29Sep
By: Nicole Martins Ferreira September 29, 2016

Rumor has it that starting an eCommerce business is expensive or only for those with money. At least, that’s what my mother always told me. So when my first business failed because I went into too much debt, my mother said her infamous ‘I told you so.’ My business had failed and I felt like there was no light at the end of the tunnel. I had no choice but to go back to the 9 to 5 and clean up the financial mess I had made.

During this time, I became obsessed with money – from making it to saving it. I knew I had to learn from my mistakes to finally achieve the success that I had always dreamed about. If you still wondering how to create a sustainable and profitable business or just how to start a dropship business. These eight tips will help you to avoid the biggest costly mistakes that I made when I first dived into entrepreneurship.

Dropship products

When it came to purchasing products, I made the biggest mistake of all: I bought inventory without testing first. I have piles of boxes of unsold inventory sitting in the basement mocking me every time I do laundry. I bought hundreds of dollars worth of inventory and paid fees associated with shipping the products to my home. This was one of the biggest reasons why I fell into debt.

After paying off all my debt (business and student loans) I knew I would never make the mistake of buying inventory again. I had been working at an eCommerce company by day and learned that some of the vendors were dropshipping. I dabbled with a few dropshipping services online until I eventually found Oberlo.

The great thing about utilizing Oberlo was that it allowed me to access a selection of millions of products which meant that I could explore any niche that I wanted and only purchase products as customers ordered them. To top it off, I was able to test products quickly without any additional fees.

When it came to cost, Oberlo offered a plan that started at less than $5 a month which is a much smaller risk than spending hundreds (or even more) on inventory that might never sell.

Eliminate the need for employees

eliminate-the-need-for-employees

The biggest financial mistake I made when I first started my business was hiring contractors. I hired a contractor for everything, even for things, I could do myself for free. My biggest weakness was that I wanted my business to look like the typical corporate company when I was just a start-up. I didn’t give my business a chance to grow because when it came to spending money on my business, I was a shopaholic.

When I first started dabbling with dropshipping using print-on-demand t-shirts, I had to design my products and hire freelancers to help. It was a fun creative outlet but within a few months, I realized that more of my time was spent on product design than marketing. I also couldn’t compete with the product selection or the price point that competitors were providing customers.

Oberlo was helpful because it allowed me to have a range of products that allowed me to stay competitive while never needing to hire freelancers. With my current business, I knew that I would have to figure out how to do most things on my own and found Oberlo’s free ebook which provided me with a lot of value so that I wouldn’t need to rely on others. Reading Oberlo’s blog also helped me implement tactical concepts with ease. Oberlo’s online forum also allowed me to learn from other entrepreneurs so that I can improve my strategy and avoid running into similar issues with them.

The biggest cost of running a business is hiring. With Oberlo, at least in the beginning, you’ll be able to do most of the work yourself and eliminate the need for employees.

Focus budget on marketing

When it comes to the budget, I used to always underestimate how important it is to allocate money to marketing. I have an educational background in public relations, so I figured I’d go the free route since I know how to build a following and provide excellent customer service. What I failed to recognize back then was that it takes money to make money. If you looked at the top eCommerce businesses, you’ll find that every single one of them pays for traffic.

However, since you’re starting out, you don’t want to spend all of your money on one ad. The strategy that has worked best for me is to create $5 ads and split test them. I’ll try different copy, pictures, and target audiences. Once one of my ads is performing well, I reinvest the profit from sales in that ad and split different test pictures and copy similar to my successful campaign until I’ve finally created the best ad possible.

Irwin, an Oberlo user, said “[My first sale] came just 3 days after my store launch. Like most of my site traffic, it came from Facebook Ads.” His insight helps people realize that when you first start a store, people won’t just come to you, you have to put your brand out there. Oh, and by the way, Irwin is currently making $10,000 a day in revenue.

For those of you who don’t have the funds to invest in ads currently, the good news is that you’re not doomed. You can play the slow, long-term game. However, to succeed in this, you can’t give up for the first year. Here’s what’s worked for me:

  • Building a social media audience: I focus primarily on Instagram, Facebook, Twitter, Pinterest and recommend Snapchat as well.
  • Pumping out content: Produce content multiple times per week. Embed products into your blog posts. Divide your content into two alternating categories: SEO driven and virality driven. For SEO articles, you might write something like “15 Tips for Picking an Engagement Ring” For viral articles, you might write something like ‘What your Engagement Ring says about your relationship.”

The great thing about dropshipping with Oberlo is that it allows you to focus almost exclusively on marketing, which is the most important part of running a business. After all, if your business isn’t making money, it isn’t a business. You don’t get distracted with product design or shipping products. You can focus your energy on building a relationship with your customers and mastering your marketing tactics.

Set sustainable margins

When you first start a business, understanding how to set margins for a product can be tricky. When I was using print-on-demand, the average recommended profit was about $10 which wasn’t sustainable. For one, I couldn’t provide free shipping internationally with that recommended profit and second I couldn’t pay for influencer marketing on Instagram because I always broke even.

When you dropship products from AliExpress via Oberlo, you can choose products that range from as little as a few cents to products that cost thousands of dollars, which provides a great opportunity for generating profit.

With Oberlo, you can also set the multiplier for your margins which gives you more to play with. In Oberlo’s Advanced Pricing Rules section, you can set margins that allow you to spend on advertising, provide free shipping and still make a profit. If you need an example, here’s what I use for my stores:

  • $0-$8 – Markup: 4 multiplier, Compared at price markup: 5 multiplier
  • $8.01- $50 – Markup: 3 multiplier, Compared at price markup: 4 multiplier
  • $50.01-$100—Markup: 2 multiplier, Compared at price markup: 3 multiplier
  • $100.01- $5000—Markup: 1.5 multiplier, Compared at price markup: 2 multiplier

Every now and then I’ll manually change the price if it seems too high for industry standards but this is my starting point. Note: I go up to $5000 because my products don’t go past that, however, where you start and end depends on the type of products in your niche.

Reduce shipping costs

shipping

As a person who has ordered bulk products and manually shipped them, I can tell you that shipping products on your own are expensive because of both the labor costs and the cost of shipping goods.

When you’re carrying your inventory like I did, you pay for shipping twice – once to get to you and again to ship to the customer.

With Oberlo, I was able to cut my costs by more than 50%. This is because I was no longer the middleman. AliExpress has cultivated relationships with 29 different countries to provide e-packet on many products which delivers products quickly and at a more affordable price, most times it’s free, which is ideal for store owners who ship to the US.

The best advice I can give about shipping is that you don’t want to limit your shipping to only the US, Canada, UK or Australia. Consider shipping internationally to other less competitive English-speaking countries.

Choose a broad niche

Picking a niche is a lot harder than most realize. On more than one occasion I’ve started working on a niche only to realize that it isn’t scalable. If your niche is too small, you could exhaust your audience quickly, making it hard to find customers.

  • Search for the biggest influencers in your niche on social media and use their audience size as a gauge for the potential for your business idea.
  • Start a brand with a one niche focus and slowly grow with similar niche products (for example, start with knives and eventually expand into kitchen supplies).
  • Write a list of 100 blog post ideas for your niche, if you run out of ideas early on it may not be scalable or the best fit for you. Focus on a niche that you’re passionate about.
  • Google different keywords in your niche. Look at how many results there are, how many images there are. Don’t forget to look through product searches as well to gauge how competitive it is.
  • Since Google Keyword Tool is no longer accessible to smaller brands, I use Merchant Words which gives me insight into Amazon products so that I have a rough idea how competitive a keyword is in an eCommerce niche.
  • Depending on the size of your niche, choose a brand name that doesn’t limit you to a niche. For example, Amazon, McDonalds, Starbucks.

When I started using Oberlo, I was able to grow gradually as I could easily choose products in niches related to mine.

Focus on today

As entrepreneurs, we’ve been taught that great leaders focus on tomorrow. When it comes to innovation focus on tomorrow, but when it comes to money focus on today. Don’t spend money you haven’t made yet.

It’s easy to look at the successes around you and spend money to be like them, but in the early stages of business, you’re not there yet. Don’t be ashamed to spend only $5 on ads in the beginning because eventually $5 turns into $20 then $100 and so on.

Another huge mistake I made was that I kept bouncing from one business idea to another. If you’re an idea machine like I am, this bad habit will destroy any chance of success you have. Don’t fall victim to ‘shiny object syndrome.’ Pick something and stick with it.

Reduce business costs

When it comes to business costs, think logically in the beginning. Oberlo only costs $5/month for new stores, start with the entry level plan and as your business succeeds you can scale up to the next plan to add more products.

When it comes to logos, everyone loves spending money on a logo for their store. I’ll be the first to admit that I spent $200 on a logo on my first business that failed in only a few months. You can use Shopify’s free logo generator, or you can design your own logo in the beginning. The logo you start with doesn’t need to be permanent.

When it comes to images for blog posts and ads, use free stock photos from Pixabay. You can also browse Wikipedia for Creative Commons images. Don’t take any image from Google images.

If you don’t have Photoshop, use Canva to create main page banners and other graphics you need. You can even buy images for only $1 on their website.

If you’re strapped for cash, start out with a free theme and once you’ve generated enough profit you can upgrade to a higher quality theme.

Final thoughts

Depending on how much you choose to spend on ads and other business costs, you can start an eCommerce business today for about $50-$300. The cost includes a domain name, Shopify’s monthly price (which includes hosting), Oberlo’s monthly price, and marketing.

You don’t need to pay a web developer tens of thousands of dollars for a website or pay thousands in inventory. There’s never been a better opportunity to create a life of financial freedom in an easy and affordable way.

Start your eCommerce business now!


Want to learn more?


Is there anything else you’d like to know more about and wish was included in this article? Let us know in the comments below!

  • splendid suggestions. I believe these methods should help get more sales.

  • Nicole

    Thanks Khan! Good luck with your store. Let me know if you ever have any questions.

  • Alexander Xayavong

    What is a good minimum list of products to carry for my store? I haven’t found a niche yet.

  • Nicole

    The products you choose for your store depends on your niche. You should pick something that’s specific but allows you to expand into other verticals. For example, chic women’s fashion which allows you to expand into handbags, shoes, jewelry, etc over time. You only need to add 20 products or so when starting out as you test out products. As your store starts making money, you can add more products to offer a greater selection to your customers.

  • eljade

    I really appreciate all this info ~ thanks!