And The Award For Dumbest Business Model In the Cannabis Industry Goes To…

The Only Thing Different From Namaste Technologies & These 16 Year Old Kids Is a CSE Listing

Boy, do I have the investment opportunity of a lifetime for you!

It’s called Namaste Technologies (N) and it’s using dropshipping technology to trick uneducated retail investors that it’s a real business, but it’s not.

Namaste is no different from these other teenage hucksters in the videos below, but these kids surely aren’t burning cash as quickly as Namaste, they may even be profitable.

The only thing Namaste did to outmaneuver them was list themselves on the CSE with an insane bloated share structure to raise loads of capital to build websites. They are also listed NASDAQ, but we couldn’t find any link or info on the listing.

Props to Namaste (N) for getting in early to a booming industry with a slightly different approach than everyone else, they said, let’s use the digital nomad/ 4 Hour Work Week-esque dropshipping model instead of growing our own weed or getting our own stores.

Awful Margins

The model has kind of worked so far, the company did an impressive amount of revenue over Black Friday with huge discounts to move a large amount of inventory.

But this is the symbol that defines every dropshipping racket, the race to the bottom.

I was living in the 4 Hour Work Week capital of the world in 2016: Chiang Mai, Thailand.

Guys like Johnny FD set up courses and lured kids from Western Countries to move to Thailand to start dropshipping. #dropshiplifestyle

He uses many of the same tactics Sean Dollinger and Kory Zelickson do to impress retail investors on this ‘new and hip’ business model with grand promises of making fat stacks of cash. What they don’t tell you about is the awful margins and the inevitable race to the bottom of any product or industry.

This is why these dudes are always shapeshifting into new niches. It’s only a matter of time before this happens to vapes.

Fidget spinners and fidget cubes were all the rage. Some of my friends were clearing $300,000 a month selling these contraptions.

They would spend $10,000-$20,000 a day on Facebook Ads, but would sell $30,000 worth of product. They were dropshipping them from China using a workflow of AliExpress, Oberlo, Shopify and Facebook.

  1. A Facebook ad would be setup displaying a trendy product like a fidget spinner.
  2. To construct the ad they would use black hat software like Which Ads Work to find which ads were doing the best, and they would rip the creative and the targeting from the ad and spend more on their daily budget.
  3. They would use Shopify insync with Oberlo to buy the products from China after a user bought it from their store, and then China would send America the product.

The figdet spinner racket worked great for about 6 months. People were cleaning up revenue wise, but then something happened around July, 2017, the whole thing basically died.

Everyone was undercutting each-other and the margins disappeared, ad costs went up and the whole racket made no sense anymore, so everyone bailed and moved onto Amazon FBA, a Facebook ad agency or SEO.

Here are Namaste’s most recent financials, look at the net loss these guys have from running a few ecom stores.

It’s insane.

Great, you did $3.3 million in revenue, but your margins are terrible. You have no greenhouses or grow space.

No Real Brand Dropships

Here’s Shopify’s definition of dropshipping.

Dropshipping is a retail fulfillment method where a store doesn’t keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer. As a result, the merchant never sees or handles the product.

The biggest difference between dropshipping and the standard retail model is that the selling merchant doesn’t stock or own inventory. Instead, the merchant purchases inventory as needed from a third party – usually a wholesaler or manufacturer – to fulfill orders.

Remember, Dollinger has been slangin’ online sales since the year 2000, according to himself. Although I am highly sceptical of that fact.

Because there’s no real established brand behind dropshipping (think of every established brand ever, they do not dropship) Namaste is leaving itself wide open to lose huge market share in the coming years. The thing about dropshipping (or ecom in general) is the barrier to entry is really low, this type of industry attracts a crowd of get rich quick folk who bask in Tim Ferris’s every word and outsource a huge portion of their workload, but it’s rarely sustainable.

Some new kid on the block will come in and create Shavasana Technologies and sell the same types of products for cheaper. The reason Namaste has been successful is they got there first, and again credit to them, but without a real brand to fall back on, that front end success is a major sacrifice down the road.

That’s why I always cringe when Dollinger shits on others in the cannabis industry for taking the time to build a real business, rather than do low quality livestreams from bathrooms in Cuban hotels and doop newer retail investors with an innovative business model.

Namaste are middle men, middle men are the first to go when things get tough.

Let’s end this one on a positive note.

Here’s a real man who has actually built a real business:

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