Auckland student creates $1.2 million company within months

Dropping out to drop-ship: 19-year-old Aucklander Josh Brown.

Auckland student Josh Brown was intrigued when he saw a clip about the “drop-shipping” fad early last year.

Drop-shipping is when you create an online store, but hold no stock. You take orders for a product via your website, then get the manufacturer - usually based in China - to deliver it directly to your buyers.

The idea is that you scour the web for a consumer product that's going viral - or seem like they are on the cusp of popularity, create a website to sell it, advertise on social media, then sit back and harvest orders and profits.

A fortune is to be had from a laptop in your bedroom.

Or so Brown thought.

Over a four-month period, the former St Kentigern College student created websites that drop-shipped what he hoped would be popular products.

Instead, he lost around $15,000.

By August, he was ready to throw in the towel when a site he created, Ezymounts, hawking phone holders for your car, suddenly took off.

In its first week online, Ezymounts generated $7000 in orders. By the end of its first month, it had brought in $50,000 revenue.

Brown decided to drop-out of his BCom at AUT and concentrate on drop-shipping full-time.

By the end of the year, Ezymounts had brought in $800,000. Brown had two more hits, taking his haul to $1.2m by the end of 2018.

He says he's running a profitable business with a 25 per cent margin.

His other hits are quirkier than Ezymounts - but although sharing them with the Herald, the young entrepreneur is wary of making them public. Drop-shipping is a crowded field, and he fears giving rivals the inside line.

When the Herald phoned Brown, he was in LA, where he's camped out for two months, networking with other drop-shippers and making contacts with more conventional marketers. After that, he's heading for Europe.

The teenager now has five staff: three taking care of phone support from the Philippines and a graphic designer and developer in Auckland to create websites.

How has he got to this point?

Brown says he noticed early last year that ads on Facebook and Instagram were "completely underpriced".

He used Shopify to create online stores, and Chinese e-commerce site AliExpress to hook up with manufacturers based in China.

The young Aucklander initially took a leap of faith, and says things went relatively smoothly, but early on in the piece he also travelled to Beijing and Ningbo for face-to-face meetings.

Although he's still based in NZ, Brown says only around 2 per cent of his customers are here. Most are in the US or Canada.

What's next? Brown has more products in the pipeline for drop-shipping.

He's not certain the golden weather will continue for social media ad rates, however. He sees squeezed margins ahead, making the sector tougher, despite his moves to almost fully automate his sites.

So Brown is diversifying by creating his own social media marketing agency, plus a product for the US yoga market as he moves from drop-shipping middle-man to brand builder.

Planning is good as you prepare to enter the advanced years of your 20s.