My thoughts (and tips?) after growing an AliExpress/Oberlo dropshipping store from $0 – $1,000,000 in less than 6 months (long-ass post)
Hopefully the title of my post isn’t too sensational.
Anyway, I have a bit of time to kill (currently waiting for my designers to finish up some stuff for me for my new store’s launch), so I thought I’d post here just to give you guys some insight into the dropshipping world from my perspective.
Keep in mind, I’m still considered somewhat of a noobie since $1-million really isn’t that much (my net profit was around 25%), so yeah. I’m not gonna act like I’m some omniscient business mogul… but… I do have some real and “in-the-trenches” insights that will hopefully help some of you on your journey, regardless of if you’re in the dropshipping space or not.
To start off, the BIG question:
Yes and no.
I say no because there really isn’t much room for growth. As much as I’d love to tell you guys shipping times don’t matter… well, they really do. And dropshipping from China just takes way too long. Obviously, you can find suppliers who have warehouses in the US, but most don’t, and most of the time you’ll be dealing with 2 – 4 weeks shipping time.
There’s also people who’ll tell you, “If you give them a good enough deal, then they’ll wait!”. Yeah, they will, but they most likely won’t ever buy from you again.
And that’s the biggest drawback in all of this. You rarely get any repeat sales… and that’s sorta where all the money is.
Advertising gets more expensive over time. As you hit more of your target market, you start getting in front of less qualified prospects and you end up having to spend more to convert. This is just how it is in any industry (I was a marketing consultant before I jumped into eCommerce).
And because advertising gets more expensive, eventually, your ads won’t really be profitable upfront anymore. And this is perfectly fine for most businesses since once they do get a customer (even at a loss), they can make it up in the back end. But you can’t really do that with a dropshipping business (using this AliExpress model) for the most part.
There are exceptions, of course, but let’s be real, most dropshipping businesses of this nature don’t get much repeat buyers.
Because of this, you have to rely on constantly finding a new product to push and try to get into new markets over and over again. It’s always an uphill battle and you won’t ever really have an asset (aka customer base) you can cultivate to maximize your profit potential.
Besides that, there’s also the issue with quality control, extreme amounts of competition, unreliable suppliers, and just a whole host of issues that you’ll constantly run into.
It’s just a lot of headaches and not really fulfilling.
HOWEVER, despite all this, dropshipping is still worth it. Why? Because it’s a great learning experience. I’ve learned so much over these past few months that I now have an almost arrogant-like confidence for any venture I start.
Once you get a taste of blood (like making $7k in profit a day at times), then there’s just no more doubt in your mind, and you’ll be able to make money much easier (since there’s no barrier of doubt stopping you).
On top of this, dropshipping is a great way to learn which markets are HOT. I ran a general store and tested a buncha different markets and finally settled on one that brought in really good money for me. I’m now expanding to a full-on business in this market that no longer relies on Chinese dropshipping. And I wouldn’t have even thought to target this market if it weren’t for me testing with my dropshipping business.
So, in short, although Chinese dropshipping is horrible in the long run, it’s definitely worth pursuing with the intent to LEARN and find hot markets to start real businesses in.
I get messages from people time to time asking me for general tips and how to succeed in dropshipping, but I have a tip that I think will honestly help anyone regardless of what industry they’re in, what fulfillment method they use, or what product they sell.
Here’s my MILLION DOLLAR secret: Test.
Even though I’ve made decent money these past few months, if you were to come to me and ask me if product A would do better than product B, I honestly wouldn’t be able to tell you. If you asked me if interest A would work better than interest B for the product you want to test on Facebook, I honestly wouldn’t be able to tell you. If you asked me which price point would work better for your product, I honestly wouldn’t be able to tell you.
I’m not a psychic and I don’t have magical powers of foresight.
What I do have, though, is a mind that’s capable of analyzing data. And, fortunately for me (and you), that’s really all you need to be able to succeed in business.
If you can analyze data, if you can tell which number is bigger or smaller than another number, if you can do simple math like multiplication/division/addition/subtraction, then you can succeed.
Because at the end of the day, all you really gotta do is test your ideas, concepts, products, copy, ads, etc… analyze the data… then go back and make the necessary corrections (kill or scale).
My strategy for finding winning products, markets, ads, or whatever, is by running a shit ton of ads (at a low price), then seeing which ones get the best results. That’s it.
I run probably anywhere from 20 – 100 ads to test a new product. And from there, I get about like 2 – 5 ads that do well. Sometimes they do REALLY well. And in rare occasions, I get a few that make me a killing.
It’s weird because the idea of testing is so simple. Everyone already knows what it is. They’ve heard about it from gurus or they just subconsciously know that testing is the logical thing to do. But people forget. They get too caught up in the day-to-day activities of their business and forget to set aside time to set up methodical tests. But trust me, testing is the most important thing I’ve ever done, and it’s the reason I’ve achieved this amount of semi-success.
Testing is like my magic bullet. I know I’m going to succeed because I know how important testing is. When you think about it, life in general kinda runs on feedback loops. And that’s really what testing is. Similar to how as a kid you made little corrections so you wouldn’t fall off a bike, you gotta make those corrections within your business and keep doing what works (and scale it), and stop doing what doesn’t work.
Actually, I wouldn’t say this is secondary in importance to testing, but there’s something that’s AS important as testing… and that is:
Branding (or, in other words, a unique selling proposition).
Branding is so crucial in today’s business world that if you don’t have some sort of branding, some sort of consistency throughout your business, then you won’t make it (in the long run).
Branding isn’t just about getting a logo made and slapping it everywhere. It’s about taking a unique stance (whether it’s combining 2 old elements together to make it new, stripping an element from something to make it simpler, improving upon something, or just coming up with a new thing altogether), and then putting that at the forefront of everything you do.
It’s hard to explain the importance of branding to the uninitiated or the people who’ve just gotten their feet wet in eCommece and business in general, but branding needs to encompass everything you do. From the theme / types of products you sell, to your customer service, and even to the look and feel of your website.
And I’m not saying you need to run a buncha ads on branding like what the mega corporations do. But just have some sort of message that you stand behind that you emphasize in everything you do (your advertising, your follow up emails, your communications, your website copy, etc.)
It’ll make you stand out from the competition and give your customers a compelling reason to buy from you.
This is probably one of the biggest mistakes I see when people ask me to critique their stores. They have a random eCommerce site with just a buncha random products thrown up on it (usually watches lol), but there’s like… no message there. There’s no compelling reason to buy from them (since most of the time it’s a generic product you can find for cheaper and better quality elsewhere).
But branding also needs to customer-centric. It needs to be a message that resonates with the customer and gives them a benefit, gives them identity, gives them a sort of feeling of belonging… or just whatever. It’s gotta be focused around the CUSTOMER. A branding message that says “I started this store because I’m a college student who wants money to travel the world” isn’t strong enough. A branding message that says “We can offer our watches at a cheaper price because we cut out the middleman and go direct to the manufacturer” is not a compelling message.
It needs to be something with more oomph. The best way to learn how to come up with a good brand and brand message is by… well… looking at other businesses that have a strong USP / brand message. Warby Parker. Apple. Toms. Supreme. Dominoes. Mcdonalds. Avis (their old slogan). Dollar Shave Club. Purple. There’s so many businesses out there with powerful messages that you can use to learn and then create your own USP (obviously, you can’t copy these because they’re unique, but you can study and deconstruct to learn WHY they’re so compelling and powerful).
I apologize if this long-winded post was all over the place. It’s late here and I drank like 8 cups of earl grey within the past hour or so.
I kinda started this post off thinking I would get deep into some of my strategies and tactics, but for the most part it seems like I just gave out general tips that you’ve probably read or heard elsewhere a million times. But at least I can somewhat confirm that it’s legit and actually works, so there’s that.
Anyway, think I’ve spent too much time writing this so I’m probably gonna log off now and watch some YouTube or something.
Feel free to hit me with any questions (if you have any) regarding your business and I’ll see if I can give you any specialized tips. (But, like I mentioned earlier, I probably won’t know the answer to your question… so you should test it hehe.)
Thanks for bearing with me and reading through all of this!
If you skipped to the bottom, then… here’s a TLDR for you:
Don’t Waste Your Time with E-Commerce
There, I said it. People need to stop wasting their time, and money, on crummy e-commerce sites selling garbage products that they sourced from AliExpress or some other supplier of junk.
I understand the dream of starting with a relatively modest budget and growing your e-commerce site into a nest egg — it’s a fantastic dream, but if you want to start a business, start a business.
Step 1. Have a business plan. If you’re going to invest your time and money into a project, actually have a business plan. Determine who your competitors are, determine who your customer is, determine the route of future growth. Having a plan will help you better price your products, it will help you guide your marketing budget, and it will allow you to determine if your business is growing or failing.
Step 2. Have access to capital. There’s an old saying that says, “you need to have money to make money”. I’m not saying that you need to have a ton of money, but having access to money will allow you to weather the storm. You see it all the time on this sub, “I spent $50 on AdWords this month, no sales and now I’m broke” or “I can’t afford to use any e-commerce solution other than the cheapest Shopify has to offer”. If a $50 loss is going to break your back or if you can’t afford to spend more than $30/month on your storefront — go back to Step 1 and reevaluate your business.
… going to lunch, to be continued.
… back from lunch.
Step 3. Understand where you fall in the distribution line. If somebody is supplying you products without terms or a contract, they’re either selling that product to many, many other resellers or you’re overpaying for it. If you’re overpaying for it, you’re not going to be able to sell at a competitive price and your product will either not sell or it will sell at a very tight margin. If your supplier is selling to many other resellers, your pricing strategy will inevitably be a race to the bottom. There will always be a seller willing to make a penny, dime, or dollar less than you and competing on price will diminish your profits.
Step 4. Refine your e-commerce site. Don’t look at your site as the seller, look at your site as the buyer. If you’re using an e-commerce template right out of the box, your site is going to look like some type of Russian scam. You need to tweak and customize the style of your site, you need to add contact information so that the buyer knows that you’re legitimate, you need to add product and category content so that the buyer trusts you as a reseller of that product, and for godsakes, remove 404s. If you’re using an out-of-the-box e-commerce template, the least you can do is go through it and remove links to pages that you’re not using.
Step 5. Sell products that you’re either knowledgeable with or passionate about. Just because somebody will supply you a product, doesn’t mean that you should sell that product. To take revenue, and profits, to the next level, you’re going to need to have content on your site and you’re going to need to answer customer questions. If your product knowledge doesn’t extend beyond what’s listed on the data feed that your supplier gave you, you’re going to come off as unreputable and your bottom line will reflect that. Use your products, hold your products, read about your products and comparable brands, read about the industry that your products are in and the industry your products are manufactured for, become an expert of the products that you sell.
I’m going to cut it off there. If you want to start an e-commerce site, you owe it to yourself to take these 5 steps or don’t waste your time with e-commerce.
Dropshipping in 2019
Some tips and thoughts regarding Dropshipping in 2019:
A bit of background about myself. I am currently staying fulltime at Shenzhen China, have been doing this for over 5 years, launched a dozen or so dropshipping sites surpassing 7 figure annual revenue.
What type of site should you build?
In most cases, I would recommend building a store with few SKU’s and focus on them. Gone are the days where you’d test 200 SKU’s with 5$ ads each. About a year or two ago, we’d have a 15% breakeven chance by testing hundreds of products a week, that’s with a somewhat ok lander + video ads, but now that number is less than 5%. Spending time optimizing your website/funnel and ads is I believe more profitable than blindly testing products.
2. Invest in good copywriting.
This seems pretty obvious, but few are doing it to maximize it’s potential. You should AB test by yourself or preferably test with multiple freelancers. We have on average 4 angles we focus on for each store (that generally only focuses on 1-2 product), each with 5 variations of copies. It’s a rather slow and costly process but much more profitable than spending that money blindly on ads. Ideally, you would want to integrate good copywriters to your product selection process, as they are the ones most directly affecting the success rate of a certain product. I almost hire exclusively on upwork, some of which I have hired permanently to work at my office. Also… videos are essential, if you don’t have people to create videos. I would suggest taking a look at animoto. Bottom line is, it’s much easier to have profitable ads by optimizing your creatives/landers than tweaking your ads platform (FB/Google).
3. Where to dropship from.
Now, this is a tricky question. I don’t see a problem using Aliexpress to start out since it has the most competitive prices and the largest selection, but I see the doubts you may have, quality and shipping. The quality issue is for me a non-issue, you get what you pay, if you are scraping the cheapest products, then sure chances are you’ll receive a crappy product, same goes with shipping. On the other hand, Chinese dropshippers don’t really use Aliexpress, they use 1688/Taobao/T-mall. I would recommend getting your hands on 1688 (Yes it’s not easy for foreigners, but that’s how you gain an edge), there will be an MOQ but not too much. Also, they don’t use epacket. You should know that shipping time is the single most influential thing to your FB page score. Most here use what’s called a “special/dedicated line”, it’s not that much expensive than e-packet and you’d get products shipped to the US in 6 natural days on average.
Now if you want to scale, eventually you’d need to have a fulfillment partner. There are hundreds of them in Shenzhen and lot’s of details you should keep an eye on, but generally speaking, one element is largely overlooked, that is, local shipping prices, which actually is super important since it adds up to your costs. Every single fulfillment center will tell you that they have the best prices, but that is absolutely not the case at all. The only way you’d get better prices is with volume, so you need to compare carefully. You should also negotiate with your fulfillment partner to see whether they can process your order in less than X hours.
4. Make sure you hide your site from Spy tools.
The Chinese are just catching up to the whole dropshipping game and they are good at it. Check your Google analytics and see whether you have traffic coming from commerce inspector etc…. You can insert 2~3 lines of code to your store )if you’re using shopify) and avoid a large percentage of spy tools.
5. UPSELL UPSELL UPSELL
Regardless of what my store sells, I always import hundreds of products to my store . I do not display them anywhere on my store, they only show up when people have purchased, just before the thank you page. You will likely not be profitable if you do not have an up/downsell funnel. There are plenty of tools that can help you achieve this.
I Surveyed 300+ 6 & 7 Figure Store Owners To Understand Who’s Winning Now and Why
Hey all, Andrew from eCommerceFuel here. I’ve built and sold a few stores and now run a Community for experienced store owners.
I surveyed 300+ high 6 and 7 figure store owners this Fall to figure out what’s working and what’s not in eCommerce, and just released my results in what I’m calling the State of the Merchant.
A few interesting stats:
Companies that are manufacturing their own products are growing 50%+ faster than retailers / dropshippers.
The average store owner surveyed has revenues of approx. $750K and makes $132K in profit.
Pet Supplies, Beauty, Tools and Home Improvement are the best converting categories. Electronics, Home, Jewelry and Clothing are the worst. The overall average conversion rate is 2.10%.
Stores in Europe and Australia have significantly higher conversion rates than those in the States.
Despite it’s dominance, most merchants (51%) still aren’t selling on Amazon.
55% of store owners would rather be attacked by an angry swarm of bees vs. a wild, hungry bear. (This was an actual survey question).
The average store owner has a net worth 5x larger than average.
There’s a bunch more stats which you can see at the full post linked to below. I also created a detailed info-graphic summarizing the data in case you’re more of a scanner.
Finally, I’m releasing the entire raw data set as well. So if you want to slice and dice the data yourself – or investigate some other areas (there’s more than 50 data points for each store owner) – you’re able to.
[LINK TO FULL REPORT AND INFO-GRAPHIC IN COMMENTS]
Happy to answer any questions in the comments and hope this is useful!