Focusing on a Single Product May Be the Key to Dropshipping
One out of every ten dollars spent around the world this year will be paid online, according to new research. But what’s more impressive is that within just three years, that number is expected to nearly double, accounting for $5.8 trillion of transactions conducted via e-commerce. So it comes as a surprise to me to see so many commentators disparaging dropshipping, a form of e-commerce where the merchant doesn’t stock inventory, but mediates the transaction between the customer and the factory supplier for a profit.
The most significant criticism directed at the dropshipping industry stems from its apparent lack of good customer experience. That’s because the factory ships the goods directly to the customer, by nature of the business model. As a result, they incur high shipping durations and the quality assurances possessed by a local fulfillment center are often absent. Due to the low barrier of entry to getting started, many dropshipping businesses are run by single founders, with an (almost) infinitely scalable supply of goods. Poor customer support, poor product quality and reduced overall digital infrastructure often translate into a worse customer experience. But that’s why I reached out to Scott Hilse, a well-known dropshipping entrepreneur and personality one who seems to actually ‘walk the walk when it comes to the lessons he shares online.
According to Hilse, dropshipping is very much alive and thriving, but what is gold is not always glittering: With so many competitors and such low barriers to getting started, the drop-shipping market has become heavily saturated. Even e-commerce platforms like Shopify have their drop-shipping plugins, making it merely a matter of clicks to get started. But that’s where Hilse saw an opportunity. Following Ken Segel’s book, Insanely Simple, Hilse focused on the purest version of the dropshipping model: one product, an iPhone case and one straightforward website. For most, the drop-shipping model is attractive because a single store can have access to an almost infinite supply of goods — from bicycles to beanbags. And while most dropshipping stores are thronged with long catalogs, Hilse started his with a single item. While his competitor stores stocked hundreds, if not thousands, of similar cases, he could refine his entire business around the customer experience of selling that one single iPhone case.
For this to work, the product needs to be top-notch. Hilse strictly suggests avoiding any generic product that you can find in Walmart. When he was searching for the iPhone case, he made sure it would stand out from competitor products; something unusual that held mass-consumer interest.
It also needed to market very well. By choosing a product that looked good on camera, Hilse was able to create high-quality video ads using influencers that worked a charm on Facebook ads. He coupled this with beautiful, professionally shot product imagery and built a simple storefront using Shopify, designed with one action in mind: Add to cart. Hilse attributes a lot of the early success to the way he optimized the Facebook pixel, which tracks users’ engagement on-site and allows Facebook to retarget them with advertisements. By prioritizing qualified traffic, such as those that add the product to the cart but abandon at checkout, he was able to build very targeted adverts for customers that performed exceptionally well.
After segmenting the Facebook audiences based on engagement, he then created look-a-like audiences out of them, which allowed him to re-invest his first profits back into adverts, this time utilizing Facebook’s algorithm. From here, Hilse scaled it to month-over-month to where it’s now making thousands per day. Most impressively, Hilse has been able to replicate this multiple times — a beacon to other dropshipping entrepreneurs on how to best approach it in 2019.
While it’s nothing necessarily new in digital marketing, breaking down the dropshipping model to the bare-minimum has shown that it is still very much alive. By maintaining customer experience as the number-one priority, while still holding to the dropshipping fulfillment model, Hilse has been able to show that there is still a wealth of opportunity for budding drop-shippers out there. Unlike sites with thousands of products, entrepreneurs can build entire businesses out of a single product, with hyper-personalized marketing funnels, websites and advertisements, that no e-commerce super-store can ever compete against.