Thinking About Dropshipping? You Might Be Too Late.

This is a very finite time. You got to learn how to develop apps. Gold rush. But you know what? Now you can do it with AI. E commerce is like, Shopify has been around for 15 years, but 16 cents of every dollar are spent online. You're still early.

The thing that I would say is maybe too late is drop shipping from Alibaba to Shopify.

That got oversaturated, and it's hard to make that work. Totally agree.

The three categories I'm most bullish on when it comes to e commerce in general for 2025 are.

It's kind of crazy to me, that picture. 2007, okay, Steve Jobs announces the iPhone. And I was. I mean, I was 20 years old then. I was on a mission in Hungary, so I wasn't anywhere near all this. I didn't even know the iPhone was a thing until the next year. But, you know, a lot of smart people in Silicon Valley on the coast were like, okay, there's going to be a new ecosystem. They're going to call it the App Store. All right, now you got to learn how to be a developer. You can launch apps. You can be the first. And, like, I distinctly remember going to ebay in, like, 2009. And for whatever reason, I searched for apps for sale on ebay, like, businesses for sale. And there was a farting app on ebay for sale for a million dollars. And it was like the first fart app. And you just press our big red button and it would make fart noises, and you could change the noises and a million dollars. Okay. And I'm just sure that back then, the. The feeling in the air was, this is a very finite time. You gotta learn how to develop apps. There's only 10,000 apps in the App Store. You gotta. I want to be the first to have an app that can, you know, act as a level or a flashlight. Okay, cool, Cool. And it was this gold rush. But you know what? It's now been 18 years since then. 18 years. And the level of opportunity to launch an app in the App Store is still insanely high. Like, you can still build an app and launch an app. Now you can do it with AI. There's millions of apps in the App Store and it's more competitive, but lots of people are still winning every single day.

So it's like the charts change every single week, too.

Yes. I love the framework that, like, you're never too late for anything. Like, we're. We're still early for e commerce. We're still early for Amazon. We're still early for bitcoin for launching apps in the app store. Like you only know that you were late once it's over. You know, like if bitcoin ended today or tomorrow, then you would literally be late if you bought bitcoin today. But if it's going to be around for a hundred years, you're very early to buy bitcoin. Right. E commerce is like Shopify has been around for 15 years but like 16 cents of every dollar are spent online. You're still early.

I also think that on that too, it's, you feel late to the party but you realize that like the place at which the party has changed a little bit. That's really what you're saying too. Like there's the element of like. Right. Like e commerce is still growing and like eventually when it eclipse 51 cents of the dollar for every dollar spent on transactional commerce, then you can be like, okay, maybe we're not in the first innings anymore or whatever. But even today we're very much still in the first innings. I think as far as, as far as like starting new companies, if you're thinking like there are already 500,000, there's nowhere near that many. There are already 10,000 roofing companies in the United States here today. I'm too late to that. All the good roofing companies are already built and in the market. Like you're right that, that like supply and demand for roofing companies is probably somewhat equal right now. And like you coming into the market in a new market, you'll probably drive pricing down very, very marginally. But where you're probably wrong is that about every roofing company on the planet uses a paper ledger, isn't willing to do quotes over the phone, they want to see the property first and don't know how to use Google Maps measuring. Probably aren't willing to like, you know, use AI to search up county records and understand what the last roof was built based on a permit poll. Or also probably aren't willing to like use AI from an assistant. So they paid a $75,000 a year assistant and you can use somebody else. Right. So like are you late to a roofing company? Yeah. Can you still compete because you are early to the modern day roofing company version. Absolutely. And I feel like that's, that's kind of like the other way to look at all of that.

Yeah. And I would even take it a step further and say let's say we're late to roofing late as compared to what? So let's Say you do want to start a roofing company. Okay. I'm going to take 30 roofing contractors in my area, 30 phone numbers, and then let's just pick a tangential industry. Let's do landscaping, and then let's do pool installers. That's 90 phone numbers. I'm going to call all 90 of them. Okay. Five people answered the phone. And roofing, 23 people answered in the other two. Okay. Like, we're late on all three of those. But it really seems like the supply and demand imbalance is in my favor if I'm launching a roofing business. Cause they're not even answering, which tells me either they suck or they're so busy they don't need to answer their phone. Right. So it's like late as relative to what is is also a relevant question to ask.

That's a great point, too. Just in terms of quality. Yeah.

So with the same argument of, you know, millions of apps in the App Store, I see AI agents as something very similar. And we were speaking on your podcast yesterday, and you brought up an idea that gave me another ide. You were asking about the YouTube play buttons and the Shopify buttons. Right. And so it's like, let's say, just like we're still launching apps in the App Store, we're going to be launching and selling agents in 20 years with different random, very specified use cases. Okay. There's millions of options. So as one random idea like this is an agent that probably won't get built for five years that I'm about to say. But. But it could work today. Okay. And maybe this will put it out into the atmosphere and it'll get built tomorrow because someone heard this. But let's say you had an agent and all the tech is available to build this today. Well, let me back up. Would you agree, Connor, that it's not too late to start a YouTube channel and it's not too late to start a Shopify store?

Completely agree.

That's still great opportunities. Okay. So those are represented to put my.

Money where my mouth is. Doing both additional ones doable. So. Yeah, so. So very, very much so. Agreed.

Well, and that carries more weight coming from you because you've had a Shopify store for years, and a lot of times when you're in that industry, you're biased and you're like, oh, it's saturated. Everyone's doing it because it's proximity bias. Right. But for you to say the opposite carries even more weight.

So.

So here's.

Yeah, I'm literally starting A new E Commerce brand this year and maybe talk about that a little later.

I don't even know that.

Yeah, we can chat about it a little bit more. Yeah, I've got some interesting things in play. The thing that I would say is maybe too late is just like late in drop shipping from Alibaba to Shopify. Like this is, this is where it's like the game has changed. Like, like if you're, if you're saying from E commerce standpoint, like I don't know, do people not want to buy things anymore? Oh, they still want to buy things. Okay, cool, you're still good then like you're, you're not too late. Whereas I think the knockoff stuff, like if you're competing on low margin products back in 2012, you could make a freaking killing selling next to anything and the product can be bad and you could still make money here. I will say that I think the types of products that you can do well with in E Commerce has changed a decent amount. But it's not too late to sell things on a Shopify website.

Completely agree. I look at dropshipping within the framework of the. The more effective a growth hack, the shorter its lifespan. Right. Call dropshipping an arbitrage growth hack. And it was extremely effective for a while but then it got people caught onto it and then the CPMs on the ads went way up and you can't drop ship without paid ads. Right. And your margins aren't great because you don't own the thing. You're dropping it, shipping it from some other place. And so that got oversaturated and it's hard to make that work. Totally agree.

I think the just for some little game. For people who are listening to this right now, the three categories I'm most bullish on when it comes to E commerce in general for 2025 are anything premium and luxury. I really would not sell a low priced product today. The idea of, I mean any tariffs are getting implemented today. So like that might change from the Chinese Temu dropship competitors but, but like for, for how long? Nobody knows. So it'd be anything luxury where it's like, all right, I'm paying for the brand. Somebody might have the same exact widget. But I like your branding better and I believe in your mission and so that's why I'm buying it. That's the first one. Second would be anything custom. Really hard to compete with that from a retail standpoint. And I also think that it drops the reverse logistics returns substantially and then the last one would be anything food and beverage. Same thing. Very like. There are return rates for sure, much lower than the average apparel category. And it's consumable and it's something that isn't going to get competed with by Chinese competitors. Those are the three categories that I'm most bullish about.

And I'll add an asterisk to your third category. Having owned a company called Send Eats, where that's all we did was ship food for other Shopify brands, you want it to be a food product that is like preferably under 16 ounces so you could ship it on USPS first class, preferably doesn't perish for a long time. Preferably not refrigerated, preferably has a higher price point so it justifies the shipping cost. That's what I would. But if all those are true, absolutely.

I agree. That's the easy. I think you've done this more than I have, so push back where I'm wrong here, Billy. What you just described is the easiest way to do it to make sure that you're not having the most returns. I think that's also the most competitive in that category because if you look at a company like Butcherbox, they exploded to like an $800 million a year brand bootstrapped in five years, which is actually. I said those numbers a lot. It sounds way too high.

It's a lot.

It was a. It is a nine figure brand. I don't know if it's 800 million, but it is nine figures for sure. And you have to refrigerate this stuff with dry ice. So I do think that that could be a competitive advantage.

It works though because the price point. The price point is higher. Right? Like because we used to ship like meat pies and ice cream. And ice cream Spider. Like it's just the unit economics do not make sense. Like we would take on customers household name brands that you have heard of that you see in the grocery store out and they're shipping like 50 orders a month because it doesn't make sense financially.

No, I agree with all of that.

Dude. All right. I haven't even gotten to the agent idea, so.

Oh, sorry, sorry. Yeah, go.

No, it's good you brought up the. What did you ask about YouTube plaques and the Shopify.

Well, I really. Yesterday we were talking about the company Send A friend has a 1 million order plaque. And I was like, that's cool. Anytime, Anytime I see that somebody has a 1 million order Shopify plaque, I ask myself what can I do to get that, like, I have one of those counters in my decor for my living room that shows like, total number of orders and updates once a day. And girlfriend hates it, but it stays. And so that's, that is my, my little, like, trophy that I've got currently.

Yeah. So imagine an agent. Okay, so I asked you the question. Is it too late to launch a Shopify store or a YouTube channel? No. Okay, so let's say you want to know what to launch. You're one of those many people that want to launch a Shopify store or YouTube channel. You have an agent that goes out there and it surfs all of social media, Reddit, Twitter, everything. And anytime someone posts a picture and it just uses image recognition, image recognition software, very basic AI stuff. Anytime someone posts a picture of their new plaque, either Shopify or YouTube, it triggers like another agent that goes and does research. It's like, okay, this channel, this YouTube channel called Joe's Tech Channel, it's going to go do research. How long has it been around? Wow, three months. Okay, how many videos does it put out? How many shorts? How many of those subscribers? Okay, how many views per short? How many views per long? And it just has all this math and then it just delivers a report in your inbox that says, this is how to reverse engineer Joe's YouTube channel. Here's exactly what he did. His minutes are. His videos are three and a half minutes long. He leads with a hook. He has background music that's trending, yada yada. It's like, if you want to win at YouTube and you don't mind being in the tech niche, then you need to copy what Joe did. He just put up his plaque. He got a hundred thousand subscribers in three months, right? Same thing with Shopify. What do you think?

I love it.

So video is cool, but you know what's better? Long form audio via podcast and my newsletter, tkopod.com go there to subscribe for free to my newsletter. It's one email a week, very tactical. And then go to my audio podcast, three episodes a week. Stuff like this, you're gonna love it. All free, no sleazy sales pitch. Tkopod.com I think I'm trying to like.

Slap a category on this as far as, like, how can you, like, what's the commercial value? How do you do this for other things, whatever. And what it got me thinking of was this is going to unlock so many more lead gen activity signals. So here's what I mean by that. There are a couple different. I mean, not even a couple There are a ton of different lead gen services where you can download as many leads as you want. Free leads, whatever. Not free leads, paid leads. And one of the top high intent signals that happens with a company when like every vendor on the planet hits them up is they raised a round of funding.

Uh huh.

Yep. Chris Kerner LLC just closed a $50 million Series A. Fantastic. Chris, I'm Connor. Let me tell you something like that's every single company on the planet. And that's because all of the fundraising announcements are public. So now the question becomes what's all of the really hard to get data? The data that's like it doesn't go across the news wire and therefore they're not a relevant lead. But like if I knew every single YouTube channel that as soon as they crossed the a hundred thousand dollars subscriber mark, they're probably a good customer for me. And like, you know, right now YouTube, it has. And I'm sure you can probably scrape every channel that has a hundred thousand subscribers. But what are the intangible things that you can't? And so is that like the example that comes to mind? I don't think you can necessarily scrape Instagram, but maybe I'm so wrong on that would be like every time that a diamond ring is posted and somebody gets engaged. Great. Now I am the not or whatever the company is that like helps plan weddings and it's you suddenly, it's suddenly great. We scraped Instagram. You know, Kelly and John are getting married. All right, jump over. What do we think? Their emails are great. We got their emails. Now we're uploading it in a CRM and we're automatically reaching out to them with a cold email saying, hey, saw that you might be getting married. Is there any chance that you would be looking for us for a wedding planner? Like. And it would be a lot more like a visual based stuff that is not as easily trackable.

Yeah.

But can get you a ton of information.

Dude. It's here. I did this when I recorded my screen. When I had these 10 operators running at the same time. The 10th prompt was go to my Instagram account because it's trained to what I want. Click on my for you page. Start watching reels. If you find a reel that's about a business idea that has over 500,000 views. Bookmark it, watch it. And it did it. And here's what I did. I went to Instagram, I downloaded one of those reels and it was. I specifically picked a reel that had no audio. It had background Music. But no one was saying anything. It was a video of some home service workers resurfacing a pool. That's exactly what it was. It was 15 seconds long. I downloaded it to my computer. I named it something generic. I named it Chat GPT Video because I didn't want it to know anything about this video. And I uploaded it to chat GPT, not the operator, but to chat GPT 4.0. And I said, what is happening in this video? And it was like, well, you know, would you like us to do this? I was like, yes. And it was like, okay, we can analyze frames per second. We can tell. We can use image recognition technology. Do you want me to do this? Yes. Okay. Well, we can't really. Here are five things happening in this video. And it listed out one through five, and they were all blank. And I was like, there's nothing there. What's happening in this video? And it was like, well, we see on the screen it says, customer wanted a new pool. Which was true, but that was. That's all it could recognize. It couldn't actually tell me. A guy had a thing and he had black tar, and he was spreading it. It couldn't tell me what was happening. But then when I went and watched reels inside of Operator, I said, what. What's happening in this video? And it told me. And then I said, how did you know that? What? I'm like, did you use the transcript? And it was like, no. I just watched it frame by frame. And that was what I was thinking. I'm like, if a video is just a bunch of frames and it can understand what's in a picture, why can't it just understand a bunch of pictures stitched together? And so Operator did watch a reel for me, and it literally. And it said, all right, I bookmarked it. And then I opened up Instagram on my phone, and it wasn't bookmarked. I'm like, no, you didn't. You need to go into bookmarks. And there's one called All Posts.

If you.

And you need to save it to the one called All Posts. And then it did. And it actually did it for me. So now it's like, I can go to sleep if I want to do research for reels to play in the background. I can just wake up to a bunch of bookmarks. And I'm paying my assistant in the Philippines to do that today.

That's cool. Not for your assistant in the Philippines, but that's cool.

It is cool for her because she would rather be editing Videos. And that means she can edit a lot more videos, you know, and you.

Have way more output than you have. Then you beat everyone else. Yes, completely agree.

So what you're saying, like we could put that together today, Find a diamond ring. Okay. Go cross reference them with.

Yeah, here's me trying to put my smart cap on and think through, like how this, how this plays out, right? So we're talking about the idea of distribution being a leverage or a larger moat of big competitive advantage. And that's what everyone's gonna be chasing. What's the number? I mean, I'll put the ball in your court and I'm sure you'll answer it. Spot on. What's the number one way to get distribution today?

Content. Social media.

Social media. I was gonna say meta. I was gonna say Facebook ads. Yeah, Facebook ads.

Yeah.

Like it's at least the easiest, right? You raise a big round.

You don't need an audience. Anyone can create an account.

Yeah, right. Facebook gets 50% of every VC backed dollar. Right. Because it's all funneling back there. Buy meta stock. Not financial advice. But I would say the question then becomes if Facebook is getting overrun, like, let's play it out five years. Facebook gets overrun with a ton of content because distribution is all that matters. And then therefore people's willingness to click and engage with an ad begins to drop because everyone has the best ad and therefore it's all not working as well anymore. You know, what's the next lever and is it probably like, does nobody really does biz dev for consumer products because it's not profitable. You can't hire a sales and a BDR team to hand reach out to everyone. And it's like not the way that the buying cycle works typically unless it's like an ultra, ultra luxury product. But like, will that change? Like, it'll be interesting to think with the increase in demand from an advertiser side on Facebook and like the messiness and the busyness and of all of it and the decrease in the cost to go direct to the consumer via email as a channel or via phone calls or text messages, messages as a channel. Will, you know, marketing and sales channels for consumer goods change? I think that's my, that's my one smart maybe, maybe illogical thought of the day. But it, it kind of raises the question.

I think it's just going to make humans, ironically, it's going to make humans more important than ever. And having a community and a loyal following as an actual human is going to be more important than ever. Because right now there's a ton of core sellers. And that's another framework is like, what are the core sellers doing? What are the core sellers selling? And like, that's kind of. That's indicative of like the broader economy. Right? Or, or it's indicative of first principles. Right? And today there are countless course sellers selling faceless YouTube channel courses. It's faceless literally was like, in no one's vernacular, two years ago, and now it's all about faceless. Why? Because we want to have our cake and eat it too. We all want to be content creators and in the media, and we all want to have a YouTube channel, but we don't want to show our face because I, I just want to. I don't, I don't want to be out there like that. Okay, well, you're going to pay a price for that. Like, you're going to pay a price because any AI in the world can create a faceless YouTube channel that has perfect editing viral breaking news faster than any human could ever do it. Okay, so if you want, if you want to actually be real, then you need to be willing to actually put your real face in front of a camera.

I agree.

End of story.

Well, so here's. I agree then. I also had a completely different debate with my girlfriend two nights ago, arguing the other side of that coin and so on what you just said. I do think that the human side of things is going to be increasingly important, but the debate I had with my girlfriend the other night was, no, that doesn't matter at all. All that actually matters is how entertaining it can be. And the most entertaining thing is going to win. And my final point in the argument where I feel like I won it was, look at Avatar. It's like the highest freaking grossing movie of all time, or one of them. And it's like, entirely CGI based, but it's because, like, it's a cinematography masterpiece. And, like, I don't know. I really don't know where, like, is every movie 20 years from now going to be with actors and actresses that don't aren't real? Like, she loves that. She loves seeing, like, isn't that guy in some other movie? But also, like, at some point, does it matter, like, if the movie's better, the movie has a better plot line, better story arc, like, whatever, and everyone in it happens to be fake. Does that matter?

I. I look at it as no different, like, than like an acoustic guitar versus an electric guitar or EDM versus acoustic music. Like, I don't think it's like styles, it's just, they just coexist, you know, it's, it's.

Yeah, I guess, I guess it's a good point. Like in the same way that cartoons are a thing today and animated movies are a thing today, but that doesn't mean that I'm not going to still watch the same, you know, realistic movie, you know, fast and furious 11 when it comes out.

Or it's kind of like even processed foods. You know, it's like the, the pendulum swung. It's like, wow, we can manufacture these foods so cheaply. There's no trade offs. And then it's like, oh, we're all getting cancer and fat. Turns out there is a trade off. I just want to eat a banana picked off the banana tree myself. Right?

Yeah.

So it's like we probably will swing in that direction where it's like, this is amazing. We don't need to, we don't need a hundred million dollar set in Hollywood. We can do it anywhere. One guy on a MacBook can make a feature film that makes a billion dollars in the, in movie theaters. And then it's going to be like, eh, this isn't very authentic. I kind of like how it was. And it's not like we're going to go away from that. They'll just like coexist.

That's a good point. Yeah. All right, that solves my argument there.

I don't know, I could be wrong.

But is this going to be like, are we expecting an AI agent launch from you next year? Are you just, you know, implementing them throughout your entire company? Like final, final notes here for this episode? What are you thinking?

Dude, I want to launch so many things because there's just so much to launch. Like I would love to take all of my content and make a business partner app where like I could be your business partner for $5 a month. Right. In an iPhone app. And you could just. Chris, what would you do here? Chris, here's my background. What would you start based on what? You know, it's like a zero equity, $5 a month business partner. Right? That's one idea. There's, there's a zillion ideas and there's only so much time. So I need to build some agents that can launch businesses for me so I can just launch whatever I want whenever I.

So interesting, interesting end question that I was thinking earlier in this episode and I want to get your take on it because I feel like you and I think about companies relatively in the same way. I think I Think you've actually kind of persuaded me a little bit more to look at them more as like, you know, you build them up, you have fun with them, you cash flow them and like if they go away, they go away type of thing. Like don't, don't try to hold onto something forever if it's not meant to be in a way. Still, you know, you have companies that you've had for five plus years or even longer if I'm not familiar with them. So I guess my question for you is right now, almost every business that I start, I start with two reasons in mind. One, want to make money. Two, it is a challenge to solve. But I don't necessarily love the game of solving a challenge. But I don't necessarily care always about the challenge that I'm solving. You know, almost every company that we have today, I enjoy problem solving but like so indifferent about the industries and don't necessarily care about them a ton. Whereas like somebody who is, you know, passionate sushi maker and they love sushi and they love the culture, like that's, that's the sport for them. My question here is, do you think there will ever be a point? I'm sorry, maybe before the question. But I will also see, you know, in this Elon Musk era, super inspiring stuff of like their stuff's changing the world and it looks really hard and I bet it doesn't make money for the first 10 years and you gotta raise a bunch of cash and it's like big hairy, audacious goal master vision, but it's really cool too. Do you ever get jealous of those guys and do you ever think that you'll want to flip the scale to doing stuff like that after a certain dollar follower amount, whatever, or do you think that. No, to you it's like I love the game of like business, like running companies and it doesn't have to change the world. From a tech standpoint.

That's an amazing question. Yes. With, with one caveat. Like I'm. This is going to sound like the laziest thing I've ever said, but I would do that. But I don't want it to be like, I don't want it to be hard. Does that make sense? Like everything Elon Musk has done has been so hard and he's changing the world and good for him. But I, I don't think you have to do. It's funny. Like I want my hard things to be intentional and deliberate. Like I'm gonna go run an ultra marathon. Okay. But I Don't want to, like, try to change the world in a way that's, like. That reduces my quality of life and makes me an unhappy person at the end of the day. Maybe that's a better way of putting it. Is not hard, but, like, makes me unhappy.

And I don't.

I'm doing one thing that I would like to do is, like, you know, I donated my kidney to a stranger.

Yes.

And I'm like, I'm a huge believer that more people should do that. That there's been zero downside to my life. My wife did it. There's been zero downside. We don't even remember it happened. There's no pills, there's no dietary changes, and lives are saved. You know, so, like, I would love to have, like, a nonprofit that petitions the government to allow people to be paid to donate their kidneys. Cause other countries do that. And, like, it's a game changer. Like, people. People are afraid of it. Cause they think it'll be abused and gamblers and addicts will. They'll just use it to make money and it will exploit poor people. But there are a million guardrails you can put in place. And there's precedent of it happening where that's not the case and it's a net win. And, like, you go from 5,000 people dying a year from kidney disease to zero. Like, that's possible. So I would love to have something that did that. Like, I'd enjoy it. I wouldn't make money from it. And it would change the world. So. Yes.

But.

But I don't want to start, like, a rocket company because that doesn't sound fun.

Yeah. So. Okay. So I think. I think your answer back makes sense where you don't have to invent something that doesn't exist. Like, maybe, you know, you're. You're causing a lot of social change and social good for humanity. And it's going to be hard to do that. So, like, just to, you know, play that. But, like, there's a path, you know, how to do it, versus, like, I need to configure a new form of technology that does not exist yet. And, like, let's spend five years in a lab just doing that. And that's. That sounds really daunting. Whereas yours is more. All right, I know who we have to talk to. I know that the incentives that we have to put in place, and it's not going to be easy, but there's a playbook, and we're going to follow that playbook.

Yep. Because what you just described before, that does not sound fun.

You know, like, I think it's. It sounds. I get jealous of it a little bit from the headline standpoint, where I'm like, oh, that sounds really the ego. But I do agree with you that it's the equivalent of what was the one guy that just came out this week? I think he was working on a supersonic jet for the last eight years, nine years, whatever. And they just launched it this week. But I've never heard of him for eight or nine years. And maybe all of his friends and family, he was heads down doing this thing. And now that he's launched it, I'm like, oh, jealous of that. That sounds fun. But if I had known about the journey the entire time, I probably would have thought, ooh, that sounds really hard. And, like, good luck with that. I'm going to go sell my knickknacks, you know, online and. And make money today.

Yeah, there's. There's people out there doing awesome stuff that I. I'm not willing to do.

Yeah. But happy that they're out there.

Yeah, we need them. Cool, man. All right. Cool. Love it. All right, what'd you think? Please share it with a friend, and we'll see you next time on the Kerner Office.