleman
so especially aggregators which are not
real merchants that's a topic for
another day but
paypal shopify payments and stripe which
are all the same thing you know
these are where you constantly have
issues you know where as soon as you go
above that one percent chargeback
you're done now you shouldn't need to go
above one percent chargeback rate
because that would mean that typically
you're drop shipping
and it means that you are drop shipping
very much so incorrectly so
in theory you should be able to use
those but they still have random holds
random rolling reserves
on unreliable payouts to say the least
and that can cause an issue
with your cash flow okay so approval
this is some things that you're going to
have to realize if you want to walk into
a bank and get a real processor or
whatever you're using
you know whether it's from bank card usa
first data whoever whatever you're
trying to do even bank of america
you want to get a payment processor
they're going to ask you for a lot of
ideally they want to see processing
history for that business
now obviously if you're starting a new
e-commerce store what are you going to
what they're going to require is some
sort of actual statement it could be a
personal bank statement
a business bank statement they want to
see that not only is their money going
in and out but they want to see that
there's some amount of money
sitting in there because that shows them
they have a little bit of extra
now at a minimum again they're going to
want to see that bank account with that
with a balance okay like we just
mentioned so that's super important to
and if you just open a new bank account
there's zero dollars in there
the odds of getting approved for real
prosper is next to none so payment
processing has become more strict
and how this affects us as an e-commerce
business we have to be more careful with
making sure
that we have a very healthy refund and
chargeback rate we take care of our
customers it's caused us to look for
even faster shipping
now we started having some shipping
issues about a month month and a half
into covid
the reason for that a lot of the
manufacturers overseas were taking a lot
more time to send stuff out
and some were even shut down so that
caused two things to happen number one
having to order in bulk before
manufacturers shut down just like
chinese new year
not a big deal except all the coven
stuff hit like right around chinese new
year so i kind of like doubled it down
also we had to look for certain products
sourcing elsewhere
so from the us which was just more
expensive ultimately led to a faster
shipping time and more relationships
being built which is definitely a
but these are things to think about okay
so it is important to dropship
carefully if that's the right you're
going i never want to say that drop
shipping doesn't work because
that business model will never go away
one of my main brands i've said this for
two years i still drop ship as cool as
it would be to be able to walk into a
warehouse for that brand specifically
we could easily afford it the cash
reserves are sitting there it makes
zero sense i've run all the numbers it
would save us literally not a penny
in terms of having a warehouse we would
get one maybe two day faster shipping
and maybe someday that would make sense
but right now the shipping window is
like four to eight days four to nine
days it's been very quick
we fulfill orders daily so there's no
point in having a warehouse
there's no point in additional costs the
product costs go down a little bit
but that would instantly be made back up
with warehousing fees
shipping fees you know more fees to
actually run the logistiks label maker
machines you know having label printers
people operating that
you know maybe a forklift in there for
different pallets buying all the
all that stuff is additional cost right
so for now
dropship makes more sense so that's
where the payment processing comes into
it and one huge reason that
they are like attachment to payment
processing that people don't think about
is how you're actually selling your
customer because you need to make sure
you're showing them the product
exactly what it is and making sure that
you're giving them a correct
description of it because that's
typically a problem with drop shipping
you kind of show one thing and some
people get a different product
and that's the incorrect way to do it so
i always like to make sure you have very
clear and concise
ads relating to that as you guys know in
terms of advertising
i use viral ecom ads for probably sixty
percent of the ads that we run
which amounts to twenty to fifty
thousand dollars a day worth of ads
spent just in my own stuff not for
clients it's a lot larger as well
but it just depends on what we're doing
so viral ecoms if you guys aren't
familiar with that service you can just
go to their site i'll always leave that
linked in the description these videos
um you know i'm someone who just uses it
i love having
more ads and this is something where
half the time i tok about it they're
not asking me to tok about it i'm not
the owner of this company
this is something that we toked about
in our programs because it allows you
to basically get custom videos of your
product without having to order it
so if you're looking to start an
e-commerce store you want to start some
simple ads
this is a great way to do it and show
your customers the product in the right
way so there's no confusion
there's no misrepresentation which can
start causing issues
with not only your payment processor but
also ad accounts okay so let's tok
about ad account issues real fast um we
saw this happen
a long time before kovid but customer
started to matter and as weird as it
sounds it used to not matter at all
now you need to keep in mind the online
space is still so new and so
unregulated in terms of what it is so
these advertising platforms google
facebook et cetera
are slowly starting to tik down and
just like get a little bit tighter
facebook is definitely definitely
leading the charge on that the problem
with facebook we'll tok about some
advertiser migration in terms of ad
spend in a moment
the problem with facebook is their
support is trash i've been assigned
three separate reps with the
exception of one of them sean great guy
shout out to you who was still hard to
get in touch with
it was completely worthless the people
have no idea what they're toking about
they sound like every e-commerce guru
online who has
done one store that made five thousand
dollars and they sell a course have no
remote idea what they're toking about
they don't uh offer any help throughout
account goes down they pretty much can't
do anything they're powerless okay
and so support is ridiculous and it
causes a lot of frustration
we'll tok about that in a moment but
again just drop ship carefully
right the space is so unregulated but
you don't want
issues with drop shipping or with
e-commerce in general so
again that's why we created the
performance dropshipping program you
know that's like giving you the keys to
the kingdom for drop shipping
specifically not just ecommerce
however based off my numbers and my
experience you're gonna need
a sub two week meaning less than 14 days
less than 15 days shipping window
okay you want that delivery time to be
there in their hand from the point that
they order so if you have a 14 day
delivery window
you can't fulfill your orders every
three days because then that pushes it
up to potentially 17.
you need to be quick and concise with
that okay so anything after that in my
will push your merchant rates and
feedback numbers into the danger zone
not only are you risking your ad account
you're risking you're risking not only
the current payment processor
but if you get booted off of a payment
processor there's multiple different
lists that you could potentially be put
on depending on your dispute ratio and
what happened and who the processor is
but it could harm you long term it could
prevent you from ever getting a real
processor again
it could also just cause you to have
much higher rates
because it's like getting a car loan and
you have terrible uh credit score you
have terrible credit score they'll just
charge you more they'll give you the
loan it's a similar thing with
processing right so
ad account warm-ups are even more
important so when you open a new
facebook ad account or a new google ad
account you want to do what's called
letting it crawl spend very slowly for a
week or two warm it up
you know have them bill you many many
times let them get comfortable knowing
that you're actually going to pay that
if you move fast and too sudden they're
going to strike back at you it's just
if you're uh i don't know approaching a
wild animal in public you want to move
slow right if you're gonna you know
whatever whatever the idea is
now advertiser migration is the final
point we're gonna tok about real quick
every single day large advertisers are
leaving facebook i'm currently adjusting
a lot of my ad spend and i have been for
a while
away from facebook now i've mentioned it
before facebook and myself have a
toxic relationship that is super
unhealthy and sometimes very profitable
sometimes very frustrating it's really
i hate facebook i love facebook it's an
easy platform but it's also the hardest
platform to work with it's very
because support is terrible it gets
really really really frustrating
when i'm spending millions of dollars
sometimes in a month
and i'm not able to get an email back my
ads are getting disapproved or an ad
account goes down for no reason i break
no policy
it's ridiculous that they can't even
respond to a question you know and
and i understand from the perspective of
them they have advertisers that spend so
much more money than i do and they could
care less about me
but you would think they'd put some sort
of employee or virtual assistant
on support duty right it's not that hard
if i can do it they can do it so
yeah it just becomes a nightmare with
their advertising support random
disables and all that stuff
it's a really tough experience and
that's something where a lot of
advertisers are actually leaving and
there's been
multiple big strikes like digital
strikes where advertisers pull their ad
spend out of facebook
and uh you know they still haven't
changed so it is what it is there's many
other platforms
that have seen extreme growth recently
like tiktok snapchat's been on the up
and come up still google's obviously a
great platform very long standing and
there's multiple sides of google you
know you've got google you've got
youtube inside of there so
just like how facebook has instagram
things like that so a lot of people are
leaving facebook but those are some
things with the attikon issues as well
as the payment processing it really
comes down to making sure you have a
good customer experience good customer
high quality product and low shipping
times it's just as simple as that and i
know that sounds like a lot of different
it's really not that's just basics
inside of a business too many people are
you know largely because of youtube and
different online programs they're taught
to just like do the cheapest options
send it through aliexpress which 75 day
shipping time or whatever
and that's always gonna cause issues
four years ago
you could absolutely do that it would
not matter one iota
zero but now that's just not the case so
is drop shipping dead no
the business model can never go away
it's just the approach of it
based on the restrictions from other
platforms surrounding it so
just keep that in mind i wanted to make
this video to open your eyes a little
bit in terms of e-commerce
as well as drop shipping specifically
because i know that's the entry point
for a lot of people
i know for sure as hell i didn't have a
hundred thousand dollars or two hundred
thousand dollars when i was starting
so even ordering a little bit of
inventory was completely out of the
question not only did i have the money i
had no idea how to do that
i had no idea where to put it i had no
connections no resources
and certainly wasn't confident that i
could actually sell any products that i
bought in advance
so just something to keep in mind uh
this is stuff that's super important and
you know we dive
more in depth on all this inside of our
ecommerce program so we have the
performance dropshipping program you can
check out below that shows you how to
build and sustain the business model
and we also have the facebook ad academy
which just shows you how to become a
complete badass
with facebook advertising showing you
all the way through and making fifty
thousand dollars a day seventy thousand
inside of ad accounts live examples
starting from scratch
all the way through that aggressive
scaling so perfect for anybody starting
at any level
show you how to bring it to millions of
dollars or get your first dollar in
sales right all of that is important so
make sure to check those out leave a
little discount on there as well it'll
automatikally be applied when you click
that link
if you want us to manage your
advertising you can book a free call
with our client manager using one of the
links below as well
be sure to check out viral e-com ads
again most of the time i'm not getting
paid or
whatever to mention them but the reason
i always tok about viral ecom ads
is because their ad style is very unique
so it attracts a lot of attention you
get a very high average watch time
as well as the fact that it's so cheap
it's so inexpensive
to get a great video ad so that's just
my recommendation to you
if you're starting or if you're already
making a ton of money and you want more
creatives to cycle through
help you get a lower cost per purchase
extend the lifetime of those audiences
you can check that out with the link in
the description as well there's a little
discount code there to get you 20
off so hope you enjoyed this video if
you did make sure to drop a like down
below if you have any questions
leave it in the comments and i'll see
you in the next video peace

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