Episode 2

How Email Marketing Helped Build a 7-Figure Dropshipping Store

Yuliya and Mike didn’t know what dropshipping was until the weekend they launched their store. In the few years since, they’ve created a 7-figure business. They tell us all about that journey, including the part where they got married.

Dropshipping wasn’t actually their first ecommerce business. That would be the subscription box service they launched. The subscription box was fun… but packing boxes six hours at a time wasn’t so fun. So Mike and Yuliya took all the lessons they learned from the subscription box, and applied them to dropshipping. They’ve ended up with a store that kills it on some of the things that dropshippers often struggle with – email, repeat business, and a killer conversion rate.

We talked to them about all of it. Enjoy!

You can read more about Yuliya and Mike on the Oberlo blog, or stop by their YouTube channel.

If you want to reach out, shoot us a note at podcast@oberlo.com.

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Transcript



David:
Alright. So there’s a ton to get to here. You two have an awesome dropshipping business that’s up over two million in revenue. Your store’s Facebook page is flirting with 100,000 followers, I’m sure it will have 100,000 by the time this airs. You have a raging email marketing operation that we’re gonna hit on too. But first, I think it’s fun that you two are a couple. I love a good dropshipping love story. So let me start there. Anyone who’s in a relationship or who’s been in a relationship can probably immediately reel off some things that they think would be awesome about launching a business with a partner, and then some things that would be less awesome. What can you two say just generally about the couple aspect of the business? 

Yuliya: Yeah. So it was terrifying ’cause we were dating for five years before we started working together. And when we started working together, I said, “Oh my God, we’re either gonna break up or get married.” Because we had never done this before. And a year later, we did elope, so it worked out. We actually usually just say, “Oh, it works because we do things separately,” but we just realize that’s not actually true, we do everything together. But what really helps us is that we think very differently. I’m more a big picture, and Mike is very detail and optimization focused. And so, we don’t really create areas where we butt heads too much.

Mike: Yeah. It’s very complementary as opposed to just fighting on ideas.

Yuliya: Yeah, and it’s really just taking our relationship to the next level, ’cause we literally spend 24/7 together. And so, we’ve actually just gotten to know each other even more. And surprisingly, we actually fight less, I think, because we’ve learned that the more we fight, the less money we make. So we got really good at getting over fights quickly. 

Mike: Yeah. We’re really good at systems and streamlining things, including fights. So it’s like, “Okay, we’re gonna be over this in like 30 minutes.”

Yuliya: Yeah, let’s just get it out.

Mike: It was just standard operating procedures. 

David: So that’s your relationship advice – to start a business.

Yuliya: If you really wanna expedite, is this person a yes or a no, start a business, you’ll know really quickly.

Mike: It’s a great way to test things, and put it under an extremely strong microscope.

David: So your first business wasn’t dropshipping, but was instead a subscription box. So the idea was that that people would subscribe, and then every month, they get a bundle of goodies. Where did that idea come from? 

Yuliya: We were actually… I remember, we were really bored one day. Well, it was two things. It was a combination of boredom and burnout. So, I had been in the health coaching and business consulting world for a really long time, and I was just totally burned out on trading hours for dollars, dollars for hours, and just being on calls all day long. And even though I felt like an entrepreneur, I was really just self-employed, because how much money I made depends it on how many hours I put in. So, I was really desperate for something that was scalable, where I was replaceable, and that I could sell in the end, because for example, with coaching, if I stopped coaching, that’s it, that’s the end of it. There’s no future money to be made.

So, we started just randomly flirting with the idea of subscription boxes, and we thought about the brain and mind, because that’s something that’s always been really interesting to us. And we’re like, “Oh, wouldn’t it be cool if every month you got a new puzzle or brain challenge to keep your brain sharp.” Because learning new things keeps your mind sharp, but who has the time to learn new things every month? So we were like, “We like this idea, let’s just give it a go.” And that was our first foray into e-commerce, and we learned so much because we were in contact with so many different businesses, and we learned a ton about fulfillment, and manufacturing, and marketing, and we realized we really love marketing and we really hate fulfillment and manufacturing. So dropshipping was the perfect thing.

Mike: Next logical step. Yeah. I never thought of it like that, but yeah, that’s exactly what it was. Dropshipping was the next logical step.

David: It might be the next step, but it’s still quite a bit different. The original business would have been putting together these boxes, then you ship them out yourself. The purchases were recurring. There’s just a lot of differences from the typical dropshipping store. What was it about dropshipping where you guys thought, “This makes sense. This is the next step.” What was the appeal versus what you were doing? 

Mike: Well, the biggest appeal for me was just not like once a month spending six hours packing boxes. Yeah, it takes a lot more time than you would think, designing the boxes, and then putting the paper and the 10 items in them, and sealing them up, and printing labels, and having half of your tiny apartment just be completely filled with boxes.

Yuliya: Well, I don’t think necessarily we wanted to dropshipping ’cause of our hate of packing boxes.

Mike: No, but it was an incredible perk about that.

Yuliya: I think it was more so, it was everything we loved. We loved running advertisements. We loved doing product descriptions. We loved finding products that already exist that we don’t have to make, that we thought were cool. We’re not creative enough, at least right now, to create our own products, but we’re really good at spotting good profits.

Mike: Yeah, it was all the best parts of the previous business.

Yuliya: Yeah. And it was just way more scalable we felt, whereas, the subscription boxes, we were limited with how many people we could reach based on how much cash flow we had, ’cause a lot of it we had to pay upfront to get product. With dropshipping, it was like unlimited potential to really scale to the moon, so it was perfect.


David:
There were these differences, of course, between the subscription box and dropshipping, and some things that you thought you could pawn off the stuff you didn’t like, double down on the stuff you do like. What were some of the things that you took from the subscription box business into dropshipping? Some things that you learned, and that you retained even if the models are totally different? 

Mike: Well, that was the first time we ever worked on Facebook ads, so that was something that was really interesting, understanding a little bit about how to reach customers.

Yuliya: Analytics.

Mike: Yeah, product pages and website design, really delving into the analytics. Building an email list was a big thing that we ended up… Became a big part of our dropshipping business eventually.

Yuliya: Yeah, because with subscription boxes, email marketing is huge because you wanna retain your customers so that there’s no churn.

Mike: And I think that’s a really big thing that people don’t associate churn with dropshipping businesses, because they just think you buy Facebook ads or whatever ads and you obtain a customer, and that’s it. But if you really focus on retaining customers, that’s when you can make a lot more money dropshipping.

Yuliya: Yeah. So we’re really grateful definitely that email part of subscription box was something that we incorporated into dropshipping, which I don’t think, many other people realize the potential of that.

David: Yeah. So let’s dig into email because I totally agree that just kind of based on what we hear and what the conventional wisdom is, with dropshipping, maybe there’s a little bit less of an emphasis on retention, and therefore, a little bit less emphasis on email. This is a channel that, as you’ve said, has been huge for your business. You saw it with with the subscription box, then you kind of counter-intuitively, at least for the dropshipping world, you retained that. So what’s at the heart of the email list building and just the email operation in general? What’s the focus and how do you go about building that list? 

Yuliya: So the beauty of an email list is once you get a customer’s email, that is your information that you get to keep, whereas, like on Facebook, you’re targeting an audience, but if Facebook shuts down, that’s it, you don’t have access to them anymore. So an email is such a great asset for a business because it’s yours, and once you have that email, you can market to those people forever without paying the customer acquisition costs.

Mike: Yeah, because the customer acquisition cost or how much you pay to get a customer is the most expensive thing, generally, in a dropshipping business. You pay more on advertising revenue than you do on cost of goods or software or anything like that. So I think a big thing is to focus on, obviously, with ads, you get a purchase, but at bare minimum, you need to focus on getting an email, because then if you just at least get an email at the top of the funnel like that, when you’re paying for it, then you can really just remarket that for free.

Yuliya: Yeah. And so basically, like the customer journey to go from Facebook to email list is really simple. We’ve had the best success with just a simple pop-up and a discount for 10, 15, 20% whatever makes most sense for your store. And from there, they enter one of our automated flows, so we have abandoned cart flows. We have a welcome flow for someone who’s visited the site but, got the coupon but didn’t make a purchase yet or didn’t add anything to your cart. And we have a variety of ways that we really nurture people on autopilot in addition to just having live emails and newsletters that we send out. So once you’re in our email list, we love you. We’re emailing you, we’re keeping in contact, building trust all the time and putting different products in front of you.

Mike: Customer win back flows too. If someone purchased but hasn’t purchased in X amount of days, you can kind of give them a nudge, and say, “Hey, we miss you. Here’s like a special discount for you,” or just when people spend enough money or make enough purchases, really treating them like VIPs and letting them know that they are valuable to our community. I think that’s a really big thing.

Yuliya: And the beauty of email marketing is that it’s so accessible for every dropshipper, as soon as you start, because there’s amazing apps like Klaviyo, which have flows already built in. All you have to do is literally turn them on, they’re extremely conversion-driven and they work. So email marketing, it can sound intimidating, but it’s really so easy. Just use the automated flows, put your logo on it, and as time goes on, you can customize it and make it feel more like you. But I say, get started with email marketing right away because it’s just amazing to nurture your customers.

David: It’s interesting to think about the… Because I think a store is never totally finished, right? Like you could optimize it forever. So it’s just a matter of when you want to launch. And so, are you saying that this is one of the things that should come before spending money on ads, that the email setup is kind of a prerequisite to really wanting to scale, as opposed to a luxury that you add later on? 

Mike: I would say at least just basic email flows. I think all stores, I would always start with a pop-up on the website that exchanges an email for a coupon, and just giving them a welcome series or at least just one welcome email like that, an abandoned cart email, for sure, at least one, and a post-purchase email trying to sell them on another product because that’s the hottest time. When someone’s already pulled out their credit card and paid for something for you, that’s when they’re the warmest and that’s when you can really get them to buy more things again. So, I do believe that at least those three things are like prerequisites on any store we’d ever start.

Yuliya: Yeah. And I think it’s just important from a mindset perspective, like treat your store like it’s going to be a success from day one. I know I’ve been guilty of that in the past like being sloppy, and just be like, “Oh, once I get really successful ads, then I’ll make my logo nicer, my website nicer, whatever.” But the truth is, if you treat it like it’s going to be a success from the start, then you’re not going to be sloppy with it. You’re going to make it a well-oiled machine from the start and that’s how it will inevitably become successful if you’re really mindful and strategic with it. So definitely have email marketing in place right before you start running your first ad because that’s one customer that you can already have in your email sequences.

Mike: Yeah. We see just from abandoned cart emails right now. We have it pretty well optimized, but we retain 10% of abandoned carts, we convert them into purchases.

David: Wow.

Mike: So if you think about running Facebook ads without having an abandoned cart flow or at least an abandoned cart email, you’re wasting your money, essentially.

Yuliya: You’re just leaving money on the table, literally.

Mike: And if you want your ads… I mean, ads are the most expensive thing, and especially for new stores, money’s not exactly the… You don’t have an infinite budget to spend on ads.

David: Sure.

Mike: So before you start spending money on ads, make sure you are getting the most you can from them when you do start spending on them.

David: And are the pop-up discount codes are… Those are also in place for people arriving via ads? 

Mike: Yep.

David: Okay.

Yuliya: They’re exit intent.

Mike: Exit intent.

David: Exit intent. Cool. Yes. I mean, that’s basically if you’re kind of just setting up more potential touch points, I mean, of course, you run an ad. You want somebody to buy, which would be awesome, but if they don’t do that, you can at least catch them on the way out.

Mike: Yeah. And without getting way too into the whole thing of it, but people just kind of a lot of times start stores and it’s just like we’re creating an ad for the intent of a conversion and we hope they buy. But you really need to treat it as a funnel. And people may not buy the first time they see it, but…

Yuliya: Especially ’cause they probably never heard of you before, so it’s like email.

Mike: But if you capture the email, then you can…

Yuliya: Let them know.

Mike: Remarket to them for free. And two, three, four touch points, they’ll purchase.

Yuliya: Cool. And it’s interesting because a lot has been made about kind of the demise of email and how you need to communicate on Messenger or you need to communicate on Instagram and that email is kind of this withering, it’s collecting dust over there, but sounds like that has not been your experience.

Mike: Yeah.

Yuliya: Well, if people wanna think that, that’s fine, because there’s more room for us.

Mike: So you can certainly still do great things like that with Messenger or even like SMS now, but none of that replaces email. All of that just is complementary to email.

Yuliya: Yeah. Agreeing.


David:
You mentioned the emails contain a discount or a reminder to return to an abandoned cart. Is there any other magic formula that you have in these emails? That stuff that I think might be top of mind for a lot of people, do you do other things within them that are…

Mike: Yeah, so for the welcome series, with the pop-up, if they get into that flow, we send them a series of emails like three days in a row one email, or even for abandoned cart. And the first time, we’ll remind you about you have an abandoned cart, but then a lot of these people who are discovering us through an ad, don’t know who we are, so we can send another email like describing who we are, what our company does.

Yuliya: Reviews.

Mike: We can post positive reviews so people get social proof. We tend to attach some charitable donations to our stores, so we focus on that, that X amount of proceeds will go to this cause. Basically, you should use those emails to address any objections you would get why someone didn’t purchase the first time. Someone might not purchase because the price was too high, so you have coupons for that. They may not purchase because they don’t know you so they don’t trust you, so you can send them reviews. And then also, even if they’re on the fence, if you attach like a charitable cause to it, they may be more inclined to say, “Okay, I really… ” like, “This is a cause that’s important to me. I would like to support this as well.” And things like that can push people over the edge.

David: Of course, basically addressing…

Yuliya: Yeah, yeah. It’s a way to address any kind of possible objection.

David: You mentioned just now that your emails might contain a description of the brand and a description of the charities that you all work with, which takes us into branding, which is another thing that I know you all focus a ton on. And it’s something that maybe is back of mind for some dropshippers who think that they wanna find a trending product and get things rolling real quick, real hot, and then jump ship. Branding is much more of a longer term thing. Where does the emphasis on branding come from? 

Yuliya: Yeah, I think it’s pretty safe to say the days of pump and dump dropshipping are coming to an end. For us, we are a brand first, and dropshipping is just one part of the business. It’s literally only the fulfillment side of the business. And that is how you really make sustainable long-term success. Like I always say, the viral dropshipping, you can get rich over night, but with building a brand, you get rich forever, because it may take longer to get started, but you build a strong community of people who like the same type of things who support each other, which is a beautiful thing to create in and of itself. You create products, we create winners, we don’t find winners. Because we know our audience so well and we know what they like, we can find a product on Ali Express that has maybe one or 200 orders, but we can make that a viral winner without competition. It’s completely blue ocean territory, because we have a strong brand, so people trust us. And I think that is so important.

Yuliya: If you’re coming into dropshipping, I imagine it’s not only to make a quick buck get in and get out, because it’s a lot of work at the end of the day. You have a lot of responsibility as an e-commerce owner. This is a big deal, like this is… You can build a brand as big as Nike. Look at Wayfair or Wish, those are dropshipping brands and they’re huge. So you have a lot of potential, and I think if you take it seriously and focus on brand building from the start, you are gonna have consistent, predictable and even exponential income. And a lot of repeat customers, too, by the way. We know that repeat customers is a pretty rare thing for traditional dropshipping, but we actually have 8% repeat customers which is very high for dropshipping, and that’s a 100% because of the trust we build with our community.

David: So, you mentioned brand building, what does that look like? 

Yuliya: I think brand building, to me, it means a unified feeling that you’re creating, so that starts tactically, your store looks cohesive, everything is kind of makes sense together. I think having a really nice visual-looking brand looks good, the way that you speak to your audience, the content that you share, the type of product descriptions that you write, that is all part of being unique. What makes you different? Why would somebody buy sunglasses from you versus somebody else? If I just put black sunglasses on my website and wrote the description black sunglasses, that’s not very on brand, I would say, but if I really described what’s so special about them, how they will make you feel, that’s creating a unique approach, which builds a brand.

Mike: Yeah, it’s about an aesthetic and a feel, more than anything else.

Yuliya: And especially with dropshipping, when you’re running Facebook ads, people buy stuff from you because of the way it makes them feel, not because it’s something they’ve necessarily been looking for for a long time, it’s something they didn’t know they wanted, but you made them feel a certain way and now they wanna buy it.

Mike: And not to get too off topic with this, but the idea of a brand in a niche, I don’t think a niche is like, “We sell pants,” it’s like, I don’t think a product is a niche, I think it’s the customer is the niche. The kind of person who would like these pants. If you’re selling leggings, it’s not a legging store, it’s a store that happens to sell leggings and other products for people who like a certain type of yoga or…

David: It’s an active young adult store as opposed to a legging? 

Mike: Yeah, exactly. Yeah, that’s a great way to say it. Yeah, so I think that is a big thing as far as branding and building a brand. It’s about the entire vibe and energy and who the customer is, not what the customer likes.

Yuliya: Well, it’s both, who the customer is will determine who the customer likes.

Mike: Yeah, but I’m saying it’s not just what they like, not the one thing that they like, it’s all of the things they like that make them the person that they are. And that’s the whole idea you’re trying to channel.

David: Yeah, I think a lot of the thought process around niches is just the product. Which products are unto themselves related, and how can we wedge those together? But yeah, I guess what you’re saying is to look at it from the outside and say, “How is the customer or the target audience gonna perceive it?”

Mike: Yeah, and that’s a way more eloquent way to say what was trying to say, so thank you there.

Yuliya: I think a great example, just tangibly, if you wanna start a dog store, I see people start a ton of dog toy stores. I don’t really think that’s a niche, but I think if you start a dog lover store, and there’s like toys for your dogs and maybe t-shirts saying, “I love my dog,” or clothes for your dog, things like that, that is more of a brand versus like, “Here’s some dog toys.”

David: Right. We talked about speaking to an audience. And so, your store is, generally speaking, a fashion store. I’m curious how you learned that audience’s language or what sort of background you had going into it that maybe enabled you to speak more cohesively to them? Or is that something that you learned only after the fact? 

Yuliya: To be honest, I wanted to make this easy on myself, so this was an audience that I was already part of. So, I knew how they spoke, I knew what they liked, ’cause it was just stuff I like.

Mike: But there’s a lot more research too. I remember you, when you created the store we’re talking about, you delved into Reddit pretty deeply, trying to find out other things about that type of niche, what they liked, and other things like that, no? You did, yeah.

Yuliya: Yeah, sure.

David: He’s giving you credit.

Yuliya: Well, I think also, if maybe you don’t have a community you’re already part of, but let’s say you really want to sell to dog lovers, you simply just ask them. Like Mike said, Reddit is a really great place to learn about how people talk about their dogs. You can ask them where they go to buy stuff, where they go to search for information. And in that way, you can learn the language of another niche, even if you’re not part of it. One thing I will say, though, not all niches are buyers. There’s just niches of people who are interested in stuff, and there’s like niches of people who are interested in stuff and they also love buying it. For example, people who love comic books, they love talking about it, but they also love buying comic books, collecting, things like that. So that’s like a buyer’s niche, so I would really try to find that – niche that’s already been proven to really buy stuff.

Mike: Yeah, it’s hard to target a niche of minimalists.

Mike: It’s not your best bet.

David: And what’s the… Can you filter out the potential buyers versus the people who are merely interested intuitively? Or is this something that you kind of, you throw out some Facebook ads and see who’s biting? What’s the process for seeing how aggressive these people are gonna be buying it? 

Yuliya: I think that’s something that you determine before you start the store. Honestly, there’s a few ways to do it. See if there’s already other stores that exist that are running ads or running products to influencers, because if they’re doing that and they’re spending money on it, it likely means there’s a big ROI. Honestly, you could just scroll Instagram and see what influencers are sharing, because that probably means there’s a lot of money behind it, and kind of like search that niche that way. I think that’s honestly the most effective way. Just go on YouTube, go on Facebook and see what other ads are running, and if they’re really engaged and take it that way. That’s what I would do.

Mike: Yeah. There’s also certainly an element of testing in terms of your targeting, and then really honing in on who is going to be the most viral buyer.

David: Now, Mike. Correct me if I’m wrong, but I assume you know a bit less about fashion than Yuliya does.

Yuliya: Not anymore.

Mike: I don’t know. Are you saying you don’t like my clothes right now? 

David: Your t-shirt is great but her sweatshirt and earrings might be… So, I wanted to ask what your relationship is to the actual products. Maybe you have learned as much as she knows about it and now you’re up to speed, but how do you approach the products versus the non-product part of the equation? 

Mike: Ah, yes, I definitely have been brought up to speed with that, for sure. It’s taken a little while. In the beginning, it was mostly Yuliya focused on all of the product stuff and I was doing more technical back-end things. But after being immersed in this for a couple of years now, it’s kind of, I feel like I can go toe to toe with anyone as far as speaking to this brand. So, a lot of the advertisements we do for things that are fashion, it’s about communicating a feeling or an emotion. So, we’ve worked together on a lot of this, but I’ve helped write a lot of pretty good ad copy, or I think, pretty good ad copy, about just describing an emotion that you would feel when you wear some of these products. I’ve written poetry about it that actually goes really well into the ads.

Yuliya: Kinda goes viral.

Mike: Literally, yeah. We’ve run poem ads and they’ve worked really well. It doesn’t say anything about the product at all, but it just focuses on the feeling that one would have when having this product in their life.

Yuliya: Yeah, it’s kind of crazy. Those poems have gone viral. When we search for people to DMCA, if you copy our stuff, we find just a ton of women sharing selfies just with the quote from our ad copy, because they just love it so much.

Mike: These inspirational poems we’ve written.

Yuliya: When things go viral, you get more bang for your buck. People share it for free. So, why not? 

David: Now, we ran a success story about you two on the website last year, and Yuliya, you said something that was really interesting, and that was, “Sometimes we’ll choose a product, and we’ll be like, ‘Oh my God, it’s so cute. I really want this product to sell,’ and then it doesn’t. So, if it doesn’t, stop spending money on it instead of being, like, ‘Oh I really love that product.'” You went on to say, “I think it’s important to keep testing and really let the numbers dictate your actions, rather than your emotions.” That was really interesting and I think it’s spot on, but it’s easier said than done, too. I’m curious if you could shed some light on how you can find ways to set your emotions aside and really stay focused on not what you like but what might actually be selling.

Yuliya: Well, it’s a lot of trial and error, because I notice when I attach my emotions, it’s just not good looks. We hold on to product for maybe longer than we should just because we really want it to work, and it’s something that honestly comes with practice. Especially in my situation, where I actually like the niche I’m in first and made a business out of it, second. But at the end of the day, this is a business and profit is number one. So, maybe I like a product, cool, I’ll buy it for myself. But if my customers don’t like it, on to the next one. We always have a cue of products that we like, that we are ready to keep testing. So, have a lot of products that you’re ready to go, that way you’re not just putting all your eggs in one basket and hoping one product will work.

Mike: No, if you look at the products in our store now versus when we started, they’re completely different. Who we thought our target customers were gonna be is very different from who our actual customers are now, and we just have to roll with it. It’s a two-degree or two-millimeter shift, but it makes all the difference.

Yuliya: Totally.


David:
You talked about you relying on tests and testing to dictate what’s in your store. What form do these tests take? Are you looking at margin per product or Facebook ad click-through rates? Where are the numbers coming from? 

Yuliya: We initially started testing using only Facebook ads and then scaling from there for product works well. Now, we actually do it cheaper; we test it with email first. So, we’ll send it to our audience list, and this is something you do later on, once you already built up a bigger email list. We’ll say, like, “New product in stock.” And once we see if it’s converting really well with our email list, then we’ll launch it onto Facebook and see how it does with click-through rates, conversion rates, and most importantly, return on ad spend. And we started that way.

Mike: Yeah, and as far as ads go, there’s a ton of KPIs we can look at, but really, the only ones that matter are cost per purchase and ROAS. Yeah, I can’t put food on the table based on clicks. It’s about return on spend. And every product and everything that we’ve done behaves differently, so it’s hard to say that, like, “Oh, this is a good cost per click, this is gonna help us.” Ultimately, some of them just all behave differently with all those KPIs, but as long as they make money at the end of the day, then those are the ones that stick around.

Yuliya: Yeah, just to give you an example with how differently products behave with similar audiences, we’ll have certain products that people buy just that one product and that’s it, versus we have other products where maybe not as many people will buy it, but those who do buy it tend to buy other products too and they really are into our upsells. So, that’s why honestly it’s like the earlier funnel stats vary so much for each product, but at the end of the day, monitor return on ad spend, and use email really just to give you an indication of, “I think this will probably sell well.” So, it’s a safer bet than just testing 10 random products.

David: The email might precede the ads.

Mike: Yeah.

Yuliya: Now, it does, yeah.

Mike: I would say so. And contradicting everything I just said, I do care about cost-per-click a little bit too, because that determines how many people get on our website and that determines how many people get into our email sequences. So, that is slightly important. If we’re testing other platforms that we’re less familiar with, like Google ads or even on Pinterest, I do value cost per click somewhat, because we have a strong email remarketing thing.

David: I know one of the challenges that you two, or at least Yuliya, you’ve spoken about this, that you experienced going from your first business into dropshipping, was that there are some things that you just lose control of. You went from owning the process, start to finish, finding the products, and then actually mailing them out yourself. I know the mailing part was tedious…

But at least you controlled it, so I think there was at least… It was in your hands, literally. Those things are just intrinsically not part of dropshipping. You do not do the shipping, you are not creating the products. The one thing you can do to offset those aspects of dropshipping is to find really good suppliers. And so, I’m curious, how you all have made sure you don’t lose any sleep over this, knowing that you are gonna forfeit some control.

Yuliya: Yeah, so we really do our work in finding suppliers that we can trust, because we have been burned a few times. But I’m so grateful that that happened, because it really taught us what to look for and really expedite that process of, “Oh my God, let me focus on problem-solving versus problem-avoiding.” And I think when we had full control of everything that was in our business, with our subscription box and me with coaching, it was really focused on problem-avoiding. And I think that’s kind of the first step of being an entrepreneur. And then, as you grow and you build a bigger enterprise, yeah, you wanna focus really on problem solving, because if you’re not having problems, your business is really not, probably not as big as you want it to be or not taking as many risks. So, it was hard at first, but I’ve honestly really eased into it, because I know that if these are the problems I’m having, I’m on the right track to really building a huge business. And there’s actually some freedom and there’s a lot of things I can’t control, but I know the one thing I can control is I have certainty in us and in our team that we can handle anything. And so, there’s certainty in that, and I much prefer that kind of certainty because its scalable. [chuckle]

Mike: Definitely. And as far as with new products and everything, we at this point are fortunate enough of pretty much working with the same suppliers every time now. But finding suppliers in the beginning, if it’s something that you’re dropshipping from China through AliExpress, we have to check the ratings of them, so work some of the metrics we have for that.

Yuliya: Yeah. So the first thing with any product, I look at the pictures first, because a lot of times the pictures on AliExpress…

Mike: The review pictures.

Yuliya: The products photos are different from the review photos that we always look for review photos first.

David: From customers, you mean? 

Yuliya: Yes. Yes. And then, we look at the supplier rating. We really like to go for no lower than 98%, really, higher 98%-99%. And then, I always like to message the suppliers and just ask them general questions, like, “Hey, I wanna dropship with you, what’s your processing time? What’s your shipping time? What happens if a product is faulty when a customer receives it?” Those answers are important, but also what’s really important is how quickly the supplier responds. If they take more than 24 hours to respond, I really don’t wanna work with them, because that’s gonna be a huge headache when it comes to conflict and resolution. Those are really the key things. And then, once you find a supplier you like, we personally have really tried to stick with them. So, if we see another product on AliExpress but our supplier doesn’t have it yet, we would ask them if they could get it, so that we have a continuous relationship with the same supplier that we trust.

Mike: Yeah, and for non-AliExpress things, we’ve dropshipped some products from America, so that’s harder if they’re on Etsy or something, they don’t have as thorough of a rating system for the MS suppliers, but the same type of principles work, where we just discuss with them these questions and hopefully they respond quickly enough. And if it’s America to America, we can get samples pretty quickly and easily, and they’re generally really good about that.

David: You mentioned that you did have a headache or two with suppliers. I’m curious if you can name one or two instances, ’cause I think this is a nightmare that every one of each dropshipper has or will have at some point that the supplier muffs something. What happened that you remember? 

Yuliya: Yeah, so this happened last summer. This was a product we started selling that didn’t have many orders on AliExpress, but we took it viral, it just blew up. And the first couple of weeks it was great, we were scaling and scaling, and they were fine, and we kept placing orders. And then, basically, it turns out our supplier just didn’t have this product for a really long time and didn’t tell us and didn’t really know when they would manufacture more. Luckily, our customers are amazing and we reached out to them proactively and explained that, “This product is selling out super quickly and we’re manufacturing more, so here’s a gift card and it’s gonna be a little bit of a delay.” So, we were able to mitigate it. But it was just a nightmare because we needed more product that they just didn’t have, and this was a supplier who was super nice and responsive, but wasn’t ready to scale. Another one was, one of the first products that went viral, the pictures looked good on AliExpress, but once we started getting returns and we realized what a horrible product it was. And again, that was a supplier that didn’t do large volume, so I’m not sure if they forged their own product’s pictures or what, but it was just a nightmare because we checked all the boxes, but still, when we actually saw the physical product, it was horrible. Which is why now we really do recommend when you’re scaling a product that’s big to actually order it.

Mike: See it yourself.

Yuliya: And see it yourself, because that was just a nightmare that we couldn’t have avoided without doing that.

Mike: If you’re making enough money on ads that you are going to scale it, you can afford the quick shipping to order one to yourself.

Yuliya: Yeah, pay 30 bucks or something and get it overnighted and just see.

Mike: If you’re gonna scale a product, $30… It’s a business, you can spend $30 to have one overnighted to you and to really see what it is, ’cause it’s gonna cost you a lot more money in refunds if you have to refund hundreds or thousands. Especially since you don’t get… When you do a refund, you don’t get your ad spend back, and that’s the most expensive part.

David: One thing I wanted to ask about is the conversion rate that you have in your website. A lot of the life of your store has been north of 5% conversion rate, which in the industry is not normal. 2% would be something that you could be relatively happy with, and you are way above double that. Is that a testament to the store itself? Or does that show that you’re targeting exactly the right people? What’s behind the abnormally high conversion rate that you have? 

Mike: I think branding.

Yuliya: Branding. I just want to say, first of all, we use a free Shopify theme. There’s nothing, we didn’t pay a developer a ton of money to make a fancy theme. We have a simple free theme, we just have really good product descriptions. Our pictures are nothing special, we get everything off AliExpress. We don’t shoot our own photos. We tried, but it didn’t convert nearly as well as the AliExpress ones. We really keep it simple. We just focus our efforts on the product description and the targeting.

Mike: Targeting, yeah.

Yuliya: So I think those two things together work beautifully. I would say, that’s where you should allocate most of your time if you’re really focused on brand building.

Mike: And I think that’s just the big thing with having a niche store like this, and having so many, all of your customers tend to be the same type of customers, so the Facebook algorithm has gotten really strong and really understands who your customers are. This year, in 2019, so far, we convert somewhere between 6% to 9% a day.

Yuliya: Yeah. That’s crazy. Those poems.

David: You mentioned the Facebook algorithm. Is the group of people that Facebook is sending your ads to now, anything like what you thought it would have been when the store started or has the… Your expected target group evolved a ton algorithmically from the original? 

Mike: Yes. Is exactly the way I would say it. It’s really evolved quite a bit. In the beginning, when we were smaller, we were doing much more like micro-targeting, layering interests on top of each other.

David: What kind of stuff you’re interested in that, like that.

Mike: But as you get more customers, and I think that’s a great way to start and that’s the kind of strategy you need in the beginning. But as your store gets bigger and you have larger spend and much more data that Facebook can use, based on your pixel, and things like that, then we just tend to go really ridiculously broad with our targeting, and let Facebook do the heavy lifting at that point.

David: So you would end up with a eight-figure group like, 10 or 20 million.

Mike: Yeah. In the beginning, we were targeting under a million, but at this point now, any ads that we have targets 35 million people minimum.

David: And then Facebook will figure out.

Mike: And Facebook just… ’cause if you have enough customer data and enough Facebook pixel data, then that’s the best way to use it. Facebook is an extremely powerful tool, so when you get enough data, Facebook can target better than you can target. But in the beginning, you have to do all of that yourself, but at this point, you just go as big as possible and let Facebook do it. Some of our best ads have no targeting. We just run an ad to the countries that we wanna advertise, with no interests, so we won’t run one to the US. It’s 250 million people or something like that, no targeting. And we always see positive ROAS on that.

David: Wow.

Mike: Just because Facebook can do the work better than you can.

Yuliya: And generally speaking, the more data you have, the more you can give Facebook the reins, and the way you get more data is by spending money.

Mike: Yeah. Yeah.

Yuliya: And testing continuously. And of course, there’s smarter ways to do Facebook ads where you can be a little bit more lean, but I will be honest, we did spend a lot of money, I would say, in the first couple months, like $5,000 that weren’t profitable to get a lot of data, and then after that, we were able to profit pretty quickly. But I know it’s scary. I just don’t wanna share a hood, and then say, “You can build a multi-million dollar business by testing for $5 a day,” but it takes time, and you can test for $5 a day for a year and get that data. It’s just a matter of how quickly do you want to see that, and the more data you have, the quicker you can reach the masses who are gonna be proven buyers.

Mike: Yeah. And disclaimer on all that edge strategy, that’s what’s working right now in the summer of 2019.

Yuliya: Yes.

Mike: Facebook evolves so quickly that no strategy will ever last forever. You always have to be testing. Things are always changing. Our edge strategy now is drastically different than 2018 or the beginning of 2019.

David: Is it more Instagram heavy now than it would have been like 2018, for example? Or just different within Facebook at all? 

Mike: It’s just different within Facebook. As far as Facebook is evolving more into like campaign budget optimization, CBOs, that’s gonna be the big thing late 2019. So it’s just whatever works, does not work forever. You always have to just be moving and evolving. So if you’re listening to this in 2021, I’m not sure if this is still the way to do it, but…

Yuliya: But definitely, what we can be sure of, don’t get comfortable with your Facebook Ads strategy. Keep it sharp, ’cause that is one mistake we made. We kept the same strategy for over six months, and we were like, “Oh my God, why isn’t it working? We’re failures, blah, blah,” and then we just changed it and everything blew up again. So just don’t get complacent. Don’t get comfortable and always keep testing.

David: You all work with charitable organizations, whereby a certain amount of your revenue will get donated to charities. There’s two elements to this. The first is that, it’s awesome to help the needy, that’s great. But then, what might be interesting for somebody who’s launching a store or trying to figure out how to implement the sort of branding tactics you’re talking about. I’m curious how you not only do that, but then, making noise about it.

Yuliya: Yeah, totally. I think first of all, people are buying based on emotion, right? And so, we love to talk about it in our post-purchase emails like, “Hey, you did a really good thing. Not only did you buy something you liked and treated yourself, but you are also helping somebody.” And I think when people buy stuff off of an ad from a brand, they probably have never heard of, there is that little bit of doubt. And so, this is just our way of affirming, “Hey, thank you so much. You did the right thing. And by the way, you’re doing something really good.” That’s a really great dopamine rush for somebody when they purchase something. So, we try not to… We can talk forever about the morals or ethics of leading with, “Hey, we donate to charity, so buy from us.” I’m not necessarily sure how I feel about that, but we definitely mention it. We don’t lead with it, and honestly, we do it more for ourselves. I think a really big part of building a big business and building wealth is responsibility to give back and giving back from day one. I think that builds a lot of good, positive energy and karma, not only around your business but for yourself as well. So, we talk about it. We’re not discreet about it, but it’s not in your face as a way to incentivize people to buy, but more so as an affirmation that you did the right thing.

David: Sure. The purchase button doesn’t say, “Give to charity.”

Yuliya: Yeah. Yeah.

Mike: No, it’s a symbiotic relationship. It’s great thing to do. You help people, and charities are very important like that. But yeah, it’s a big thing, especially if you’re selling something that has longer shipping times after the purchase is, “Did I make the right decision?” And that just helps that feeling, too. So I think it’s a win-win-win.

David: Okay, cool. I’ll get you out of here on one last question, and that is, now that you’ve been in dropshipping for a couple of years, and you’ve hit that coveted seven-figure mark on store sales. Looking back when you started this whole journey, is there anything that you wish you would have known or that it would’ve been really helpful if somebody would have whispered to you on day one? 

Yuliya: Yeah. I think for me, it can be really intimidating, initially, going on YouTube or social media, and seeing people’s crazy revenue numbers and thinking, “Oh my God, I will never get there.” But the truth that the matter is right now, we have a multiple seven-figure business, but exactly two years ago, we didn’t even know what dropshipping was. The weekend I launched dropshipping, I didn’t know what dropshipping was. So, it’s something that you can learn really quickly if you’re motivated and driven, but also remember to have fun with it, and also to not get discouraged because how much revenue you make and how much profit you make can change so quickly in the dropshipping world. I say to Mike, “I can’t even believe we own such a huge business.” Because it just happened, because we were really focused and really smart, and really knew our numbers, which you should do. And yeah, just don’t give up, and don’t get discouraged, and just take one step at a time.

Mike: I agree. And as far as things that I wish I knew or that would be helpful for people starting out like this, I think what’s most important to me is that Facebook ads are not the problem. It’s not what your issue is with your store. You should spend way more time really polishing your product pages, making sure they’re mobile friendly, making sure you’re upselling products, making sure all of that is right, make sure you have very good products, and then run Facebook ads. If all of that stuff is in place, you can have a horrible Facebook ad with pretty bad targeting, and it will still make money. But if that stuff’s not in place, you can spend all your time running Facebook ads, and it won’t work. And I feel like in the community, especially with people starting, the people always think, “Oh, if I could just get Facebook ads working, then I’d be making money.” But I really think Facebook ads will work pretty much regard… Don’t spend your time worrying about the details of the Facebook ads. Spend your time worrying about the details of the Shopify page more than anything else.

Yuliya: ‘Cause Facebook ads just amplify what already is. So, if you have a not-so-great site, Facebook ads are not gonna be so great.

Mike: Yeah. Product descriptions, copy, pictures, everything that’s way more important than… If I’m spending $25 a day in a CBO or multiple ad sets, splitting by age, demographics, that’s not important in the beginning at all.

Yuliya: And just remember, you’re probably gonna fail a lot, so be excited to fail, ’cause literally, every fail we made ended up making us so much more money, ’cause we learned from it and implemented it. So get excited ’cause if you’re starting this, or you’re in the middle of this, you’re gonna fail a lot, but those are just opportunities to optimize certain areas of your business. So if your ads aren’t working at first, celebrate that, figure out why, and then keep going. So, you got this, guys? 

Mike: You’ll be better for it every time. Yes, motivational.

David: Great. Mike, Yuliya, thank you so much for taking the time to chat.

Yuliya: Thank you.

Mike: Thank you so much, it’s been a real pleasure.

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