Thread by @schm7dt

Dropshipping isn't dead.

But, it is WOUNDED.

And if you don't act on the info I'm about to share here, it's gonna bleed out before you can get your piece of the pie.

Here's what you need to know about dropshipping if you ACTUALLY want to make $$ in 2019 and beyond.

~ THREAD ~

By nature, dropshipping is a very front-end business. Meaning, you make the majority of your money on the initial sale, not on the back (via upsells, email marketing, etc.)

You put products on your store. You run ads to them. People buy them. And you pocket the difference after ad + product costs.

Up until recently, this was fine. Competition was low, ad costs were reasonable, and you could still profit handsomely sending traffic straight to a product page.

Nowadays though, dropshipping is more competitive than ever. Ad costs are rising. Audiences are becoming saturated. It's harder than it's ever been to create a profitable store.

That is, if you stick with the typical front-loaded style of dropshipping, instead of evolving like the guys who are actually making real $$.

To illustrate, here's what most people are doing:

Facebook ads >> product page >> 1 sale of 1 product

Say you get it for $6 and are charging $20.

Cost per purchase on FB is around $8.

$20 sale - $6 product cost - $8 ad cost = $6 profit per sale

Not great margins.

This way of dropshipping is soon going to be impossible. Once that ad cost rises to $12 per purchase (and it will), you're barely even breaking even.

Here's where an important principle of marketing comes in. It's a quote from @russellbrunson:

"Whoever can afford to spend the most to acquire a customer wins"

Following the above example, you can only afford to spend $12 max to acquire a customer. More than that and you're in the red. Problem is, what happens when someone comes along and they're willing to spend $15 to acquire a customer?

Your ad costs go up.

You're SOL.

So, to stay alive with dropshipping, you need to be able to spend MORE to acquire a customer.

How do you do that?

Like this:

You turn your front-loaded business into a back-end loaded business. Instead of making the majority of your money on that first initial sale, you make it on subsequent upsells AFTER the initial sale.

Taking the same example:

It costs $8 to acquire a customer. But instead of just buying 1 of the $20 product, he buys 2. And then after he buys 2, he's upsold a different product for, say $15.

The cost to acquire that customer is the same. But instead of bringing you $20 revenue, he brings you $55. Factor in product costs and instead of $6 profit, you're now at ~$30 profit. That's a 5x increase in profit. And that's just right off the bat.

Then a few days later, you send him an email about another product you offer. He buys that one too. Now you're at $40 profit, but the cost to acquire that customer is still the same. That measly $8.

At this point, you can now afford to spend $20 to acquire that same customer, while all your competitors are losing money at anything past $12.

And, that's how you win. By doing two things:

(1) Increasing your average order value
(2) Increasing your average customer lifetime value

If you fail to implement this in your business, regardless of whether or not it's dropshipping, you're always going to get beaten out by the person who does.

You can certainly still make money on the front-end with dropshipping, but if you want real, sustained, long-term profits, you HAVE to beef up the back end. No way around it.

Get an upsell app on your store. Upsell and cross-sell more products AFTER your customer has made their initial purchase. Set up email autoresponders and sell them even MORE products after that. Squeeze out every last penny you can from every customer who buys from your store.

That's how you win at dropshipping long-term. I really can't understate how important this is. Most of you reading this will ignore it, and that's fine. But just know the few of us implementing this will be laughing when we're banking and you're struggling.

Final note: As of now (could change in the future), don't worry about this until you already have a store that's profitable on the front-end. Until you have a product that's actually selling, it's a waste of time.

All that said, this is the kind of thing I talk about on my email list daily. If you like stuff like this and you're not on it, you're missing out big time.

Fix that here --> nateschmidt.io

This entire thread applies to every business, ever. If you’re not doing this, you’re quite literally leaving A LOT of money on the table. Just doing this alone could double, triple, even quadruple your sales.

Don’t sleep.