Mole's Ramblings

A place for me to express my thoughts about technology

Why Dropshipping Can Be Very Dangerous Part 2 — April 9, 2017

Why Dropshipping Can Be Very Dangerous Part 2

Welcome to Part 2! Let’s jump straight back in.

So eBay charges a 9.9% fee for a listing that sells, and PayPal charges 2.6% + 0.30 for each transaction. These numbers don’t seem too big at a glance, but when you’re working in the thousands, like with this laptop they do start to add up.

Chinavasion also charges postage, which isn’t actually disclosed to you until after you click checkout. Then staring you in the face is the minimum of $48.60 “Priority Line” (for the laptop at least), and the estimated time is 7-20 days! This also adds a large chunk onto the cost, and if you weren’t expecting it then it is quite likely to push you (possibly further) into debt.

Now, this is the reason it could be “further” into debt because Chinavasion’s prices are so inflated dropshipping with them can be dodgy. The profit you can make can be calculated like so:

  • eBay listing price (let’s use Chinavasion’s retail price for this): $1224.83 (P)
  • What it cost us to buy: $1103.44 (C)
  • Shipping(!): $48.60 (S)

Now for the formulas (warning these will be messy):

  • Subtract the eBay fee from the profit: P-(P*0.099) = X
  • Subtract the PayPal fee from the current total: X-((X*0.026)+0.3)) = Y
  • Finally, Calculate the final profit: Y-(C+S)=Z

To put these formulas into practice I have created a spreadsheet.

https://docs.google.com/spreadsheets/d/1tcdxEedCB88CLtjAc6revG4EsWgVaGY8tBrw3l_E52I/edit?usp=sharing

Feel free to comment and suggest improvements (and point out errors should there be any).

So dropshipping can turn out to be a very expensive accident, if not treated with ample caution and if you do not research it. Hopefully, my posts have helped you in some way and maybe even saved you from possibly losing a lot of money.

Thanks for reading, and please share this.

P.S. A possible Part 3 is in the making

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Why Dropshipping Can Be Very Dangerous —

Why Dropshipping Can Be Very Dangerous

Dropshipping. Described by Wikipedia as a supply chain management method in which the retailer does not keep goods in stock but instead transfers customer orders and shipment details to either the manufacturer, another retailer, or a wholesaler, who then ships the goods directly to the customer.

That essentially just means a shop can sell products without having to buy any stock. Because when a customer buys a product, they pay you, and then you pay the dropshipper, and they send the item directly to the customer.

what_is_dropshipping

This diagram describes it rather well. All credit to SellerBot.com for that picture.

Dropshipping obviously has many advantages, these include:

  • Not having to invest any money in stocking up on items to sell.
  • You can sell a wide range of items because you don’t need to store them anywhere.
  • And being essentially risk-free.

Just to name a few. The main attraction is the risk-free element. Lots of people see this as an option to make a few extra bucks without doing much work.

But Dropshipping has quickly started to become a very bad idea. Earlier in the 2000s dropshipping companies used to charge very cheap prices for their items, but they all eventually went out of business because they were making a loss, so the suppliers started putting up prices to keep themselves in business. Now dropshipping suppliers are only slightly cheaper than buying directly from a retailer (in some cases anyway). The idea itself is good, and if you are very careful and do lots of research you might just succeed. Now I do not know what it’s like in the US (or any other country for that matter) but in Australia, some of the companies who offer dropshipping services have a few sneaky tricks.

Chinavasion, are a “china wholesaler” which means that they sell Chinese products at so-called wholesale prices. These websites often offer bulk buying options at discounted rates. They also sell individual products at “heavily discounted” prices.

Screenshot from 2017-04-09 18-47-58

https://www.chinavasion.com/china/wholesale/Android-Tablets/Windows-Tablet-PC/Xiaomi-Air-13-Laptop/

Let’s look at the listing for this Xiaomi Air 13 laptop, the title includes all the important specs and right up the top is a 5-star rating, but that’s only out of a whole one review, which isn’t a very good one at that.

Screenshot from 2017-04-09 20-26-29

So for the listing, there is a crossed out retail price at the top with the discounted prices below. This format for pricing already makes it seem like a pretty discounted laptop. It’s about 10% off their retail price. But a quick Google search shows how inaccurate that retail price is. The average price (out of 5 different retailers) for the Xiaomi Air 13 is $1,147.94 which is only about $43 more than Chinavasion.

So what’s wrong with that you ask? $43 profit is still pretty good considering you didn’t do any work. There’s the problem. People who want to use dropshipping as just a small side earning thing will probably be using eBay due to its simplicity, and also PayPal because of the payment security so you know you aren’t being scammed. But with both these services come fees and this is where it starts to get expensive.

To be continued in Part 2

 

Why I believe that iCloud is a scam. — March 27, 2017

Why I believe that iCloud is a scam.

iCloud is the flagship cloud storage created by Apple, iCloud was known as MobileMe when it was first released in 2011. Since then it has evolved greatly and now includes many features like Backup and Restore, an email service, a phone tracking service and a password management system just to name a few.

So why do I hold this opinion of it? It sounds like a great service, what exactly is the issue? Well, the issue is with the cost. Initially iCloud is free, but you only get 5GB of storage. Not very long ago 5GB would have been fine, but with both the iPhone 7 and (both) iPad Pros having 256GB storage options the 5GB just stops being feasible, that’s where the cost comes in. Apple charge for increased storage; 50GB is $1.49 a month, then 200GB is $4.49 a month, 1TB is $14.99 a month and 2TB is $29.99 a month. These prices might look reasonable at first glance but when you actually look further into them, then you see the issue.

Now before I start getting technical I should probably explain a few things, first off a Hard Drive is what your files are stored on when you use a computer or laptop. It is basically a slab of metal with a couple of disks inside it (also why it is known as a Hard Disk Drive, or HDD) these disks spin around when in use and a little magnet writes the 1’s and 0’s that make up your files onto it, being mechanical means that it will eventually fail, as moving parts are so prone to do so. A Solid State Drive (or SSD) is a new kind of drive for storing files on, as the name suggests it is “solid” so no moving parts, this makes it naturally less prone to failures. Instead of having a disk, these drives have lots of transistors (which are essentially just switches, they can either be on or off, or 1 or 0) and this stores your data. (If you aren’t following this just skip this section it isn’t too important) This makes these drives much much faster than the hard drives because your files travel at the speed of electricity, and they do not need to wait for a disk to turn.

As Apple (https://goo.gl/euB08S) points out, mechanical hard drives are prone to failure, much more so than solid forms of storage, like the flash memory in an iPad, or an SSD for a PC/Laptop for example. They are suggesting that if you used iCloud to store your files you would be much better off. That might be the case safety wise, but definitely not cost wise.
BackBlaze, who are an online backup company recently ran tests on their mechanical hard drive arrays and concluded that 80% of hard drives live past 4 years, and 50% of hard drives will live past 6 years.

So hard drives aren’t 100% reliable, but neither is cloud storage, there’s always someone who has lost their file in the cloud or had it deleted, and there is always the risk of being hacked.

If we were to, for example say that these hard drives were 1TB in capacity, now a 1TB hard drive for a computer would cost about $65 (Seagate 3.5″ 7200rpm), now this drive has an 80% chance of making it past it’s 4th birthday and only a 50% chance of turning 6, but how likely are you to keep one hard drive 6 years? Especially at the rate technology changes. So chances are your hard drive won’t need to turn 6, and if it doesn’t fail during that time, then money well saved.
If you were to use Apple’s iCloud for 4 or 6 years (1TB space) then it would cost $719.52 and $1079.28 (4 and 6 years respectively), that is a lot of money! Granted it is, in theory, less likely to fail than a hard drive but is it worth the extra cost? With that bonus money left over you can do a couple of things to help the hard drive issue:

The first option is to buy an SSD (remember these from the explanation?). SSDs never used to be seen as sturdier than a hard drive, but with modern SSDs allowing for over a petabyte (1000TB) of writes before failure, this is no longer the case. If you have one of these drives, it also will warn you with a popup long before any actual failures happen. an SSD provides you with super speed for your file storage options, a 7200rpm (which is how fast the disks in a hard drive turn, revolutions per minute) hard drive has an average read/write speed of 100/50, that’s megabytes per second, which isn’t very fast, an expensive SSD can provide 3500/2100 (still megabytes per second!). In an article Apple says the 4GB can hold about 1000 songs, with an SSD like this, you could move almost all of them (about 875) in one second, good luck doing this with cloud storage. Admittedly this SSD (which is a Samsung 960 Pro) can cost anywhere between $444.99 to $1639, and $444.99 gets you only 512GB. If you want 1TB of this it’ll cost you $819. That is still less than the cost for 6 years of 1TB iCloud storage, and only slightly more than the cost for 4 years. Even cheaper SSDs can provide about 500/300 megabytes per second, which is still much faster than a hard drive, or cloud storage. A cheap 1TB SSD will set you back $344.88. The great thing about an SSD is the reduced chance of failure, because of the lack of moving parts there is a lot less to break! The cost of them can be avoided because most of the time you won’t need such a large SSD, and there are many options for creating a “hybrid” drive, which consists of a fast SSD working with a slow hard drive to move your most used and important data to the SSD, this allows for mass storage while having the safety and speed of an SSD.

The second option is you could buy a new drive if you start to see signs of failure, if you get unlucky and lose your drive quickly the cost would be similar (again $65) but in 4 or 6 years, the cost of a 1TB drive will probably be a lot less, you would probably be able to buy a much bigger drive for $65 then! The other option is you could buy an USB hard drive to backup to, JB HiFi will sell you a WD My Digital Passport for $99, these drives will be used less and that will also increase their lifespan!

Yet another option is to buy a cheaper cloud storage to backup important things. Both Dropbox and Google Drive charge a competitive $10 a month for 1TB, this would cost you $480 for 4 years and $720 for 6 years, this means that you can get 6 years on these platforms for the same price as 4 years on iCloud! 2 years is quite a long time if you think about it, and it’s a saving of $300, who doesn’t want an extra $300? In Amazon’s case, it is even cheaper! It costs a measly $60 a year for unlimited files storage! (And if you only want photo storage it is $12 a year for unlimited photos). That adds up to $240 for 4 years and $360 for 6 years! Amazing!

If you have the technical know-how (and let’s be honest, there is probably a wikiHow on it), you could even build yourself a RAID array and have redundancy and improved speed. RAID is a technology that was originally only used by servers. It stands for a Redundant Array of Inexpensive Disks, which basically means lots of drives hooked together. It is becoming increasing popular as more and more desktop PCs can do it without the expensive RAID cards now, RAID 1, 5, 6 and 10 all offer redundancy, redundancy is the ability for your system to tolerate a disk failure while not losing any files (RAID 2, 3, 4 and 7 also offer redundancy but are less used and some are defunct). Another advantage of RAID is that levels 5, 6 and 10 also offer performance increases for every drive added! So the more drives in the array the faster it goes!

This article seems very long, but that is only because of my proposed solutions. Now that you have been presented with all the facts what do you think? For 1TB of iCloud storage, it costs $14.99 a month, which is $719.52 for 4 years and $1079.28 for 6 months. Keeping in mind that a 1TB Hard Drive costs $65 and has an 80% chance of lasting 4 years and a 50% chance of surviving 6 years, there are many better options than iCloud and I think that it is bad that Apple forces it upon their customers.

Please like and share this if you agree 🙂