Hey, guys.
So, I've noticed something recently.
There are a lot of myths and misconceptions that people are having around AliExpress Dropshipping.
These myths and misconceptions, like fears around taxes and import duties and things
like this, are stopping people from starting their stores, which is a real shame because
these myths, well, they're exactly that.
They are myths.
They are not true.
In this video, I'm going to address what these stupid myths are and why they're not true,
so that you can stop letting them holding you back from starting your own dropshipping
business.
Myth one: Don't I need to hide the fact that the package comes from China?
I'm just gonna straight out answer this now.
No, no you don't, and even if you wanted to, you can't hide the fact that it's coming from
China.
And, no, that is not a problem.
One of the most popular videos on this channel is a video titled "How to blind dropship from
AliExpress," and of course in that video, I teach people how to blindly dropship.
Blindly dropshipping is when an AliExpress supplier sends out a package to a customer,
and they don't include any marketing, so that the customer doesn't know that you've bought
it from another store.
It also means that you've asked your AliExpress supplier to ship out the item to the customer
without including any invoices in it, which means that the customer does not know what
you originally paid for it.
But a lot of people watch that video and have these comments like, "Oh, but China, the package
says it comes from China."
China, China, China, "You promised to teach us how to blindly dropship, but look, the
package comes from China!"
China, China, China.
Look, here's the thing, in that video I showed you how to blindly dropship, as in get the
customer to send out the package without any identifying marketing, or any invoices, but
I never promised to teach you to hide the fact that it was coming from China because
you simply can't do that.
They have to put that on the package for shipping and customs requirements.
But you don't want to hide that anyway.
Why?
Well, it's simple, when you're doing AliExpress Dropshipping, even if you're using ePacket
shipping, which we strongly recommend that you do, the shipping times are still quite
long.
Yes, these shipping times are still quite long, so you want to give the customer the
shipping tracking code and encourage them to use it to give them the peace of mind during
the shipping process.
So what happens when the customer uses that tracking code?
Well, funnily enough, they're very quickly going to discover that the package is coming
from China.
And, honestly, most customers aren't stupid.
The fact that you've got such long shipping times means that a lot of them are gonna figure
out that the package is probably coming Asia anyway.
Here's my advice to you, firstly, stop worrying about the customer discovering that the package
is coming from China.
It's true that it is a downside that it's coming from China, most customers would prefer
to see it coming from a western country like the United States.
So, don't draw attention to it in your product listing, but don't feel embarrassed about
it or feel like you have to hide it.
Most customers are not going to care that it's coming from China.
And even if you do have one that does mind, tell them that the item that they bought has
been in super high demand, and so because of that, the shipping times are two to four
weeks because of limited supply, and so to expedite the process of the customer getting
their item faster, you were getting the item shipped directly to them.
Everyone knows that the majority of items are manufactured in China anyway.
So with the right customer support response, you can turn what was a complaint into something
that makes it look like that you are doing them a favor.
Myth two: What about South Dakota versus Wayfair?
All right, so for those of you that don't know, South Dakota versus Wayfair was a very
important USA Supreme Court case for dropshippers that happened in June 2018.
I have received a flood of comments from people who are understandably concerned about the
case and would like to know how it's going to affect them.
The issue of the court case was this.
Can South Dakota require that people collect and pay sales tax on orders made within the
state even if they don't live there?
You see, in the USA, it's not the federal government that controls sales taxes.
Each individual state has their own laws.
So when you make a sale within that state, you are required to collect and pay sales
tax on that order.
But, in the past, you were only required to collect and pay sales taxes on orders made
within that state if you had a sufficiently large physical presence in it.
This is called having nexus.
So for most people, they only had nexus or a sufficiently large physical presence within
a state if they lived in it.
And for people that lived outside the United States, it usually means that they didn't
have nexus in any state.
However, South Dakota wanted to change this law.
In 2016, they created a law that required all online retailers who either did over $100,000
in sales or 200 plus transactions in the state of South Dakota to collect and pay sales tax
even if they didn't have a physical presence.
One affected retailer, Wayfair, a furniture store, took South Dakota to court over it,
and this battle was fought all the way up to the Supreme Court.
Well, in a narrow five to four victory, South Dakota won, which means that they Supreme
Court set a new precedent that it was now legal for states to set new laws requiring
large out of state sellers to have to collect and pay sales tax.
So what does this mean for dropshippers who want to sell to USA citizens?
Well, yes, the laws have definitely changed, but keep in mind for this to be applicable
in a state, they do have to pass a law that will override the old one.
Currently, the only state I know that has done this is South Dakota.
Something else though that I want to stress here, is that for 99% of my viewers, this
law is not going to affect them.
Why?
Well, because the precedent was set that states can require large retailers to collect and
pay sales tax, not small retailers.
If states want to significantly lower the threshold of a $100,000 in sales or 200 transactions
in their state, then there will need to be a new court case.
So, yes, if you were doing these sorts of sales numbers in a single state, like say
the state of New York, then I would start preparing to be collecting and paying sales
tax in the near future.
Otherwise, I wouldn't worry about it.
Myth three: Won't I need to pay tariffs or income duties?
So for those of you that don't know, import duties and tariffs are fees that countries
charge you for importing goods into the country.
Now this happens for two reasons.
Firstly, because you're importing a good into your country it means that when you purchased
it, it's unlikely that you paid sales tax on it.
And so sometimes countries charge you sales tax on the item that you bought so that you
can't dodge this tax.
Secondly, sometimes countries put tariffs or import duties on items to discourage you
from importing them.
This might be to stifle competition or because of the fact that they hurt the environment.
A lot of people are concerned about this with dropshipping.
Will they have to pay tariffs or import duties on the items that customers buy from them?
Well, the answer to this is no.
Firstly, tariffs and import duties get charged to the person who has their address on the
package, so it wouldn't be you that got this, it would be your customer who got charged
this.
But, it is extremely unlikely that they would get charged at all because of the fact that
countries usually have a very high threshold on what the value of the package must be before
they apply any import duties or tariffs.
For example, if you follow the advice on this channel, and as a beginning focus on dropshipping
to the USA, then you'll never encounter this problem.
Their threshold is $800.
There are no customers that are gonna purchase so many items from you that the value of their
package is going to go above $800.
In fact, the only country that I can think of off the top of my head that has a low threshold
is Canada.
Their threshold is ridiculously low, it's at $20, which is one reason why I try to avoid
selling to Canada.
Myth four: But don't I need to register a business to dropship?
Now, I've answered this before, but there's still quite a lot of confusion about it, so
I will answer it in greater detail.
Many people are scared and worried that they can't open a dropshipping store because they
haven't registered a business or a company.
Do they need to do this?
How do they structure it?
The answer is that for the vast, vast majority of you, you don't need to do anything, you
can start right now.
You can't start a store right now, and start making money right now without any paperwork,
without having to register anything, without having to structure anything.
You can get started right now, and it's perfectly legal for you to do so.
That is because most jurisdictions in the world allow you to set up what is called an
unlicensed sole proprietorship, which is otherwise known as being a sole trader.
Basically, in most places in the world, if you just start selling goods or services without
registering a company, you are by default a sole proprietor, which means that you are
your business.
There is no legal distinction between you and your business.
No paperwork, no registering, nothing, the very act of you spontaneously selling goods
or services means that you are now a sole proprietor unless you choose to register as
a company.
You will still have to pay your taxes, and depending on your local laws, you may still
have to apply for a special tax ID when tax time rolls around.
But usually, you don't need to do that at the creation of your business, that can come
later.
Now here is something that I need to stress, while most places in the world will let you
spontaneously become a sole proprietor, there is a chance that your local state or country
doesn't.
When people come to me and say, "Sarah, do I need to register a business?"
I really honestly find this a frustrating question.
Firstly, I have no idea where they live, and each jurisdiction in the world has their own
laws, but even if I did know where they live, why would I know what their local laws are?
I live in New Zealand, I know our local laws.
I don't know yours, so please do your research and confirm that you can start an unlicensed
sole proprietorship in your local state or country.
Luckily, for the vast majority of you, you are going to find out that you can.
In the future, as your business grows, you are probably going to want to form a company
because of the fact that there are lots of benefits and bonuses to doing so.
But for most of you, you don't need to go through that hassle right now.
You can start selling and start making money today.
Myth five: Won't people track the store based on the address?
So this is actually related to the first misconception that we discussed at the start of the video.
When a supplier ships an item to you, they need to put their address on the package.
Many people are concerned that customers will google that address and find the original
supplier, and thus find the AliExpress store and the original price that you paid for the
item.
Well, firstly, I do have to know that this is a little bit paranoid.
Who would take the time to go and google the address on the package?
Why would they want to?
Secondly, even if customers did google the address on the package, they usually don't
find anything at all courtesy of China and Google not getting along well together.
They certainly won't find your AliExpress store.
AliExpress stores list very little information on their store pages about their origins,
and they definitely don't list their addresses.
So don't worry your customer isn't going to go and google the address on the package and
then find the AliExpress supplier and then find the original price that you paid for
it.
Myth six: Won't the USA/China trade war kill dropshipping?
Yes, while I may get frustrated that people are worried that their customers are going
to google the addresses on the packages, I definitely don't get frustrated by this question.
This is a good question.
Throughout 2018, the USA and China have definitely been involved in a quite bitter trade dispute.
I like to keep my political opinions neutral on this channel, but you can feel free to
sound off on them in the comment section below.
Basically, Donald Trump's White House has been making moves to increase the tariffs
on Chinese imports to discourage people from importing from China.
On March 22 of this year, 2018, Donald Trump signed a memorandum stating his intention
to have a $50 billion tariff imposed on selected Chinese goods.
This would put tariffs up to a huge 25%.
Well, firstly, this hasn't actually happened yet.
We don't even know if the White House would pass such a bill, or if it would even be upheld
in court because this would be a huge thing to do.
Let's say it does pass, this still won't impact dropshippers.
Why?
Well because as we discussed earlier on in this video, items that we are dropshipping
and importing in the USA market are below the threshold for tariffs, they're below $800.
There have been no discussions from the Trump White House about lowering this, but even
if it was lowered, I doubt it would go beyond it's initial threshold of $200.
Do I think that Amazon FBA private labelers need to be watching the situation closely?
Yes, yes I do.
Do I think that dropshippers need to be worried about it though?
No, no I don't.
Myth seven: Wait, Oberlo doesn't buy the items for me?
A lot of people are confused and don't understand how Oberlo the app that turns Shopify stores
into semi-automated AliExpress Dropshipping stores works.
Some people think that if you've set up a Shopify store, that when a customer comes
and buys an item from you, then that's it.
You don't need to do anything.
Oberlo will now order the item for you, and get it shipped out to the customer.
Now, that would be nice and super convenient if it did do that, but unfortunately for many
reasons, it does not.
Now let me show you what it actually does.
When a customer orders a product for you, it'll show up in your Oberlo app on the orders
page.
Next to the order you want to fulfill, click the 'order product' button.
When you do this, if you set up Oberlo right, it'll go to AliExpress and add the item to
your shopping cart.
It'll do this automatically without you even having to touch your mouse or keyboard.
It's kind of like magic.
It'll even add in the customers address for you, plus it'll add a custom message if you
asked it to, and select your default shipping method.
When it's done doing that, all you need to do is click the 'confirm and pay' button and
you are done.
So, yes, Oberlo semi-automates the process for you by taking control of your screen and
within seconds preparing the item to be ordered.
But you still need to click the 'order product' button and you still need to click the 'confirm
and pay' button on AliExpress.
Setting up Oberlo is actually really easy.
To see how you should configure its settings just check out our tutorial which shows you
how to create an AliExpress Dropshipping store with Shopify and Oberlo.
Thanks for watching this.
If you learned something from this video, then I know that you will learn tons from
all of our videos.
So be sure to subscribe to Wholesale Ted and click that little notification bar next to
the subscribe button, so that you don't miss out on any of our videos.
Did you know that we here at Wholesale Ted have a premium step-by-step video training
course called the Dropship Club?
It teaches you how to create a profitable dropshipping store from start to finish.
To join that, simply click on the link in the video description.
I've got one last freebie that I'd like to give you.
Here at Wholesale Ted we have a free e-book that teaches you the six steps that six-figure
dropshipping stores follow to earn over $10,000 every month.
To get that e-book for yourself, simply click on the link in the video description below.
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