Canggu is a place where people go to feel rich. The clicking of keyboards in the Balinese town’s co-working spaces is drowned out only by the roar of mopeds. Over smoothie bowls and lattes, western immigrants – expats, as they prefer to be known – talk about themselves, loudly. A local woman will massage your body, silently, for the equivalent of a few pounds. Everyone is very good-looking. Everything is very cheap.
The town, once a stop-off for backpackers en route to Ubud’s yoga studios and hippy scene, has in recent years become a hub for self-described “digital nomads”. In Canggu’s cafés, barefoot westerners run fledgling companies from MacBook Pros. When not talking Facebook ads or cost-per-click, they socialise exclusively with each other. “The thing is, not many Indonesians are on a level with bule [an Indonesian term for foreigners],” explains one digital nomad over the fart of hot tub jets in Amo, a luxury spa. Around us, statue-like men wander in and out of steam rooms (CrossFit is big here), talking about e-commerce and intermittent fasting.
Inside the city’s co-working spaces (Dojo is the oldest in Canggu, Outpost the new challenger), people are building business empires selling products they’ve never handled, from countries they’ve never visited, to consumers they’ve never met. Welcome to the world of dropshipping.
Dropshipping is a “fulfilment” method. At one end of the supply chain, an entrepreneur identifies a product – usually through Chinese e-commerce platform AliExpress – which they think they can sell to European or American consumers. They create a website using Shopify, and identify and target buyers, typically using Facebook ads, although you will find dropshippers on other platforms, including Instagram, or selling through marketplaces such as online homeware store Wayfair.
When an order is received, the dropshipper purchases the item through AliExpress, and has it shipped directly to the buyer, pocketing their mark-up minus marketing spend. At no point does a dropshipper hold stock: they are simply the middleman in a globalised supply chain.
Successful dropshippers often solve so-called “pain points”. Perhaps you like to go running with your dog, but find holding the lead a chore. A dropshipper finds a hands-free running leash on AliExpress, and targets it via Facebook to dog-loving runners. They’ll create a video showcasing its benefits (videos outperform imagery), and then haunt you with that video until you give in and purchase the item. At this point, you’ll wait up to a month for delivery – lengthy order processing times are a dropshipping tell – because the item is being shipped from China.
Although there is a strong dropshipping scene in other places, notably the mountainous city of Chiang Mai in northern Thailand, Canggu has become an increasingly popular destination, with its affordable cost of living, vibrant café culture and great surf. Agung Suryawan Wiranatha, director of the Centre of Excellence in Tourism at Udayana University in Denpasar, the Balinese capital, says that so-called digital nomads started moving to Canggu about four years ago. Michael Craig, founder of co-working space Dojo, identifies the moment that well-known dropshipper Johnny FD moved to the area, in March 2017, as a turning point – where the popular blogger and YouTuber went, others followed. The following year, Outpost was built in the space of a few months, to meet the community’s growing demand for workspaces.
Israeli-born Yakir Starosta and Americans Rob Whitaker and Phil Louden are partners in a dropshipping business based out of a glass-walled office in Outpost. In another era, these ambitious young men might have been Wall Street traders or budding industrialists. But the internet has made it possible for anyone with a high-speed internet connection and some seed money to make serious money, without the 9-to-5 or suit-and-tie.
“Most of my life, I’ve never had strong ambitions to have a lot of money,” says Whitaker. “But I really think if you’re poor or middle-class, you’re going to get fucked in the next 20 years. It’s going to get, like, really bad.” Dropshipping offers these men a way to accrue wealth outside of the stultifying confines of corporate culture, and without formal qualifications – many of the dropshippers I meet are college dropouts.
Louden talks me through their strategy in a nearby coffee shop. The best dropshippers will run “funnels”: repeatedly targeting the same consumers over a period of time in order to coax them through the various stages of purchase – add to cart, enter card details, check out. “We run funnels to let the Facebook algorithm figure everything out,” he says. “We may burn through a few thousand dollars before we start doing consistent sales.” Louden and his partners have five Shopify stores, selling clothing, gadgets, and household products. They also have a remote team of five in the Philippines who handle customer service, as well as a project manager in India.
Louden, who is 28, has the affable, languid demeanor of the well-mannered Virginia boy he is. He washed up in Asia three years ago, after working in Australia as a farmhand. In Chiang Mai, he met a dropshipper who introduced him to remote working. Louden worked for free for other dropshippers to learn the ropes. He paired up with Starosta in 2018, before bringing in Whitaker as a junior partner in early 2019. “I had this target that I wanted to make $1 million in profit in a year,” he says over smoothies and matcha cookies. “I didn’t do it. I beat myself down really well, I had to book into a ten-day meditation retreat.”
This year, his Shopify records show he’ll clear about $90,000 (£69,000) in personal profit. He describes dropshipping as a “real-life video game”, albeit one he doesn’t seem to enjoy an awful lot. “When you do dropshipping and Facebook ads, it’s like going to the casino and pressing the slot machine, and based off what happens, that’s how your emotions are going to be,” he says.
Plenty of people never make it. You need money to start an online store and invest in marketing, and it’s easy to burn through cash while trying to figure out what sells.
At a restaurant near Canggu’s Echo Beach, former dropshipper “Ellie” (who requested anonymity so she could speak candidly about her experience) explains how her dropshipping business selling eco-friendly, plastic-free homeware almost ended in disaster. But hang on – isn’t dropshipping about the least eco-friendly way of buying and selling? “Obviously to the outside world” – Ellie, who is in her late 20s, lowers her voice – “I was interested in it, I wanted to make a difference. But to be honest, we did it because we spotted a trend.”
Her instinct was correct: in the run-up to Christmas 2018, Ellie and her partners were shifting $10,000 of plastic-free homeware a day – only their Chinese supplier couldn’t cope, and stopped shipping the orders. Their inbox filled up with furious emails from customers, accusing them of running a scam; when the products did arrive, they were poor quality, and wrapped in plastic packaging. One customer was so enraged, she emailed them a photograph of their products in the bin.
They started issuing refunds but weren’t able to pay back all their customers, because they’d spent the money on more Facebook ads. “I didn’t eat for two weeks,” Ellie says. “I was so stressed.” Eventually, her co-partner loaned the business more than $10,000 – enough to process the refunds, ship the remaining stock, and get them out of the mess.
Ellie still runs an e-commerce business selling plastic-free products, but now holds her own stock in a warehouse. She says she can’t imagine ever going back to work for a company, but she wouldn’t do dropshipping again. “The customer gets a shit experience.”
Behind a blue door in the heart of Canggu, 25-year-old Filipino-American Mike Vestil is teaching his dog Cinta [Indonesian for “love”] to roll in the garden of his luxury villa. “Cinta! Cinta!” extorts Vestil, who is dressed in flowing white trousers and a peach t-shirt with a complicated neckline. Cinta rolls towards Vestil, and he rewards her with chicken from the outdoor kitchen facing the swimming pool. After an uncomfortable interlude in which Vestil berates his Balinese cleaner for leaving the villa door open, we make our way into his plant-filled office. A wooden bench is covered with recording equipment. A lettered lightbox spells out the WiFi network (SIT ON MY FACE) and the password (YOLOYOLOYOLO). Vestil catches me looking. “Um, someone is literally coming around to change that later today.”
A self-described “entrepreneur, author and YouTuber”, Vestil has 230k YouTube followers and 56k Instagram followers. In brash videos with titles like “How To Make $1000 PER DAY From ANYWHERE In The World!!” Vestil encourages his followers, whom he calls “freedom fighters”, to live their best lives by becoming fabulously rich. He is often topless in these videos.
In real life, Vestil is less obnoxious, albeit grandiose and prone to speaking in a mixture of pop psychology, corporate jargon and quasi-Buddhist philosophy. At one point, he starts talking about seminal 1937 self-help book Think and Grow Rich, by Napoleon Hill. “There’s this thing called sexual transmutation,” he says, explaining Chapter 11 of Hill’s book. “Instead of spilling your seed, you transmute it into creativity, into passion, into liveliness, into charisma.” My eyes flick once more to the lightbox.
Before Vestil became a barefoot muscle man rattling around an oversized villa in Canggu, he was the child of hard-working immigrants – his mother is a nurse, his father an engineer – whose parents wanted him to go to dentist school. The Chicago native describes the experience of watching his parents scrimp to put him through private school as traumatic. “I didn’t want the 250k in debt that would have happened if I’d continued with dentistry. My parents were so stressed. I literally saw them get older, right before my eyes, with the stress. I felt like this guilt, all the trauma, like I was to blame. My sister almost went to community college because we spent all the money on me.”
According to Vestil, he achieved $1.5 million of sales on Shopify in just 12 months, selling grill mats and T-shirts in the halcyon days of dropshipping: 2015, the year Facebook Ads Manager was launched but before dropshipping got big. “In 2015 you could literally throw anything up and make money… it was a golden period,” Vestil says. As the business took off – he initially sourced stock through eBay, before finding a local supplier – he started a travel vlog. He shows me a video of himself backflipping off a boat at a full moon party.
Vestil, who moved to Canggu in 2018, claims to have made “around 400k, I guess” in his dropshipping career. (When asked to provide evidence, he told me that he didn’t keep records.) After a stint selling courses to people wanting to learn how to get into dropshipping, he is now focusing on podcasting, and has vague plans to launch a collective of high-net-worth individuals and influencers. “If something crazy happened, for example a tsunami in the Philippines… We would literally go over there, and make the most epic videos, and share exactly what’s going on, and get more attention to the world to the things that actually matter,” he says. “To find a way to solve these problems with epic people, and be like, damn, like, fuck! We did something epic with our lives, you know. Almost like the Avengers.”
Vestil no longer sells courses, and is evasive when I ask him about it. “The thing that I didn’t like about dealing with this specific audience, and why I don’t sell any courses, and why I’d work with existing entrepreneurs, is that it’s coming from a frame of scarcity, and they want to succeed but they don’t want to grow into the person that would deserve it… They wanted immediate results, and I didn’t resonate with that,” he says. He ends the interview shortly afterwards. Later, he texts asking if I know how he can get verified on Instagram.
They claim to be making money,” says Michael Craig. He’s roiling against the so-called “dropshipping gurus” who promise to share their secrets to anyone willing to pay. Around us, would-be entrepreneurs drink juice and work on laptops, moped helmets by their side. “You cannot prove how much money they’re making. That’s the thing. It’s all bullshit.’”
A gruff, profane Australian who speaks his mind, Craig, 41, has banned anyone from selling dropshipping courses in Dojo. “My main gripe is that you’re selling a course for $6,000 to a person from middle America who’s put all their funds into this, and you’re teaching them to sell avocado slicers online with 40 other people who are also selling avocado slicers,” he says.
His comments remind me of something Starosta had said back in Outpost, as an army of freelancers tapped away on gleaming keyboards beneath us. “The thing is with these gurus is that they make money and then start selling courses, and they’re posing in front of a Lambo [Lamborghini]. So people are like, shit, how did he afford the Lambo? But they just rent the Lambo out for the day. That’s the problem.” E-commerce guru Tai Lopez has received more than 69 million views on his YouTube video bragging about the Lamborghini he keeps in his garage, with the comments an equal measure of derision and admiration.
Craig is also scathing about the broader digital-nomad community, despite the fact that many are Dojo customers. “There’s an immaturity about it,” he says. “It’s two times removed. Digital means you’re connected to this digital thing that is removed from yourself, and nomad means you’re not really connected to the place you’re at.” He’ll throw digital nomads out of Dojo if he feels they are acting entitled or rude to staff. “I kick them out. Because that MacBook is two years salary for the guy at the front desk. You don’t think that guy wants his MacBook?”
There is a sense among many in the Canggu scene that the glory days of dropshipping may be coming to an end. There’s a stigma around dropshipping, as if the banknotes you earn are unusually smeared with grubby fingermarks. The most important decision a dropshipper can make, perhaps, is knowing when to get out.
I am bone-tired when I arrive at Bukabuka island, in Central Sulawesi. The journey was long: three flights, over the course of one night, through airports that grow progressively smaller. At Palu airport, where I am the only bule, smiling immigration officers question me more out of curiosity than suspicion. I then board the prop plane to the administrative centre of Ampana, before embarking on the final bit of the journey: a white motorboat that skims across water that is clear, turquoise and warm. Thirty minutes later, we’re pulling up at Bukabuka. On a wooden pier that juts out from a white sand beach, a white hammock swings in the breeze.
When you’re done with dropshipping, where do you go? In Thomas Despin’s case, you leave it all behind, and start afresh in a place that’s so remote it’s basically inaccessible (a week after I leave, the daily flight from Palu to Ampana is axed due to lack of demand). After closing his dropshipping store in September 2017, Despin purchased 1.38 hectares of Bukabuka island, and moved there in October 2018. He plans to open a sustainable retreat called Reconnect here in 2020. The resort is only half-built when I arrive.
The 28-year-old Frenchman lives alone in a hut that serves as the island’s official base. On the porch are jerry cans full of water, a gas hob, cooking equipment, and sacks of rice. Inside, a bed, a fridge, a plastic table and chairs, and an electrical converter. Outside his hut is the island’s only bathroom: a cold-water bucket shower and toilet you manually flush with sea water.
Despin takes me on a tour, past wooden homes that house extended families: grandparents, parents and children living in one-room structures without running water or electricity. Before Despin arrived, the 20 people living on Bukabuka scratched a living selling dried coconut meat, copra, which they cured on open pyres in the jungle. But the market for copra is saturated, and prices are low. Almost everyone on Bukabuka is now in his employ. He stops to chat in Indonesian with one worker, who is building a fence to protect Despin’s allotment from the island’s marauding goats.
Despin has the air of a man determined to reinvent himself whenever the mood takes him. A failed medical student, he studied for a degree in psychology while working as a student party promoter. After university, he criss-crossed Europe and the US by bicycle, earning money doing freelance web design. By the time he arrived in Bali in May 2016, he was broke. He heard about dropshipping, and partnered with a friend back home in France, who gave him €3,000 (£2,540) initial capital to get started.
In darkness (the electricity is out), Despin reminisces about those early days. “I think we were the dumbest dropshippers ever,” he snorts. “We literally tried everything and we were terrible. I mean it! We were really, really bad.” Outside, his housekeeper Tya is shredding vegetables on the porch. The thud of the blade is the only sound we can hear. “Our first strategy – it wasn’t a strategy – our first waste of money was to sell as many products as possible in as many countries as possible. And our extraordinarily dumb theory behind it was, well, look at Amazon.”
Eventually, Despin hit upon a winning idea: selling shapewear to French women. He shows me the video he and his partner used to advertise the product, which they stole from another online store. “The video is awful,” he says, shaking his head. But it worked: $750,000 of sales, and around $100,000 of profit for Despin, in just 11 months. To this day, he has never seen or touched the product.
Despin is something of a legend in the dropshipping scene, having gained attention with a Medium essay he wrote announcing the closing of his business, headlined “11 months & $750,000 later, I decided to close my drop shipping business. Here’s why”. “I’m the opposite of what dropshippers like to say, because they like to see themselves as good entrepreneurs because they made money,” he says. “I’m completely fine with saying that I made a lot of money, six figures, and still I think I was dumb. I didn’t know what I was doing.”
Despin shuttered his dropshipping store while it was still profitable – effectively reaching into the belly of an ATM that was belching notes, and switching it off. Why? Firstly, he hated his clients. “French people like to complain a lot,” he says. “Fuck! So we were basically targeting older, fat Frenchwomen – you’re talking to people who complain the most, ever.” Then Despin’s partner quit, and it stopped being fun. “I don’t regret it,” he says. “I’m very happy that I did it. I’m also very happy that I stopped doing it. A lot of people don’t understand that. They think that if you’re doing something and it works, you should keep doing it. Which is nonsense.”
After quitting dropshipping, Despin wanted to see what it felt like to be rich. He flew first class and stayed in fancy hotels. It was a good experience, but he realised he didn’t care about making money as much as he used to. “I see money as a tool, and making more money is like putting more tools in a big garage, and you don’t even use the tools to create anything. It’s just meaningless.”
Despite his efforts to leave dropshipping behind, people keep trying to pull Despin back in. They wangle his number somehow and text him, or send him pleading emails. He reads one out to me: “I want to do dropshipping, but I do not know where to start. How to create your own online store? What goods should I fill it with so that it does not burn out? I will be very grateful for your advice – I’m your fan.” Despin refuses all these requests; he has no desire to be a dropshipping guru.
All of the dropshippers I spoke with for this story feel that they are living on borrowed time. They tell me that Facebook is becoming hostile to dropshippers, and ad spend is going up. “So many scammy people have come through, and Facebook wants people to stay online and trust the advertisements,” Louden says. (Facebook would not comment specifically on dropshipping, saying only that products sold on the platform must comply with its policies.)
Francisco J Sánchez-Vellvé, a lecturer at CES Cardenal Cisneros in Madrid, says that dropshipping is full of drawbacks: it’s typically hard to get good SEO positioning on Google if your main marketing channel is through Facebook, margins are too narrow for comfort, and high rates of product returns make it tough to make money. As dropshipping is seen to be less profitable, the knives come out: watch out for the other dropshippers who’ll steal your product, copy your video, or clone your store.
Some dropshippers are shuttering their stores, and shipping out. Louden is one of them. Despite the fact that he’s earning executive-level pay while wearing boardshorts, he wants to leave dropshipping behind. He’s aware that even the most successful dropshipping store will eventually run out of steam: when the cost of Facebook advertising increases beyond your marketing spend, you’re done. “At the end of this year, we’re probably done with dropshipping,” he says. “I want to build brands – actual ones – that provide value to people.”
I’m reminded of a comment one of the statue-men made amid the ice baths and steam rooms of Amo Spa. I’d asked him if he was a dropshipper, and he’d laughed and said that he wasn’t any more: “I’m doing something ethical.”
Meanwhile, kids keep washing up in Canggu with baggage tags on their backpacks and dollar signs in their eyes, dreaming of making it big. They’re prospecting for gold amongst the melon ballers and avocado slicers of AliExpress – throwing junk at the internet and hoping some of it sticks.
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