I Was Doing E-Commerce: Here's How
Drop shipping is an attractive business model for many entrepreneurs, as it requires minimal upfront cost. However, it can come with its own set of challenges, such as longer shipping times, customer satisfaction issues, and competition from well-established brands.
In this article, we will explore why drop shipping may not be the ideal long-term business strategy, and what alternative approaches entrepreneurs can consider to start a successful e-commerce business. We will look at the mindset, business model, product research, store creation, and marketing strategies that can help entrepreneurs increase their chances of success. From leveraging social media for product research, creating a professional-looking online store with Shopify, to advertising on Facebook and TikTok, this article provides a comprehensive guide to starting a profitable e-commerce business.
Why Not Drop Shipping?
For non-entrepreneurs, let me provide a brief overview of drop shipping. Drop shipping involves connecting a manufacturer to a customer through a middleman, often a website. The middleman does not own any inventory and only orders the product from the manufacturer once the customer has paid for the order.
Why drop ship? It requires less upfront cost compared to bulk buying a product that may not sell. However, it is not a suitable long-term business strategy. Most drop shippers use AliExpress, which primarily sells from China, resulting in long shipping times of 2-4 weeks or more. This can negatively impact customer satisfaction and may drive customers to competitors with faster shipping times, thus hurting the product or brand's reputation.
Couldn't Customers Buy From The Manufacturers?
An example I can provide is a conversation between my mother and myself about ordering contacts. I wanted to order from an optician store, while my mother preferred to order directly from the manufacturer due to cost savings. However, I argued that ordering through a brand, such as an optician, would provide added security and convenience in case anything went wrong. The optician would have the knowledge and expertise to handle the process and ensure the right contacts were ordered.
This scenario highlights the importance of brand trust and security. Customers are more likely to trust a well-known brand rather than an unknown manufacturer from China that doesn't publicly advertise. A brand provides a sense of security and reliability that is often preferred over a cheaper alternative."
The Mindset
Andrew Tate, in his old Hustler's University Course, stated that one should be able to start any business with minimal capital. While ecommerce requires some funding for expenses such as domain hosting, Shopify fees, product ordering, and marketing, it doesn't have to involve a large amount of upfront cost.
Tate uses the example of a friend who wanted to start a makeup business to illustrate this point. Many people believe that starting a business requires ordering products, registering the business as a legal entity, and hiring a designer for a logo. However, these steps are not necessary, and investing a large sum of money upfront, such as $100,000, could result in failure. Instead, one could start the business with only $2,000 and have 50 chances to make it successful.
The Basic Business Model
The process can be summarized as follows:
- Find a product
- List it on the website
- Drive traffic through social media marketing
- Sell
Initially, the target audience is impulse buyers who spend a lot of time on social media and are exposed to a lot of advertising. Once the brand establishes a reputation for trustworthiness, it can expand its reach to other audiences.
Researching Products
There are several methods for researching a product to sell online. A traditional approach is to browse through wholesalers like AliExpress to find products that meet certain criteria to ensure potential sales. However, it's important to consider what the market wants, and cater to that demand through your store.
One method is to use social media as a research platform, as recommended by Jordan Welch. For example, using TikTok, you can have someone, such as a brother, browse the platform and look for viral videos about products. If a video about a product is receiving a lot of engagement, it indicates the market wants the product. From there, you can examine the competition's customer experience, such as the appearance of their website, the quality of their advertisements, and the product description, among other things.
The goal is to improve upon the flaws and provide a better customer experience, which can be as important, if not more important, than the product itself. After finding a product, the next step is creating a store.
Store Creation
Shopify is definitely the king when it comes to e-commerce. You can try it out with the free 14-day trial. When thinking about making a name for your store, don't choose something too specific. Take a look at Nike, Adidas, Puma, Rolex, and Bugatti. All these names only have meaning because of their marketing. Then, create your pages: usually Home, About Us, Support, and Order Look Up. Research how to create a Shopify store and you'll be on your way. The objective in creating a store is to look as legitimate as possible and convert customers. Customer experience is key.
Marketing
Use Facebook and Tik Tok ads. But with Tik Tok, you can also promote your product organically, without cost. Facebook is the most powerful advertising tool we have at our disposal. Its metrics provide a wide range of data to determine the demographic of users who buy our product.
The Facebook System
With Facebook Ads, we divide our advertising into Campaigns, Ad Sets, and then the Ads themselves. The Campaign has an intended goal, such as checkout or purchase optimization. The Ad Sets then keep this big goal in mind, and, based on the groups you target, the ad budget is spent on these users through the ads in the Ad section. It's better to visualize it as an inverted pyramid.
The Ad section will contain the ad creatives that are shown to users. If we are skilled in editing, we can create the videos ourselves, or we can outsource the work to an ad creation agency. The reason we recommend using an ad creation agency is that to create videos featuring the product, we would have to either ship it, or search the internet for showcase videos and edit them together. This all takes time, and we are simply testing to see if the product is viable.
TikTok
To drive organic growth on TikTok, focus on replicating the success of popular videos by adding your own unique twist with your product. Use your own phone to record the videos, and aim to upload at least 60 of them. Continuously innovate and generate new ideas to showcase the product in an attractive way, highlighting the benefits and desirable outcomes the customer can achieve by purchasing it. Your ultimate goal is to create videos that captivate the viewer and help build a strong brand image.
General Principle With Ads
Additionally, ensuring that your ads are engaging will also increase their performance. Respond to comments and encourage sharing and liking. This will signal to the algorithm that the product is resonating with the target audience and should be shown to a larger audience, thereby increasing potential customers.
To further streamline and optimize your business, consider incorporating AI technology. This can save you time and provide valuable insights for tasks such as writing ad copy, product descriptions, and product names. A highly recommended AI technology is ChatGPT.
Ad Agency
If we want to scale up, we can have an ad agency run our ads for us and achieve the desired results. Alternatively, we can start our own.
My plan is to gain experience running my own ads to build a track record of results. Having an ad agency has a process similar to E-Commerce. We prospect potential clients, onboard them, and deliver the service.
Iman Gadzhi argues that it is the best business model for beginners in entrepreneurship, and I agree with him. By selling the service of scaling people's businesses, the revenue is pure profit and the potential to earn more is limitless.
Copywriting As The Back Bone
Your ability to tap into people's fears and desires will determine your success in sales. This is the art of copywriting. I'd recommend learning this skill if you're starting at $0.
If you have capital, consider e-commerce. You can become a freelance copywriter, similar to running an ad agency. Learn how to write persuasive content that appeals to the customer's eager wants. If you can understand your customer, it's powerful in directing your brand. We need to know their problems, fears, and desires in order to sell them a product that will solve those issues
Why Am I Telling You This?
I haven't revealed the product I sell or the brand name I sell under. I'm sharing this information for free as I understand that not everyone will take my advice and put it into practice. It's mainly to help me solidify my knowledge. Writing it out and teaching others will be beneficial to my own understanding.
Selfish, but it is a value exchange, just like any business.
More To Write
I'll end it here. There's more to talk of business and entrepreneurship. Most of what I wrote in this article only taps the surface.