In this drop shipping case study, we’ll cover why you should dropship outside the USA. You’ll learn about the disadvantages of dropship USA. Dropshipping USA products isn’t sustainable. Thus, we’ll cover how dropshipping AliExpress products can allow you to reach a global audience.
Recently, our community fellow at Ask.Oberlo @KerrieWilson asked:
I am wondering when first starting out should I just market to the USA rather than other smaller markets?
When writing an answer, at first I quickly decided that dropship USA is the right choice, but then I started to have doubts. Is it really the best market for dropshipping? After digging deeper, here’s what I’ve found.
By dropshipping with AliExpress, you can literally sell anywhere and everywhere. A lot of suppliers ship to dozens or even hundreds of different countries, from G8 members to tiny countries like Kiribati (a country in Oceania). Meanwhile, dropshipping USA products wouldn’t allow you to take advantage of the global market as easily due to lower margins.
However, most store-owners sell only to the US because they don’t feel like their store is ready for a grand global expansion.
Their store is only in English and they can only provide English support. Besides, shipping to locations outside the US often takes more than 30 business days while getting parcels delivered to American addresses using ePacket only takes 14 days..
But the US market isn’t ideal…
Disadvantages of the Dropshipping USA Market
Below I list a few disadvantages of the dropshipping USA market, such as high competition that increases advertising costs and saturates supply. The disadvantages we found while creating this drop shipping case study are extremely interrelated and warrant closer examination.
The Dropshipping USA market is extremely competitive
Being the largest economy on earth, the US has grown a lot of strong eCommerce giants people can visit to buy anything they want. Think of Amazon, Walmart, or now Jet.com.
Furthermore, large and developed markets have tons of smaller merchants. Shopify powered 240K stores in 2015 and 70% them were based in the US. While the giants and smaller merchants don’t necessarily sell only to the US only, it clearly reflects the level of competition.
The Dropship USA market is extremely demanding
Some of you might be surprised to hear this, but Americans are the most demanding consumers I’ve ever worked with. It’s definitely not a bad thing, but for a beginner it’s often difficult to keep up with the dropshipping USA market expectations of someone who has gotten used to an Amazon Prime level of service.
The Dropshipping USA market advertising costs are huge
If you cater to the dropship USA market, you’ll find that you spend more on ads. According to Salesforce Advertising Index (2015 Q1), the average cost per thousand impressions (CPM) in the US was $3.30. In France it was only $1.57. That’s more than 2x cheaper for the same result.
How many of those 1,000 impressions converts into customers depends on your product, store and other factors — but if these things are done right, you could enjoy double the profits just by switching to another market.
And think of even smaller developed markets like Norway or Finland. (Fun fact: In Norway, a bottle of lager beer costs $9.00, just like a T-Shirt in your store :)).
Dropshippers USA – What You Should Consider Before Picking Another Market
Below I list three things you should consider before testing another market.
Dropship USA – English Speaking Population
Assuming you don’t plan to invest your money and time translating your entire store, you should consider the English Speaking Population of your selected audience.
For instance, only 5% of Brazilians speak English, while in Denmark the English-speaking population is 86%.
The conventional eCommerce design makes it super intuitive to buy on a site no matter what the customer’s language. When I was running a store, I received many orders from non-English speakers around the world. However, it’s still something you should be aware of.
Handy Tip: there are many translation apps on Shopify Apps Marketplace that can help you get along with translations without manual work. Click here.
Dropshipping USA – Purchasing Power
From the Norwegian beer example above, it seems that Norwegians will mind spending $30 on a T-Shirt. But for someone in Mexico (a big and attractive market), $30 might be a price of a higher-end clothing item. Pay a lot of attention to this, as it might significantly reduce your conversion rate.
Dropship USA – Delivery Infrastructure
Some remote countries don’t have the postal infrastructure that’s taken for granted in Europe and the United States. A lot of suppliers will say you can’t track orders shipped to South Africa or Brazil; or that there’s an extra delivery fee (even though the delivery was supposed to be free).
But what’s worse is that in remote countries a lot of deliveries never reach the recipient. These developing markets tend to have extremely strict customs policy or bad postal services and the packages are “lost” somewhere en route.
Though you should be careful with developing markets, I strongly recommend testing them. You might just hit the jackpot you failed to find in your home country.
What Countries Should You Try (Drop shipping USA Case Study)
Our friend and early Oberlo store agreed to share their Google Analytics stats, in this drop shipping USA case study, to help you decide which countries are worth testing. We aren’t allowed to disclose the store name, but they are selling a broad range of women’s and men’s clothing and accessories.
A few key points before we get into details:
- All of their products are dropshipped with Oberlo and comes from China.
- The store offers standard delivery options: 14-day delivery to the USA (with ePacket) and 30+ days delivery to other countries (China Post).
- The website is in English and has never been translated into other languages.
- The website support is only in English as well.
- The majority of traffic comes from Facebook Advertising.
Dropshippers USA – Top Countries by Conversion Rate
Quick note: conversion rate is the % of your site visitors who make a purchase. For the purpose of this drop shipping USA case study, you can calculate it by simply dividing the number of sales by the number of visitors.
The chart represents the statistics of more than 2,500,000 visitors and includes only the countries with 100+ orders.
The top 20 countries are:
Even though the United States is the biggest traffic source of this site, its conversion rate is 1.5 times smaller than Australia. Scandinavia (Norway, Finland, Denmark) taking three of the top 10 slots suggests it is a must-try region.
Other countries you might want to try include Ireland, Canada and the United Kingdom. All have good conversion rates, are less competitive and easily scalable (your ads can quickly reach every person in Belgium, but your budget would be insane to reach everyone in the UK).
Dropship USA – Top Countries by Average Order Value
Just like cutting your advertising costs in half might double your profits, you can earn more by selling more to one customer.
In this specific example, of this drop shipping USA case study, the US is not even in the top 20 of countries by average order value with its average order value of US$39.29.
8 out of 10 countries on the list are in Europe, and the majority of those are Scandinavian. While Argentina looks great, I’d recommend eliminating it from your testing list since the conversion rate is only 0.46%. Norway proves to be another top choice as it appears in second and fourth places on the charts.
These two simple graphs above, allows us to create a sample scenario:
Out of 100 visitors from Norway, you would receive 3.54 orders of $51.25 value. Or in other words 100 visitors = $181.43 in sales.
Out of 100 visitors from the US, you’d receive 3 orders of $39.29 value. And 100 visitors= $117.87.
The difference is $63.56. Now if you have 1,000 visitors per day, you’re leaving almost $650 on the table each and every day.
Drop shipping USA Case Study Conclusion
The goal of this drop shipping USA case study is to show you that the US may very well not be your go-to option. Thus, you must test other countries, even if you don’t speak their language or your site is only in English. This especially applies when your budget is smaller.
While the stats will definitely differ for your store, use the above graphs and insights to create your countries-to-test list. Test them and track the results. Then revise your marketing strategy.
As we’ve seen from the above examples, smaller and cheaper markets don’t always mean smaller profits (Tweet This).
What have you found most useful from this drop shipping USA case study?