During our dropshipping business, we engaged with many Chinese vendors while trying to source our products. During the early phase, we simply placed orders on AliExpress directly for our customers. That seemed to become impossible once we started selling at scale, and so we decided to engage a few vendors for long-term order fulfillment.
My co-founder started engaging them on WeChat to discuss details of manufacturing, pricing, quality etc. After signing up a few vendors, we started the fulfillment process.
During one of the video calls with our vendor who was packing orders to ship at the time of call, I saw something that left me in complete disbelief. I saw that her 4 year old daughter was also packing orders in the background in her house, while the vendor attended our call.
At that point I realized how the Chinese are eating the world and that’s because of sheer hard work and no other reason. If you have a problem with the Chinese doing that, you need to work harder than them. And if you can’t, then you need to stop complaining.
Users online on Socialoholic’s content website at one point in time according to Google Analytics
Since 2011, we have driven more revenue from influencer marketing than anything else whether it is for e-commerce, content websites or Ad Breaks (video monetization program of Facebook). Influencer marketing is really rewarding in one regard and that is you can often have a much higher reach compared to paid ads of the same platform for much lower cost. It is one of the best ways to scale your business on social networks with higher margins. I also feel no shame in acknowledging that we’ve been doing influencer marketing before we knew what it was called. That makes us one of the first ones to tap into this industry.
We have served as much as 60 million pageviews in a single day. That’s 700 pageviews per second or 42,000 per minute. We also served 240 million ad impressions per day making our content network one of the largest in the world. I mention these figures to demonstrate the power of influencer marketing.
60 million PVs on 30th December 2014
We are also notorious for breaking the internet because we have crashed cloud servers, not only making our back-ends inaccessible but for hundreds of others as well. Of course the front-ends always stayed unaffected.
Our audience development was led by Musa Mughal who was only 16 at the time of contract. We identified him for his connections in the influencer-sphere when he was very young and that has led to a very rewarding experience for both Socialoholic and him.
Today, while Facebook penalizes content-websites for influencer marketing, it is still a booming industry for Ad Breaks. While Instagram continues to stay the top audience market for e-commerce businesses. I highly encourage you to explore this area of business as personally I haven’t found anything better in the entirety of my career.
This is the third part of the three-part series of posts that I planned to write on dropshipping. The first post explained what dropshipping is. Second part highlighted our scaling strategies, and the third part explains the final trick that boosted our sales by 837% as we handled over 10,000 orders everyday.
By mid 2017, we were successfully running 3 e-commerce stores. I was extremely busy running day to day ad-ops for our company. Fulfillment had been automated completely. But Saad, my co-founder, still had a few things outside of our core business ops that kept him very busy.
We were doing nearly 2000 sales a day, and posting growth month over month. I was happy with the progress but also very busy launching new ad-sets and optimizing existing ones. We were constantly trying to scale globally. We were extremely proud that we had a major portion of sales coming in from Brazil, Mexico, Portugal and Australia. Combined, this was bigger than US.
Meanwhile, Saad tried to crack an altogether different code. If you remember, I mentioned in my last post the #1 trick to scale a dropshipping business. I said I can’t stress enough it’s importance. That is exactly what Saad was busy with. He hired a team of developers in Ukraine and we ended up with what we internally call hypersonic. A product spy tool, only to be used by us that gained us leverage against every other dropshippper. We scrapped every single dropshipping store in the world, and found winners in real-time.
This helped us find 3 more winning products within 4 weeks, allowing us to eventually scale 8x. At the moment, we only privately use this tool because of the kind of leverage it provides us against others and haven’t decided to offer this as a service. However, I highly recommend serious 7 and 8 figure dropshippers to develop something like this internally to ace this game.
This is the second post of the three-part series that I’m publishing on dropshipping to help create awareness of what it is, and scaling strategies that we use in our company to rocket-fuel growth. This post is not for beginners and will make more sense if you have already started your dropshipping business or have some sort of digital marketing experience.
Since 2016, our company has been running several dropshipping stores in 3 different niches. Most of the growth comes from paid-advertising with majority budget spent on Facebook, Instagram and influencer marketing (also on FB & IG). We also spend about 20% of our ad budget on Pinterest and Google Ads. There is no reason why we spend less on the latter, we’re just more comfortable advertising on Facebook. It’s possible other dropshippers find more success on Google. So by all means I recommend that you explore it. Below I’ll list the top strategies we use in our company for growth.
#1 Product Hunting
I can’t stress enough the importance of product in your dropshipping business. Without a good product and creative, your chances of winning would seriously suffer no matter how good your ads are. I recommend that you spy other stores, AliExpress, Wish, Amazon and everything else that you can to get access to products before others. Most dropshippers use some kind of product spy tool which is often a paid subscription service. You can also search for products on social media platforms where they are being advertised.
#2 Influencer Marketing
Influencer marketing is often always an easier method to find success with dropshipping. To some people it looks more complicated because it involves reaching out to many people, testing their audience and sometimes losing money to less-engaging audience. You may also end up finding accounts with large amount of bot followers, causing total capital loss for the campaign.
The reason why I say it is the easier option is because once you make connection with the right influencers, this is basically an on-going, long-term money making opportunity. You can keep trying new products in the same niche with the same influencer and you can continue to get sales.
Influencer marketing is often also lesser competitive compared to the platform ads where everyone is competing, whether in a dropshipping business or not. This also means that once you have right influencers, you’re likely to have a much higher profit margin compared to running ads on any platform.
#3 Pixel Training & PPE Ads
Without pixels installed on your store from Facebook, Google (and any other platform you choose to advertise on), you’re never going to be able to run successful ads. In short, pixel is a small snippet of code provided by ad platforms that you can install on your stores. Once installed, the pixel establishes a connection between the store and the platform. For example, FB pixel will exchange data between the actions committed on your store and FB ad platform.
The pixel fires whenever a user initiates any action on your store whether it is view content, add to cart, initiate checkout or purchase etc. All user behavior and action data is stored in your pixel. As long as the pixel keeps getting fired, it continues to create an audience profile for you. The more sales you have, the more easily the pixel can help you find better audience. Without pixel training, your campaign is unlikely to do well for you.
First strategy that we commonly use to train pixel is running influencer marketing campaign to get quick, cheap sales. These sales help pixel understand our audience.
The second strategy that we use is running PPE (Page Post Engagement or simply Engagement ads). Engagement ads are cheaper than conversion ads. You get quick social proof, you get quicker, cheaper clicks and this can be a nice way to train and prepare your pixel for your actual campaign.
#4 Horizontal Scaling
After generating a few sales from influencer marketing and PPE ads, we start running website conversion ads. We create a large number of ad sets with a unique targeting angle for each ad set.We generally run these ad-sets on a small budget. This allows us to scale our campaign through many targeting angles. We also end up testing many targeting options. Setting a small budget for each ad set means you’re not trying to win all bids and so you don’t over-spend. Instead you scale horizontally, running many $20-$50 ad-sets. This way you can continue to lose bids (save money) as well as spend more budget (scale) your ad campaign.
#5 Vertical Scaling (with Manual Bids)
Once we have found our top winning ad-sets we also want to scale them vertically. What that means is we ideally want to increase budget for these ad sets. There are generally 2 methods of how this can be done.
Using the first method, you can increase budget for winning ad sets by 10-20% every 2-3 days. This is obviously a slow process and can sometimes not work as expected because ad-sets try to re-optimize every-time they are updated.
The second method is scaling through manual bids. This means that the budget can be exponentially and immediately increased. But we put a cap on what we’re willing to pay for each sale. If the ad-set fails to get a sale, it stops spending. We have had success running $5000/day ad-sets using this method. So this is a fool-proof method to scale vertically. You win, or you don’t spend.
#6 Lookalike Ads
Lookalike is a magical AI technology by Facebook which allows you to run ads without any targeting options. Once you have generated more than 100 sales from a single country, you are eligible to create lookalike audience. This is the quickest, dumbest, simplest way of scaling your ads by letting Facebook do your job.
#7 Retargeting
The simplest explanation of retargeting is not leaving money on the table. A lot of clicks to your website are going to result in missed sales, abandoned carts or simply window shopping. You can reach these high-intent buyers again. Just run retargeting ads, emails & SMS to convert these missed leads for almost negligible price.
Conclusion
A lot of this information is going to sound tough especially if you’re a first time advertiser. But who said running a 7-figure business was going to be easy. The good news is, you can simply start with influencer marketing and learn your way up. The better news is, this is a very low cost business to begin with. You can start with as little as $2000 and make your way up to 7-figure. And the best news is, we have seen it happen first-hand.
I was asked by one of the readers of this blog to write in detail about our dropshipping business. This is the first part of the three-part series of posts that I plan to write on dropshipping. Since this isn’t a how-to blog, I can’t get into too many specifics or step by step guides which there are many on the internet. A simple Google search will lead you to many tutorials. However, I’ll try my best to give you the birds-eye view of what dropshipping is, it’s several advantages, and the top strategies we use to scale this business.
Dropshipping is only a fulfillment method but has many advantages over standard fulfillment. In short, it’s a retail business where you keep no inventory. Instead, when you receive an order, you have your wholesaler or manufacturer ship directly to your customers. Today, over 20% of all e-commerce fulfillment happens via dropshipping making it a $700 billion industry. Below I’ll elaborate the several advantages of running an e-commerce business with dropshipping fulfillment.
No Inventory
Since a 3rd-party ships orders on your behalf, you never have to maintain inventory. This saves warehouse costs, dead-inventory risks, and you only buy what you’ve already sold.
No Stock Investment
This is a very obvious advantage of running a dropshipping business. Since you only buy what you’ve already sold, it means you never have to invest in inventory or stock. This saves serious capital as most businesses end up spending a large percentage of their entire investment only on product, leaving very little to nothing for marketing. As a marketer, I believe this is missing out on everything.
Unlimited Listings
The founder of the 2nd largest e-commerce store Jeff Bezos started Amazon by selling only books. Although Amazon is an “everything store” today, it was started with books for only 1 reason: the large number of titles available. He said
Books were great as the first best because books are incredibly unusual in one respect, that is that there are more items in the book category than there are items in any other category by far.
My takeaway from this is that he focused on listing large number of titles from single category. With Dropshipping you can do that, and more. You can list virtually unlimited items from any amount of categories you like. Essentially, you only need product photos.
Marketing Budget
Almost 90% of your total capital can go into marketing since you don’t have to invest in product giving you an opportunity to run your marketing campaign on steroids. As you get a sale, you can use that money to buy the product.
Business Structure & Taxes
Your business can be structured in a way where you may not be paying sales taxes on your orders, and the burden may also not be passed on to your customers. While in some cases, customers may have to pay customs duties as packages arrive from overseas, generally that will not happen on smaller cheaper products that are invoiced by wholesalers at the wholesale price. Please do your own research on taxes and structure as different rules will apply with different countries involved in the chain.
Disadvantages
As with any business strategy, there are obvious disadvantages too. The single biggest disadvantage of dropshipping is long-shipping times, as items often ship from different countries, and primarily from China. But this varies on case to case basis. Once dropshippers figure out their best-sellers, they start to keep inventory and stock at 3rd-party-logistics (3PL) in the destination country. The other disadvantage, also linked to the first one, is customer experience. The delayed shipping times can result in bad customer experience. However, experienced dropshippers can address this issue too using 3PL, providing real-time email / phone support, and by being up-front about their shipping times.
In the second part of the series, I’ll talk about the strategies we use to scale this super lucrative business.
