I normally recommend that people use free traffic to generate sales, just by producing valuable content around the web. But most drop shipped products don't even need that, a simple facebook ad campaign can turn one product sales page into a money printing machine. A machine you put quarters into and get dollars back.
How?
Well, if your gross margin (sales price minus product cost) is $70, and your facebook ads cost $.50 per click, you could sell your product to just one in ten visitors and take home $65 every single sale. $70 gross margin minus $5 in advertising equals $65.
Sales volume would only be limited by your advertising budget.
Where are you going to find a product with a $70 margin?
Sounds hard, but it just takes some time and research. The other day I spent an hour or two browsing around Etsy, evaluating some opportunities. I will reveal one of those opportunities below: a beautiful clock I found someone drop shipping with a sale price of $65, at a cost of $10/unit to him. He is making a KILLING.
I've mentioned in previous answers many different places you can source product: Etsy, Alibaba, AliExpress, as well as more obscure, niche wholesalers. Etsy is a particularly great place to start for a few reasons...
- High concentration of well-designed, unique, white-label products. We aren't looking to sell well-known, branded items. Competition is too intense, and margins are too low. Plus, Etsy products are easy on the eyes, and that is a huge factor when it comes to the value your customers perceives in the product.
- People come to Etsy for low prices. This drives prices down for us when we are looking to source product to sell in more profitable channels.
- Many Etsy sellers aren't very business savvy. Consequently, it's common to find product being sold for much lower prices than they could be selling for if they were marketed better. That's where you come in.
Some things to keep in mind as you search...
When browsing through Etsy, your main objective should be to identify products where there is a wide discrepancy between what you would pay to source the product, and the value your customer will perceive in the product. This is true for any product sourcing platform, not just Etsy. You will heighten customer's perceived value with a brand of your own, great pictures/design, and better distribution channels (Etsy is a marketplace where price is a huge factor for customers, whereas it won't be as important to customers elsewhere).
So, anytime you see a product and think it is priced too low, that's a great sign. Of course, there is no set profit margin for Etsy sellers. Some will markup 10%, others 300%. But chances are, if you think a particular seller is marking up less, they will be more likely to give you a better price and appreciate you helping them sell more product. Other Etsy sellers, like the one selling the clock I mentioned above, are drop shipping product from places like Alibaba.
It's not a great idea to drop ship product on someone else's platform like Etsy, Amazon, eBay. You can make money, but not nearly as much as if you build your own infrastructure, build a brand around the product, and forgo the fees. Etsy's audience is limited. Plus, you can't retarget visitors with ads to remind them to come back. A sale takes 5 exposures to the product on average, so you don't want to be counting on selling to impulsive buyers only. People who only see the product once.
When you see a seller drop shipping on Etsy and doing well, like the clock seller, it is a great sign you will succeed independently of Etsy. Be sure to pay attention to product reviews and favorites. This clock's 4,380 product favorites and 2,509 five-star reviews are a great sign that it will sell like wildfire. Reviews and favorites serve as indicators that your customers will be happy with the item they receive, and that the item itself is desirable.
You also want to avoid listings where the quantity available is only 1, for obvious reasons.
The clock.
Beautiful and elegant in style. I would expect this clock to fetch at least $90 with its own, independent sales page. This seller has it listed for $65 on Etsy. It has 4,379 product favorites and the seller has 2,508 five-star reviews.
I was on Etsy looking for product I could source from the Etsy seller, then re-sell on independent sales pages. But, the $65 price tag on this clock was suspiciously high for Etsy. So I checked Alibaba. He is sourcing these clocks for just $10 each! The listing says it ships from an international source, so he is almost definitely drop-shipping it.
The fact that he has had so much success selling this clock at a $55 mark-up so successfully, on Etsy, nonetheless, is a strong sign this clock would perform really well with an independent sales page.
You could build an independent sales page for it in just an hour, using this step-by-step video tutorial I made. You don't need any experience whatsoever. It is CAKE.
You would then take that sales page URL, and use it to drive traffic. Like I said earlier, normally I recommend writing content, producing videos, etc. and publishing content around the web for free exposure. Which is great, and free.
But for this clock I could sell on that sales page for ~$90, I wouldn't even bother. That's a $70 mark-up. I would just run a variety of facebook ads, then delete the ads that didn't work. For the ads that converted, I would ramp the budget up and run them continuously.
You see, Facebook ads might cost you $.50 per click, maybe a dollar, depending on the audience. I would put the price of the clock in the ad so it wouldn't scare any buyers off. If each click costs me just $.50, I need to convert 1 out of every 139 visitors in to buyers to be profitable.
Again, if just 1 in 10 visitors purchased, I would earn $75 on each sale ($90 sales price - $5 advertising cost - $10 product cost). The sales volume would be limited only by my daily advertising budget.
Etsy products not being drop shipped...
These are products NOT being drop shipped by the seller. But, you could easily just ask the seller to drop ship them for you. See this conversation I had for example...
Some product examples...
Margins on bath and beauty items are typically very large. The products are cheap to produce. It's a product category where perceived value really comes into play. A sales page with great pictures, elegant design, and sales copy stressing the organic aspects will go a long way.
This Etsy seller sells this product for just $3, with 153 five-star reviews and 1,129 product favorites. To me, that screams underpriced. My guess is she will ship it straight to your customer for $3 total, and you could justify a $15 price tag (80% margin). I'm sure if you send her logo stickers, she will be happy to put one on each lid for you.
A facebook ad campaign to your sales page might cost $.50 a click. With a $12 margin, so long as you sell one every 20 clicks, you are in business. Refine your page to sell one every ten visitors, run enough ads to sell 50 a day, and you're making $350 a day while you sleep.
Another premium, bath and beauty item. 1,796 product favorites, 2,495 five-star reviews, and yet it's only listed for $5. The product is already branded well, too. I think you could probably get this product shipped to your customer for $6, but charge $17.
I can't explain why, but it seems people can't get enough of this fairy dust. 6,235 product favorites and 196 five-star reviews. The item is listed for $18, my guess is she will ship for a unit cost of $12.
Seems like an excellent opportunity to sell for ~$29 with some facebook ads.
Hope that helps!
Drop shipping doesn't have to be complicated, nor does picking a product to sell. Perceived value in your customers eyes minus product sourcing costs equals your margin. So long as you don't use your whole margin on advertising, you've got yourself a money making machine. A machine where you put a quarter in, and it spits a dollar back out.
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