- In this podcast episode, we go deep into our experiences with outsourcing our high ticket drop shipping stores on Shopify.
- Learn how we finally did it successfully along with our biggest struggles and mistakes.
Join the conversation on YouTube or use the Podcast player BELOW the YouTube player to listen on your browser.
Mentioned People and Books for Outsourcing
- Work Less Make More by James Shramko
- E-Myth by Michael E Gerber
- War of Art by Stephen Pressfield
Outsourcing for High Ticket Drop shipping Stores on Shopify: Build Assets Online
Joe: All right, everyone. Welcome to the Build Assets Online podcast. This is your boy, Joe. I’m here with my brother Mike. And it’s our first episode so of course I want to say thank you to our sponsors, which we don’t have. So our sponsor today is our free course, the Online Assets Playbook where we teach you how to build an online portfolio from zero to worth a million dollars. We kind of give you the blueprint to do it. So today’s topic is outsourcing. Oh, and you can get that buildassetsonline.com/playbook. Sorry about that. So today’s topic is outsourcing and outsourcing is a very important skill and a very important thing to do if you do want to build a portfolio of online assets. So we’re going to get it into our story with how we started outsourcing, our successes, our failures and give you guys, hopefully give you some valuable tips and pointers along the way.
Mike: Also I want to add, you know, outsourcing; it is very important when it comes to being able to scale a portfolio of websites. But it’s also just as important for actually being able to make these websites passive and being able to make these websites work for you. And you know, we’ll get into our story, but a very good book to read on this subject is “Work Less, Make More” by James Schramko who is someone who heavily outsources their day to day business, and they have very strict boundaries as to when they work and what they work on. And we will get into our philosophies and what we particularly do on the day to day basis where we outsource. So yeah, let’s jump right into it. So I think, you know, when we had started drop shipping back in 2015, 2016 rather, we were already doing kindle publishing. So we were familiar with outsourcing in some fashion because we were not writing our own books. We were not editing our own books. We’re not making the covers. And when you’re getting started doing these sort of pay-per-project type things, I think is the easiest way to dip your toes in because there’s no actual long-term commitment to it. You’re just paying someone to do a task and I think that’s the simplest form of outsourcing. And when you’re getting started, that is where you should go because you’ll probably have less things to do on a day to day basis and you just want to be able to hire someone who can do something better than you or just free up time for a tedious task.
Joe: Yeah, that’s correct. So let’s, let’s talk about kind of how we got, so you just mentioned kind of how we got started. So let’s talk a little bit about how we got started outsourcing when it comes to drop shipping. So kindle publishing allowed us to dip our toes, but it is a little bit more complicated when it comes to running an actual store that has transactions and it has customers and it’s not a per project basis. You really need to find, you know, someone that’s dedicated to running it. And when we first started drop shipping, I don’t think that’s something we fully had our head around. It kind of all started that we needed to really take it seriously. We went to a conference. It was the Ecom All-stars Conference, Ezra Firestone was hosting it. And so tell us a little about what happened? I mean you mentioned the book, but we kind of went there thinking one thing and we came out thinking…
Mike: Yeah. I don’t know what we came in thinking, but that was where we were first exposed to James Schramko and he did give a talk that was specifically about outsourcing and I think he glorified it a little bit, made it seem easier than it is. I think outsourcing and hiring is one of the most painful processes to go through because you’re really starting from scratch when you need to be so patient with people and really teach them the ins and outs of your business, especially for drop shipping because there’s no one situation that is exactly the same. Probably, you know, maybe 20% of what you encounter is like a copy paste automated thing you can train someone to do, but 80% of the time it’s going to be a new customer. It’s going to be a situation you may not be used to. But the key is to really find the similarities beneath that and train them on that. But going back to this presentation, you know, James had talked about hiring people in the Philippines and that it really was possible to do this, to hire people in the Philippines to actually run your U.S. or Australian based business. And I think that’s something we were not really exposed to at the time. I don’t think it was something that we had ever thought about, you know, hiring someone in the Philippines to work.
Joe: Yeah I mean, well we definitely heard about it because when I was getting start with Amazon FBA, I had an employee in the Philippines, but to have them – oh that was like researching products for me to sell, like wholesale arbitrage. But not to get too far off topic. I didn’t think that we thought it was possible to do it at a high level. You know I was like maybe we thought it was possible to do it for like one off tasks, but to actually have like a team of people in the Philippines that are doing stuff at a high level for your business, I didn’t think that was possible.
Mike: Yeah. And it wasn’t anything that we didn’t already know necessarily. I think it was just kind of the motivational push that we needed to start hiring someone.
Joe: Yeah. And I think actually, I mean, if you have a business partner or you are doing this by yourself, it’s also really important to identify what you’re good at because actually before we went to that conference, not only we’re we not outsourcing effectively, but we weren’t really utilizing ourselves effectively. Like there was a lot of overlap with tasks that we would do. We were kind of just first getting started. So I mean, I would go on the ad words one day and then Mike would go on the ad words the next day and be like, “Hey, I’m going to change this”. Yeah. So it was kind of silly. So after that we started focusing on not only outsourcing for employees, but specialization for ourselves. And that’s kind of the name of the game when it comes to outsourcing is find what you’re going to specialize in, learn that in and out and then send the rest over to employees.
Mike: Yeah. And so I think the first major thing that we did when we got back from that conference, we were in the process of making a new store. And we were highly motivated. You go to all of these, you know, you listen to all of these talks and you’re just ready to just do some massive action taking. So we had embarked on this big, big store that we were going to make and we had mailed a bunch of suppliers, and we essentially hired someone in the Philippines to start listing all these products for us. And that was I think, really, our introduction into, you know, having someone outsourced long-term. So the way that we found this person, we had just posted on a Facebook group saying, “hey, you know, we’re looking to get some product uploads done.” And we had got connected with this person and yeah, we essentially just had them list a bunch of things and now they, you know, they manage an office in the Philippines. They still list products for us, essentially full time. We have another person who list products for us full time. We had another employee there that did customer service full time. So you know, it kind of snowballs and we’ll circle back to that. But you know, for drop shipping, I think that’s definitely the first place to get started. Have someone upload your products for you because that’s something you can give clear direction to. Especially if you have suppliers that they allow you to copy and paste their images, they allow you to copy and paste their descriptions; that stuff is kind of a no brainer.
Joe: Yeah. And it seems easy when you think about it on the surface like, oh I just going to go in and copy and paste these descriptions. And I used to do a lot of that for our site. And the thing is once you don’t do it, you realize how horrible of a of a time suck it is.
Mike: Yeah. And that’s the thing. Once you actually outsource something and it goes well, then it kind of creates like a permanent barrier in your mind. Like, I’m never doing that again.
Joe: Yeah. Yeah.
Mike: It’s like for us to go in and list manually list products at this point, I don’t think we’d ever do it. We would just put out ads. We would do whatever we had to do to avoid doing that. And yeah, it is a huge time suck and if you want to actually scale your business, if you want to be able to run things at a high level, you can’t be doing product uploads. You have to think of yourself almost as a CEO or you know, maybe a VP.
Joe: Yeah. Because there really is, especially when you’re building a portfolio of only drop shipping stores or drop shipping stores plus other things, there really is so much that you have to be doing that’s research oriented, and really, you’re the only one that can do that research. You could hire someone to do the research, but just for a few examples, finding new suppliers to sell, finding new niches to selling, it’s going to be hard to hire someone with that knowledge that can do that for you, and maybe that’s something that you do when you reach like a really, really, really high level is you have someone scoping out suppliers and niches and calling suppliers. But what I’m trying to get at is, you know, you’d have to be in looking at the business from the highest level and trying to do things that are going to benefit it the most and that are going to have exponential effect.
Mike: Yeah. And no matter who you hire, you’re always going to be in the position of deciding what the next move is going to be.
Mike: So the more your time is freed up, the more moves that you can make. Because at this point, if we want to get something done, chances are we’re not going to be doing 80% of the process.
Joe: Yeah, exactly.
Mike: And it has really allowed us to get a lot of stuff done.
Joe: Yeah, it’s actually kind of crazy how much we have going on at once just because we have so many different people doing different things in our drop shipping stores, but also in the other parts of our business, whether it be the kindle, the content sites; there’s just so many different hands touching different things. And if we were to try and do that all ourselves, it would literally be impossible. And I think that’s what you have to understand is that, even though you might think that you can do at all, at some point it becomes impossible and you can’t. So you may as well not do as much as you can.
Mike: Another great James Schramko quote, “you should always ask yourself, would Richard Branson be doing this?” So I mean, at this point, I think I definitely do some tasks that Richard Branson would not do, but at least that’s something to work towards.
Joe: Yeah. I mean look, it’s not easy.
Mike: It’s not easy, but it’s a climb. And again, at the peak, it’s just you making decisions as to what happens with your business and then you have other people execute it. So another really good book to read on the subject is “the E myth”. I forget who wrote it. I think their last name is Gerber. Maybe the name is Michael Gerber or something.
Joe: What we’ll do is everything we talked about in the podcast, we’ll leave the links in the show notes.
Mike: Yeah. The show notes. So yeah, what the e-myth really talks about is a lot of times we have these online businesses and everyone wants to be a solopreneur and they want to live in these exotic places and just be working for themselves. And that’s what I wanted in the beginning as well. But I think to actually have something that’s really sustainable and there’s, you know, multiple legs to it, very risk-diversified, you need to build out a team. And even if you are a solopreneur and you have one business and it’s making you money, you still have to do work in that business. So the more you can outsource it, the more you can go ahead and just pass off the responsibility to someone if you wanted to take a month off. So moving on in our story, we had finally decided after we’d got this big store up and running, that we were going to hire someone for customer service. So we were, I think we were too scared to try and hire someone in the Philippines for this at first.
Mike: So we went on Upwork and we put out an ad for a customer service person. And I mean, maybe we were considering people in the Philippines, but we had decided to hire…
Joe: We actually did hire someone in the Philippines.
Mike: That was after this first hire.
Joe: Oh, was it?
Mike: Yeah. So we had decided to hire a nice southern woman. I think we were paying her maybe $12 an hour. And you know, while I don’t think there was something that she necessarily did wrong, I think it was where we were at mentally that prevented the situation from working out. I think we were trying to micromanage her too much. I don’t think we had the proper documents in place to really make it easy for her. And what winds up happening when you don’t have proper documentation in place or you know, you’re not super patient and willing to at least document things as you go along, it’s just going to result in you watching them like a hawk, so you’re still wasting your time, or having to go back over and do their work again. So it basically winds up being double your time than if you were going do it. So combined with the fact that, I don’t think, you know, I think we were a lot more conservative financially back then. So we just maybe got scared and we decided that it wasn’t going to work out. And then we had tried hiring another person. This time it was a man in the Philippines and we had paid him, I think it was like $8 or $9 an hour.
Joe: I think it was $12. To be honest with you, I think it was $12.
Mike: Well, I don’t know, but we had hired him on the merit of like, all right, we’re going to get an absolute monster.
Joe: He had some credentials that I think impressed us. It was like he worked for this company, he worked for this company. He was going to set up this like complex ticketing system.
Mike: Yeah. Yeah. We had expected him to come and sort of revamp our business, and I don’t think that is ever something you should do; is expect someone who is going to come work for you essentially redefine your business processes. I think it’s a lazy thing to do and it will usually never work out in your favor.
Joe: I think it is possible, but it has to be I mean, it’s not possible at, it’s possible I think at the corporate level.
Mike: Oh yeah. If you hire like you know, a VP with a big salary, yeah they’ll come in and they’ll change things.
Joe: Yeah. Exactly
Mike: But I’m talking about someone on upwork.
New Speaker: Yeah, they’re not going to come and develop this whole system for your business. They’d be doing it themselves, if they really had that level of expertise. So I think we kind of realized that we were overpaying and I think he had gotten a little bit too cocky in his position. So we had decided to let him go and then I think we took some time just running things by ourselves, and eventually we had stumbled upon a family friend who was, you know, they were looking for work albeit I think it was a temporary thing at the time. But I think what that did was that kind of forced us to really do things properly. Because this time it was a family friend. We couldn’t just fire her.
Mike: You know, we couldn’t be shitty to her, we couldn’t do all the things that we had done wrong originally. So with that process, it forced us to be more patient, it forced us to really document things. And that was the first sort of full time hire that actually had gone well.
Joe: Yeah and the difference was, I mean, it wasn’t really so much with the employee as it was with us. I think that’s the key point. It’s like even though the first woman we hired didn’t work out, I think we have to, you know, at the end of the day we have to put it on ourselves.
Mike: Yeah. I’d say there’s some things. I mean it’s always on yourself. As a business owner, you need to take full responsibility for everything that you do. So if she did something, it’s still your fault because you hired her. So you do really have to take it, take extreme ownership of what you’re doing when it comes to the hiring process. And that’s really what that situation forced us to do. We had to take ownership, we had to really just buckle down and just go through the grueling process of training someone. And looking back, I think I could have did it 10 times better and made it 10 times easier for the both of us but it is what it is. And every time you hire someone, you learn, even if it doesn’t work out, you learn, okay, I need to look out for this next time. I need to ask this type of question. I need to give people this when they start out so they know what to do. But yeah, I mean that worked out really, really well. I was able to go to Thailand for a couple of weeks and obviously that’s a completely different time zone. She handled everything. That was actually one of our biggest months for that store.
Joe: Yeah and then sometime later we both went to Amsterdam and she was kind of handling a lot of stuff when we were there as well, so that kind of gave us a taste of what it was like to outsource effectively.
Mike: And I think also when you outsource, it is kind of like you do often treat your business like your baby. I know I definitely did this. And when you force yourself to take a vacation or if you have to be in a meeting or you physically can’t run the business and you just pass everything over, that is probably the best moments for the employees to actually learn because they can’t rely on you. They have to actually take full responsibility. And I think it makes them feel good because they want to be able to do good. They want to be able to have responsibility. And I’ve just noticed as a general trend, whenever I’ve done that with other employees, it has always worked out.
Joe: Yeah. So I think we’ve kind been talking about our story for a little while and I hope there were some valuable stuff baked into that. So why don’t we pivot a little bit and give people some effective advice that if they’re going to outsource right now, you know, what should they do? Like what should they do, what should they avoid, et cetera?
Mike: So for drop shipping specifically, I would say the main things that need to get handled are supplier communications, customer communications and imputing order and tracking details. So those four things. For supplier communications, what we do in our business is we make what’s called a supplier encyclopedia. So we will list out all the suppliers we have and whether it’s an order that we get, whether it’s an existing order issue, whether it’s a general inquiry, we will list out for that particular supplier who our employees should email. So that way they always know who to ask questions to. They’re always sending things in the right place. And then for customer relations, there are certain themes that a lot of interactions will have. So I think what’s good is to make different SOPs that detail these situations. And this part is not going to be perfect. When dealing with customers, especially when you’re first hiring, you probably need to be there to kind of assist the employee, but you should always come out of situations like that with a general rule that you can take going forward. And so you can write those down, you can put them wherever. [Train UIL 22:53] is also a good platform that essentially allows you to make almost owner’s manuals for your business using recordings, using different quizzes. We’re not sponsored by them, we don’t even really use them, but I just know that that exists. Suite Process is another software that people use for that. And then as far as taking orders, you can make an SOP for that. And then trackings we’d like to use shipstation, which essentially really allows you to systemize the process of putting in tracking numbers and doing the whole thing.
Joe: And there’s also another very special reason why we like to use shipstation, is because by using that you don’t give your employees like, and this is something that not a lot of people talk about, everyone seems to kind of brush off to the side, is that if you give your employees like access to your Shopify orders, then they can just refund. They can refund customers at will, but with shipstation it kind of allows everything to be not only more organized, But there’s like a layer of management; actually management protection in there to where like if a refund has to be processed, then they come to you or they come to the person above them and then it can get processed that way. So there’s kind of like, if you need people to have access to your orders; multiple people, it gives you that like layering system. Like when you’re at the grocery store and they scan something by accident, the manager has to come over and they got to come over and scan their badge. So I think that’s actually really important.
Mike: Yeah. And Shopify doesn’t have anything to protect you, the administrator, from an employee who has access to your orders from just refunding people. And I had brought this up in a drop shipping group and everyone kind of laughed at me, which I thought was ridiculous because you know, people say, “Oh, you should trust your employees, blah blah, blah, blah.” But it’s not really that easy. You don’t know these people, you know, you don’t know what goes on. Do they have kids? Like there’s a million reasons to not allow your employees to refund people who…
Joe: They could lose computer at the airport, you know, something.
Mike: Yeah. Or even by accident. Like if they accidentally cancel the wrong order. But so long story short, shipstation, it’s good for protecting. People can put it in trackings without having access to your orders and you can also manage multiple stores all on one screen essentially.
Joe: Yeah. So I think we can, let’s kind of move into the final segment, which I think is the piece that we haven’t really talked about yet, which is the actual hiring process. So lately I know we’ve been using a lot of indeed, Manila Craig’s list to hire people. We use a little bit of upwork for some specialized tasks here and there, Fiverr for one off tasks maybe like site speed optimization or logo design or just something, you know…
Mike: So I’d say for logo design, use Fiverr.
Mike: For product uploads, I would say you can try using Fiverr but I think anything dealing with the Philippines at this point, you should use Manila Craigslist. Or not just Manila, but there are other craigslist in the Philippines that you can use, and that’s kind of a low key place to find employees right now. Everyone’s going on upwork and I despise upwork. But it’s kind of getting saturated and it’s also just not worth it. I think you can find high quality employees.
Joe: I mean, besides for the additional costs of upwork, I feel like it’s always best to bring employees kind of into your systems and your architecture. And like with upwork it’s like you get to talk to them on their messaging platform, it’s just you want to bring people into your business and have them there for a long period of time. And I feel like upwork…
Mike: Creates a layer between them and you, which can be good for like, again, like I think it’s good for one off tasks because there is some sort of liability if someone screws up. You know, because you could leave them a bad review, you can file a dispute, all of these things. But…
Joe: I think developing a long-term relationship with that employee is key because really it starts to snowball very quickly once they learn the processes and once they can do it effectively. And then you’ve invested all that time to train them and it just starts to pay off once they’re trained and it starts to pay off more and more, the more they learn and the quicker they do things.
Mike: Yeah. It’s a very slow process, but it does begin to become exponential.
Mike: And then eventually you wonder how you did things.
Joe: It’s very front end heavy, but the payoff is worth it.
Mike: Yeah. And then indeed we used to hire American employees typically. We’ve used that for writers, for customer service people and that’s also a good source because you’re going to get legit people and you should think of yourself as a legit business. So I think that’s really all that needs to be said about indeed. But yeah, to wrap it up, is there anything else that you think people should know about outsourcing?
Joe: I think that’s about it. I think just do it as soon as possible.
Mike: Yeah, at what level of income or how much profit do you think someone should make?
Joe: I mean, here’s the thing, it is an upfront investment, both money and time wise. See here’s the thing. If we could easily right now have like an awesome lifestyle business where we really just outsource most, we do a lot of work because we’re trying to actively grow the business. So we’re like hiring new people, developing new processes, doing all sorts of new things all the time. But we couldn’t like not do that and like have a really nice lifestyle business. But I think we want to run really fast and have a lot of big exits and get out, you know, get out fully eventually. But yeah, I think, you got to see if you’re in this for the long run, which, you know, if you’re listening to this, hopefully you are, then once you’re profiting a thousand a month I would say be willing to not pocket that and put it right back into outsourcing.
Mike: Yeah. I would say especially if you have a job already and you’re making $1,000 a month, that’s not going to allow you to quit your job necessarily. So there’s not much point in just pocketing it. Yeah. That money’s better spent hiring someone in the Philippines who is good, who is qualified to start doing basic tasks in your business. That way you can really focus on, again, closing suppliers; you can focus on managing ads. Yeah. And I know we’re at the conclusion, but something I also think we need to talk about is attention residue. And how when you’re doing all these different tasks, especially customer service where it’s more of an instantaneous response type thing that can completely screw over your productivity. And I still struggle with that because I have all these Skype messages, I have all these things going on because I need to be able to sort of manage employees. But so when you’re trying to work on a task and it gets interrupted, the amount of energy it takes to begin and really get focused on that task again is very big and it can really mess with you actually getting things done and having breakthroughs in your business.
Joe: Yeah, that’s another book that I don’t remember the author or the name, but…
Mike: Deep Work.
Joe: Deep Work. Yes. That’s where the term attention residue comes from. And yeah, it is a very, very real thing. If you have your phone or if you have social media open and you’re trying to do like a new thing, like you’d have to get deeply focused on it. And if you’re in the day to day, it’s difficult to do that, which is kind of why we’ve split up the way we do things and you deal with most of those interruptions and I really try and do the deepest work I possibly can.
Mike: Yeah. I basically have gone on the front lines to allow you to just focus on whatever all day. So yeah, in the end you are the master of your business. Your attention is very important and it should not be wasted doing product uploads, doing basic customer service tasks. And for those things it is very easy to outsource. And once your is freed up, you can use that to building your portfolio and doing a host of other things, whether it’s lifestyle or business related. So yeah, on that I think we will wrap it up. Again, head over to buildassetsonline.com/playbook for our beginner’s guide and to start a mini private equity portfolio, how to get from zero to $1 million in assets. And any final remarks, Joe?
Joe: That’s about it. Hope you guys enjoyed the podcast and don’t forget to check out the playbook like he said.
Mike: See you in the next one.
Joe: See you!