The success of a dropshipping business ultimately comes down to its three pillars:
- Product: What you'll be selling to people
- Website: Your online ecommerce store
- Marketing and Advertising: That's how you are going to attract people to your store
This blog will focus on the most important factor to make money as a dropshipper—great ads. Ads are the first thing people will see when they meet your brand—they are the digital window to your store. That's why Adflow—which allows you to generate high conversion ads with its AI—is the perfect tool to scale your dropshipping business.
An introduction to dropshipping
Dropshipping is the process of selling products without storing those products. Instead of holding inventory, a dropshipper simply places an order with their suppliers when they receive an order from their customers. Therefore, Dropshipping is a relatively popular way to get into ecommerce because it does not require the upfront cost of buying inventory.
Finding profitability as a dropshipper is not easy. Dropshippers make money when they sell a product for a price that is higher than the cost they are buying it at, minus all their marketing and advertising expenses.
Why ads play a crucial role in dropshipping
Let's imagine you're selling led stripes for $30 each. If a led stripe cost you $10 from your supplier, you'd be looking at a $20 profit for every sale you were making. That is, until we start to account for any marketing cost related acquiring the customer we just sold our led stripe to
The margin you are making for every sale—our $20—is fixed. However, your customer acquisition costs are variable. The less you can spend on acquiring your customers, the more money is going to flow in your pocket. Let's go back to our scenario. Let's now factor in the advertising costs for making a sale. If we had paid $25 on ads to acquire the customer we sold to, would no longer be looking at a $20 profit. In fact, we would be looking at a -$5 loss.
This example embodies why effective, high-conversion ads are the ground on which a successful dropshipping business is built. Intuitively, this makes a lot of sense. As we mentioned before, an ad it's the first thing that people see when they meet your brand online—it's the digital window to your store. Would you walk in if what you saw was not inviting?
How to make a great ad for your dropshipping business
Your dropshipping business is completely reliant on ads to drive traffic to your products. So how can you make ads that work for your dropshipping business? Most likely, selling your product(s) on Social Media will be easier to do than other channels, since you can leverage flywheel effects and build an audience over time. That's why Facebook is often a good first learning ground for people starting out their dropshipping business.
As a fresh dropshipper, you should start from the basics. That is, before diving into the intricacies of audience definition and precise targeting, it might be best to let ad platforms handle the heavy lifting for you. Contrary to popular belief, the optimisations that are baked into Facebook Smart Ads can prove successful, provided the ads can stand out from the crowd.
In fact, with the large number of people on Facebook, it's always difficult for dropshippers to stand out from the crowd. However, with powerful Facebook Ads creatives and some consistent product positioning chances of success increase drastically!
The right approach to advertising to scale a profitable dropshipping business
It follows that the best thing you can do to increase your likelihood of success and decrease costs per sale is to create relevant, interesting and inspirational ads.
This will give your business more engagement which will in turn attract new readers. It's an old idea—message boards were the original place to attract customers back in the day. Think about it—the better the message you can deliver to your audience and the better conversion rates, the faster you will grow your business. So if you want to generate a large profit from your dropshipping business, then you need to invest in a paid marketing strategy.
Creating the right message and creatives for digital advertising campaigns will take time, and it might cost upwards of $1,000 if done by a professional. Without a fat budget to get started, one might feel discouraged to start her venture.
Yet, there are well known patterns and strategies that can be used to automate much of the legwork, bringing down the time needed significantly. In fact, we have written an entire piece on how you can improve your engagement on Facebook with better headlines.
At Adflow, we have curated a list of templates and patterns that can be easily exported to your Facebook Ad campaigns. Plus, our Artificial Intelligence engine will help you get up and running with all the other elements needed in very little time.