***Full disclaimer - this isn't a GUARANTEED method, no method/strategy is***
Hi everyone,
I'm fairly new on BHW and I've made a few posts to get help on different things (with no avail), but even then, I believe that good comes to those who do good - simple karma, so that's why I wanted to share my journey very briefly to anyone looking for help or motivation.
I've been in the dropship/white label biz for over 3+ years now, so my experience, just like with anyone else's, varies through good and bad experiences, legal troubles, ad account bans, hiring BS "marketers", and the list goes on.
I've been running a general men's accessories Shopify store for over 2 years now. Prior to this, I dabbed around with different hype products. Now back to the story.
For the better part of my business, we had one item (amongst dozens) that was our bread and butter, the real money maker. We were honestly tired of selling this item because our profit margins were not so great, I had to pay a team of VA's/CS agents, and more over, it didn't represent the brand I was trying to build for my store.
I continuously researched to find something that is cool/unique and has a relatively strong profit margin. I know - this is what every dropshipper says but it's true, you don't want to sell an item and make a few bucks. Our aim was quantity sales vs. niche, selective items.
We found a winning product in April and launched it. Sales picked up as we found a very interesting (but not surprising) audience that we targeted. Keep in mind we didn't have any value-based audiences (VBA) at the time or any LLAs, etc. This was 100% pure interest based targeting only.
By May, we locked a relationship with a supplier to ship the item and we had a solid month with over $40K sales. The problem? Our net revenue (includes cost of goods, overhead expenses/salaries for team, ad spend) was actually always in the red zone - we didn't make any positive cash. Why? Crappy ROAS and over expectations on ad spend + hiring a marketer who was extremely over priced that we let go in 2 weeks.
So now we really needed to lift our business from the gutter. What did we do? Find a better, "cooler" item to target the same audience (we knew this was a winning audience) BUT also find an item that can be targeted to several audiences - meaning it shouldn't be specific to one niche in particular.
Last month (August), we stumbled across another winning product but from our lesson learned in the past, we were very conservative on ad spend. As a result, we started September with a strong comeback and leveraged several of the interest-based audiences we created along with a VBA audience. Keeping in mind that we managed to hold steady a ROAS of average 2.2 - 2.3x. This is VERY HARD TO DO! I am still struggling as our ROAS has dropped to around 1.5x to 1.8x recently which means it's about time to switch creatives. If that doesn't work? Find another winning product.
In 14 days, we hit $100K and as of today (20th), are are at $163K. This is all gross sales. Actual net revenue on this is around ~ 25%. Our average order value was roughly $50. I've noted some key takeaways and also existing problems that we face below. I really hope this helps all of you, motivates you and also makes you understand that the micro data is indeed something to care about. When you are earning around 8-10K a day, a 0.3 reduction in your ROAS could make you loose hundreds, if not thousands, in net revenue.
LEARNING LESSONS:
- Never give up
- Find a winning product with the mindset that you can target several audiences, not just limit yourself to one niche
- If you have/find a winning product, be slow and steady with your ad spend. Think very conservative and always keep tabs on your individual campaign ROAS alongside tour averaged ROAS. Your aim should be to have this atleast at 2.10x > daily averaged
- After running your campaigns for one week, go through each chart for the individual campaign to understand your demographics - this is key. Are you getting more purchases on FB vs IG? What is your cost per result for each platform? Which gender/age group is best responding to your campaign? Once you know this, you can better optimize your campaigns
- With enough pixel data, create a VBA audience - this is a money maker!
- Video, video, video - I cannot stress this enough. Do NOT make carousel ad's with pictures. You NEED a SOLID video ad. If your supplier can't provide you with one, then ship it to your house and make a video yourself but regardless you NEED a video ad (not some Animoto one, like a real one)
- My last advice is my best - learn everything yourself. I was working a corporate job not related to marketing at all, but after getting scammed and deceived by countless "marketing experts", I learned where they failed and found out how to do things myself
- Things that many drop shippers won't address in detail are ongoing issues. You cannot have a forever winning store, this is just not possible due to several reasons including product saturation, audience overlap, or people just don't want it. Simple.
- Just because you have a winning creative (e.g. video), always create new content. Why do some Youtubers do better than others? It's because they have cool, engaging content that keeps their viewers entertained. Think of yourself in that context; you want to make sure your content is ever-changing even if it's the same product.
- ROAS will stress you out because you need to factor in your daily ad spend + COGS (cost of goods incl. shipping).
- If you can afford to hire a VA (overseas), do this once you start to scale so they can manage your customer service. Honestly, CS is super important in order to avoid paypal disputes and Shopify chargebacks
- Learn from the failure of yourself and others - as simple as it is
- Expect crappy days and negative net revenue in the beginning, this will happen but things will just get better
- Always measure true ROAS by your daily sales (minus shopify fees) divided by your ad spend, pixels are always delayed so this method will calculate your true ROAS which is generally 0.4-0.5x higher
I'll let anyone ask questions if they'd like. Yes, I can post "proof" if needed as well. I have one request from all of you who can help me out with ROAS. Even though I have found a winning product, my ROAS has dropped in the past 4-5 days with an average around 1.7x. Can someone please provide me some tips/help on how to increase this?
Thanks for reading!
