Here’s How To Lower Your Product Cost By Up to 10%

Most drop-shippers start off by fulfilling the orders by placing them on AliExpress. As they progress with the journey and are able to do larger volumes, they use tools like Oberlo or Dropified for auto order placement on AliExpress.

Although we have been working with a private supplier for a few years now, we were able to reduce our product cost by a significant percentage while we placed orders via AliExpress.

AliExpress has an affiliate program that you can sign up for using AdmitAd. Once you’re in the program, you’ll get an affiliate code that you’d need to pass on to Oberlo or Dropified by contacting support.

By doing so, on each order that you’ll place using Oberlo or Dropified, your affiliate cookie will be dropped earning you up-to 10% cashback on your COGS (cost of goods sold).

At average, we have received 7% cashback. Since product is usually 33% of your gross revenue, you can increase 2-3% profit margins which are significant in an e-commerce business.

Finding Opportunities in a Recession

As an entrepreneur, it’s very important to stay calm even when the world is breaking apart. Most of the time, when there is a world changing event like COVID-19, people’s consumption behavior change. They buy different things compared with their previous spending habits.

While doing product research for our E-Commerce holding company, I got to know that Hair Clippers was one of the best selling products while China was on lockdown because of COVID-19. Who would’ve thought that people would buy Hair Clippers when hundreds are dying because of an extremely deadly virus.

But when barbershops are closed, you still gotta cut yours and your children’s hair. 3 of the fastest growing Chinese companies from January to March are companies which are either manufacturing Hair Clippers or are leading retailers.

Another great example of this trend is blankets, hand warmers and mini electric heaters. Due to control measures of COVID-19, apartment buildings turn off heating and you have to open windows for fresh air. However, temperature in many parts of the world is still too cold. China’s leading e-commerce marketplace Pinduoduo reported that sales of blankets and hard warmers saw 165% increase during the lockdown.

When you find calm in chaos, you can find opportunities like these and benefit from them. Insights like these coupled with lethal digital marketing can create new companies which capitalize on new purchasing behaviors.

This is a guest post by Socialoholic’s co-founder @SaadBassi

There Must Be Something That’s Recession Proof Right Now?

COVID-19 has disrupted businesses of all types across the world. I have already written about the turmoil that markets are in. I’ve also mentioned that our business was largely affected too. In fact, our business was affected before most other businesses when COVID-19 was only limited to China. All this while I’ve been thinking what could be the right thing to do during this tough time.

I thought about software businesses, which may also be struggling, but far less than other kind of businesses. In fact there are some software businesses that are doing better than they have ever done before; Zoom for example. As S&P500 index goes down as much as 30%, the stock price for Zoom is up by 30% as more and more people resort to work from home.

You may have also read that Amazon is hiring as many as 100,000 people to fulfill the customer demand. So Amazon doesn’t seem to be doing too bad either as people resort to online shopping to follow social distancing.

The more you read about the bad news on Twitter, Facebook or wherever you get your news from, the more opportunities are presented to you. In fact, when the world was functioning on full-throttle, it was tough to find opportunities because every industry was so competitive. Now, opportunities present themselves to you.

For example, you may have read that in many parts of the world, everything has been closed except for pharmacies, groceries and food deliveries. This is an obvious proof that if you could deliver medicines, essentials or food, you might be doing better than others. But what’s more obvious is that if there was a delivery version available of everything else that’s on a complete shutdown, that could be an even better opportunity.

If people are locked in their houses, they might need more than food or medicines. They certainly need video conferencing (zoom) to continue to work from home. They need Netflix, obviously. They probably also need to workout, right? Probably other things to keep themselves entertained or busy.

Because people need to still workout, we’ve launched our “workout from home” brand in the last couple of days. We’ve seen initial demand for it, and plan to scale it in the coming weeks. There’s a big e-commerce opportunity right now and I encourage that you seize it.

Moreover, Shopify is giving away 90 days free trial instead of the regular 14-days to help small businesses stay afloat. So what are you waiting for? This could be the time to kick-start your e-commerce journey.

My Life Right Now

I don’t like doing these posts too much. I like to talk more about meaningful things that could potentially help others and less about myself. But I don’t feel like talking about meaningful stuff today. I want to talk about myself.

Pakistan

2 days ago, Pakistan reported more than 100 cases of COVID-19 in a single day. The government of Pakistan so far is claiming that 100% of the cases are imported ones, and there are no local transmissions. The problem with Pakistan is not the virus itself, but the healthcare system which is over-loaded and in a mess even without the virus. The second problem with Pakistan is that with lockdown more people will die of hunger and poverty than the virus will kill without the lockdown. Hence, Pakistan has adopted a mid-way strategy with regards to social distancing.

Mental Health

For the past few days I kept reading to learn more and more about the virus in order to be more aware of the virus to protect myself and others not only in health terms but also in the markets and to create the right investment strategy. The good thing about consuming all that information is that it kept me busy while I was distancing socially and I learnt a lot of things. The bad thing about consuming this much information on a pandemic is that it induced fear, anxiety and panic in my mind. Today, I’ve decided to pull back. The important stuff will reach me as it will reach everyone. The details, I’m not interested in anymore.

Work

My work is a mess. For the past 15 years, I’ve only known two ways to make money. I either sell ads to make money i-e publishing, blogs, ad-breaks etc

Or I buy ads to make money i-e e-commerce, influencer marketing etc.

Both are in a mess right now.

The CPMs are down as much as 75% depending on the industry you are in. So selling ads is 75% lesser profitable as before. This in theory means this could be a good time to buy ads. While that’s true that CPMs are lower for buying ads too, but that’s because the demand for buying things except for certain essentials is down too. In addition to demand, the supply chain is disrupted too as most things are manufactured in China which is not fully functional even now.

In summary, both e-commerce and publishing are largely affected.

As I was spending more time at home than usual, and do not have much work to do except for reading about the virus, it has been a bad combination for me. So I’m taking a step back.

Options

The options that I can personally think of to keep me engaged are Netflix, reading, courses etc. I don’t think binge-watching Netflix will be too helpful in restoring the right state of mind for me. So I’ve decided to enroll in certain online courses. Work has been absolutely essential for me always to keep me in the right state of mind. I think getting educated further about digital marketing is going to feel as an extension of work to me.

What are you guys going to do if you are in a similar position?

Are Software Companies Safe from Present Economic Conditions & COVID-19?

What’s happening right now due to coronavirus is a supply-chain crisis. Businesses have buyers but are running out of goods to sell. Once the business profitability is affected due to decline in sales, they will let go some of their employees. This could affect purchasing power of some of the people creating a demand-side crisis.

The pandemic could also affect demand as more and more people stay at home to avoid the disease, they would be spending lesser money on certain products. In addition, their purchasing power could also be affected by additional health related bills. If COVID-19 lasts long enough, which at the moment it is showing signs of, there will be both supply-side and demand-side disruptions.

To improve the situation, Fed has cut down the interest rates. The goal is to sustain the economy by offering cheaper credit to businesses. But I’m wondering how can a supply-side disruption be fixed with cheaper credit. Moreover, cheaper credit could help larger businesses but small and medium sized businesses are likely to suffer the most.

While it is obvious that trade and e-commerce are largely affected, are software companies safe? Some of them might be but I do not believe that they will not have a cascading affect on them. After all, many software businesses are intended to solve real-world problems.

In my industry for example, many software businesses are Shopify apps or WordPress plugins. Shopify store owners use those apps to improve their selling experience. But if there are no sales, or no revenue, the store owners will obviously stop using those apps until situation changes.

Softwares that have nothing to do with commerce, may be relying on advertising as a source of revenue, or may be assisting industries that depend on advertising revenue. They aren’t safe either. Once the commerce is disrupted, the advertising is meant to be disturbed too. In my own case, my e-commerce stores are affected due to supply-chain crisis, but I’m also not spending on Facebook and Instagram ads to drive sales which means the advertising industry is taking the hit too.

As a publisher, I also have data to support this argument as CPMs are going down across the board. So any software business which is dependent on advertising or support customers who drive revenue from advertising will see disruption too.

All other kind of softwares may be safe from this cascading affect, but will still be dealing with users with lower purchasing power.

While pure software businesses are much better off than other businesses, I wouldn’t say that they will not be affected. However, it is still a better time to be running a software business than any kind of traditional business.

Receiving Ad Delivery Penalty Due to Coronavirus

It should be no surprise to anyone that coronavirus has affected some of the global trade and specifically slowed down the e-commerce industry.

Since we were facing increasing difficulty to source and fulfil our orders, we had stopped advertising some of our stores by end of January where product sourcing had become difficult.

But even though we had stopped the ads, there were still shipping delays for the orders that we had already received. By last week, after a three week break, we had made alternate arrangements for our product sourcing and resumed partial advertising operations for the affected stores. However, today we received an advertising delivery penalization. This has caused us to stop ad-ops one more time.

Although our delivery rates received poor reviews and for obvious reasons, I’m still relieved that nearly 100% of the customers were happy with the product quality.

In the end, I’m not just an e-commerce seller, but many times also an e-commerce buyer. Since I expect to receive a certain quality of service as a buyer, I need to ensure the same as a seller too and when I fall short, with or without coronavirus, I’m not proud of it.

What I Absolutely Hate About Dropshipping

Although dropshiping is just a fulfilment method and there’s nothing wrong with this fulfilment method given that there is a good process in place. But the dropshipping that I commonly refer to on this blog has some shortcomings. I’m going to list a few below.

When you’re fulfilling orders only and only from China, and shipping across the globe, there will be delays despite using e-packet only shipping method. Delays result in angry customers and angry customers aren’t repeat buyers. It’s more challenging to have repeat customers, subscriptions, or higher lifetime value if you’ve 1 fullfilment center in China responsible for your global shipping.

I dislike this about dropshipping and my team does everything in their power to resolve this as much as possible. This can be resolved to some extent using 3PLs once you have a proven product. Like I said, I dislike this but I wouldn’t go so far to say that I hate this about dropshipping.

What I absolutely hate about dropshipping is that there are many many stores that use the same or similar creatives, copywriting, landing pages and scam customers in the end. The customers, who are often very naive, can not even differentiate between two or more stores running ads for 1 identical product.

Moreover, most customers can not understand that they were scammed by someone else. Our support inbox is often full of queries about orders that the customers never placed with us. These are the nicer emails. The other types of emails are accusations and abuses also intended for someone else, but sent to us. Our ads on Facebook get flooded by unhappy customers, who also aren’t our customers.

I wouldn’t say Facebook doesn’t do enough. They run surveys targeting the people who bought from Facebook ads and penalize sellers based on the feedback. But such sellers move from one LLC to another, one domain to another, one theme to another, closing everything behind.

In the end honest sellers suffer. Facebook will obviously crack down even harder. The honest sellers will lose their accounts even more. This is what I absolutely hate about dropshipping.

Why Lifetime Value (LTV) Is a Survival Game

As the ad costs to drive sales keep going higher, at some point you’ve to understand and work on the lifetime value of your customer. Otherwise, you’ll not stay competitive and will be crushed away.

You pay Facebook or other platforms a certain amount to display your ads to people who are interested in a certain “interest or a keyword”. At some point you realize that the cost per acquisition has gotten so high that after paying for acquisition cost, cost of goods sold, and other infrastructure costs such as fee for shopify/server and other plugins etc, you’re losing money.

Sometimes after optimizations of all kinds on the ad level as well as on the landing page, you’ll realize that you’re still losing money. How can that happen? How could your competitors by bidding so high? How can their business model work if they are spending higher than you to acquire customer. The simple answer lies in LTV: Lifetime value. And LTV should always be higher than CPA (cost per acquisition).

If your business model is designed such that you acquire a customer who would pay you once only, your revenue model is limiting you to compete. The reason why that happens is because your competitors are now betting on the lifetime value of a customer. They are interested in recurring purchases, subscriptions, and in summary to acquire user once, and monetize him again and again.

Other buyers of ads are bidding higher in order to purchase data that they can use later to either bring the bids lower, or use it elsewhere to generate revenue.

To conclude, in this day and age, if your business doesn’t account for the lifetime value of the customer, you’re simply not competitive.

The 1/2 Rule For E-Commerce Metrics

Although there’s no standard for e-commerce metrics, you should still aim to hit certain floors for your metrics in order for you to have a working funnel. I call this a 1/2 rule.

When a user lands on your product page, you need to track the progress between the different steps he needs to go through. A large or unexpected drop at any step should make you want to investigate that particular step of the funnel.

After landing on the product page or landing page, the user may have to add the product to cart. After adding the product to cart, user would land on the cart page. At this point, user would need to initiate check-out to land on the check out page. The user then needs to input his shipping and billing info in order to place the order.

While what percentage of users reach on each of these pages will largely vary depending on the type of products, price of products and the source of traffic, for typical dropshipping stores selling products between $20-$100 I recommend to at least watch out for the 1/2 rule.

The 1/2 rule suggests that if 20 people added the product to cart, at least 1/2 of them should initiate check-out which should lead 10 users to the check out page. And if 10 made it to the check-out page, at least 1/2 of them should purchase giving you 5 purchases in the end.

Landing page optimization is very important and I recommend that you use heatmaps to optimize your funnels. If you get your advertising, creatives and product selection right, but there’s a problem with your landing page, cart page or check out page, you’ll end up wasting all your efforts.

After all a chain is only as strong as it’s weakest link.

The Fast Moving World of Digital Marketing

As I mentioned earlier on this blog, our first e-commerce store was launched in 2016. Our primary customer acquisition strategy since then has been through Facebook ads.

While I had run Facebook ads a long time before, it wasn’t until 2016 that I spent a major budget. Since then, almost everything about the ads has changed. Many new strategies have been introduced and a lot of strategies that I learnt in 2016 are irrelevant.

Case in point, tech moves really really fast. Digital marketing moves even faster. And I’m curious what value could business schools add in your marketing career in this day and age.

It’s likely that my perspective is limited too, since I’ve never been to a business school. But help me understand, do business schools, including international, teach anything about this kind of marketing? If they do, how do the teachings stay relevant since the minimum length of a masters business degree is 1 year. Let’s not even talk about the bachelors degree here. In my opinion 1 year is a long enough time in digital marketing to unlearn everything and learn new things.

In my 15 years of career as digital marketer, I’ve changed my job roles 15 times. If I hadn’t, I would have found myself with no work. My primary source of revenue came from selling ads and our publishing company Socialoholic mastered that area. Only a few years later, we found ourselves buying ads instead. Now all of our revenue comes from buying ads.

In digital marketing, if you’re not pivoting every few months or even weeks, you’re being left behind.

So if you’re looking for a marketing school, let me tell you one. It’s where I went to. It’s called YouTube. The course length varies from 4 days to 4 weeks. And after that, you can get shit done.