Action.
Hey guys, I'm Davie and I've built 7 brands that are now valued at over a quarter of a
billion dollars.
The biggest you know?
The Oodie.
I'll get into that another time but today, I'm gonna cut the crap and teach you five
secrets that they're not telling you in e-commerce.
I'm never gonna sell you a course,
I just want to help fellow entrepreneurs reach their goals.
Let's get into it.
The truth is e-commerce is really easy to get into and a great starting point for anyone
that wants to get into business.
The risk:reward ratio is great compared to retail, hospitality or software.
The barriers of entry are also very low.
If you're willing to be humble and learn the basic fundamentals, you can make a lot of
money but you need to be patient.
There's this misconception that you can do one course and be a master.
Don't get me wrong, it's possible to become successful very quickly but the reality is
you shouldn't focus on making millions and taking on big brands in the beginning.
Simply focus on learning the foundations, which can make you profitable as soon as possible.
The basic building blocks of e-commerce include the following: copywriting, digital paid marketing,
influencer marketing, email marketing, content creation, product sourcing and website setup
which, right now, is very easy, thanks to Shopify.
This may sound like a lot but there are many free YouTube videos out there that can teach
you the basics of them all and that's all you need to know: the basics.
There are a lot of opinions on how to start a business but what I've found has worked
is the method inspired by The Lean Startup.
This model kind of flips the traditional business model of business planning, which I'll run
quickly through first now.
Traditionally, a business or founder develops a vision which then they go into, you know,
a large planning period.
People spend a month on a name, a month on a logo, six months developing the product,
they get their family and friends to nod along the whole time, saying it's a great idea.
Then they plan a huge party to launch the product, thinking they're going to change
the world.
This is an absolute waste of time.
You do not need a business plan.
While this level of planning could have a place in giant companies, it is not right
for a new founder of a small company.
You just need to know what you are selling and how you are going to sell it, then all
you need to do is test exactly that.
Get data along the way.
Guide your decision making.
For example, let's just say you're gonna sell t-shirts with slogans on it, supporting an
environmental cause close to your heart.
Go onto Upwork and get a graphic designer to create some simple quotes and designs.
It will cost you under $50.
Or, better yet, go onto YouTube and learn how to use Photoshop yourself.
Then, go get five t-shirts made online for another $100.
You don't need to buy boxes filled with each style and spend your whole life savings on
the idea.
Next, pick your sales channel.
For example, Facebook.
If Facebook doesn't work and you're 100% confident you've done everything you can to make it
work, try a different sales channel.
If you can't succeed with either channels, try a different product.
Repeat this without spending too much money and never losing faith that it will work eventually.
You don't need to worry about customer service, distribution, suppliers, even fabric quality
in the very early stages for a business like that.
Just see if you can get a few sales, then invest more into it.
Focus on the marketing and the product.
On a side note, I'm gonna do a video walking you through how to launch a brand from $0
to $1 million, showing you every step of the way.
The key lessons I've learnt when launching a business is product is everything.
You're not gonna be able to scale and keep customers happy if your product is crap.
You need to pick a good product that gets good reviews and has a high enough profit
margin so you can fund more advertising and growth.
The person who can spend the most on advertising will win.
If you search "dropshipping", there's a tonne of clickbait saying dropshipping is dead.
This is, of course, not true.
There is still definitely a place for it, however, it is not a long-term strategy.
For those who don't know, dropshipping is where the supplier sends the product directly
from their warehouse to the customer.
You never have to touch it.
Dropshipping is super appealing because you don't need to have your own warehouse and
it requires pretty much no capital to get started.
I'm a huge advocate for new people in e-commerce to do dropshipping to find if they have product
market fit, as well as learn just the basic skills.
The problem is if you ever wanna sell the business and build a truly loved brand, dropshipping
won't get you there.
Let's do an example.
Bear with me as I explain the reasoning at the end.
Say, with Business A, you're dropshipping and you're making $10,000 profit per month.
Great work.
If you wanna sell that business, based on other dropshipping businesses being sold right
now, you'll probably get $120,000, depending on how much product diversification you have
and your store age.
With Business B, you're also doing $10,000 profit per month, however you're using a 3PL
and you have a nice, branded site and great shopping experience.
You could probably sell this for over $300,000.
This can vary case-by-case but usually, dropshipping businesses sell for about .5 to 2 x multiple
of their yearly profit.
Proper branded sites sell for 2 to 4 times multiple.
You're probably thinking, "That doesn't make any sense" but the underlying reasoning is
sound.
If you have ever bought something from a dropshipping store and it took over 12 days to get to you,
you would just know how annoying it actually is.
This is especially the case now Amazon is a great alternative, taking a day to deliver.
You would never go back to this store and purchase again.
Instead, you will go somewhere else.
This means dropshipping businesses have less repeat purchase rate, a critical metric that you
need to know.
This long shipping time over international borders also creates more margin for error,
creating negative reviews and poor customer feedback scores on your ad accounts.
This, along with a tonne of identical competitors entering the market, will eventually raise
your advertising cost until you aren't profitable.
The alternative is just test with dropshipping, then improve and customise your product while
switching to a 3PL.
You'll get repeat customers, word of mouth virality and enjoy building a brand that people
love.
There are so many different channels out there which you can start with.
You have Facebook, Pinterest, Snapchat, SEO, native advertising and now TikTok.
You can even go letterbox dropping if that's the marketing channel that you decide.
However, one of the best channels that is often overlooked is influencer marketing.
Full disclaimer: last month we spent over $2 million on Facebook advertising and it
is our best channel, however we also get great returns and build amazing connections with
customers by using influencer marketing.
If you're watching right now saying, "I've tried influencer marketing and failed whereas
I could make my product work on Facebook" then there is two possibilities.
A) You didn't do it properly or, less likely, B) you don't have product channel fit.
I say that's less likely because if it's selling on Facebook, people want the product.
I will do a whole video on influencer marketing and how to do it properly, however, for today,
let me give you the key tip.
Focus on your influencer selection.
You want to make sure that the audience is genuine and emotionally connected to the influencer
because you're going to piggyback on that emotional connection to sell your product.
The best way to do this is look at their engagement rate.
Is it consistent?
Do they have real comments and conversations going on?
If it's just one emoji or a couple of words, chances are it's an engagement pod, where
influencers are helping each other grow.
The final thing with influencer marketing is you need to make sure everything is trackable.
Everything in e-commerce should be measured so you can repeat profitable feedback loops.
Use unique discount codes for influencers and make sure you see how many products they
can sell.
My final point is less of an optimistic one.
It's something that I wish people told me when I first started so I could focus more
on it as I grew.
There are way less YouTube videos on it because it's not very sexy to talk about.
Logistics, operations and finance.
It can get messy really quickly.
If you're selling 50 units a day in one country with one 3PL and one courier, you're gonna
be fine.
However, every time you need to add an element of complexity to that system, you create more
risk.
This can be anything: cashflow risk, supply chain risk, compliance risk, inventory risk.
This shouldn't scare you away from your goals.
Everything can be learnt, you just need to know where to start.
If you believe you're ready to expand, here are some of my top tips.
Do demand planning for your inventory or hire an experienced demand manager.
This will avoid pressure on your departments
which comes when you're low on stock or sell out.
This small investment in someone focused in future demand will pay for itself very quickly.
You'll need to develop an understanding of local import taxes.
I know what you're thinking, "Taxes?
That sounds complicated" but honestly, that's most people's reactions and deters the majority
from actually expanding their business.
So, take it as your advantage.
Jump on a couple of introduction calls with good local accountants, tax specialists and
freight forwarders in these countries.
They'll give you everything you need to know to get started.
You need to find a good 3PL.
They are your logistics partner.
You are only as strong as your weakest link.
Make sure your 3PL has great systems and procedures.
Ask them for their process for inputting stock and pick and pack.
If they don't require barcodes and don't scan barcodes, it's probably a huge red flag.
Also, make sure you know how they deal with returns.
So, let's quickly revisit those five sneaky secrets.
1) E-commerce is actually really easy if you're patient.
2) Being ready to fail and learn is the best way to go.
We're here to make mistakes.
3) Dropshipping is not smart long term.
I'd recommend getting a 3PL. 4) Influencers are super powerful.
Use discount codes to measure effectiveness.
5) Learn logistics, operations and finance to deal with the complexity of expansion.
If you feel like you've learnt something today or you've started your own business before,
drop a comment below and tell me, what's the one thing that you've learnt?
What's the one thing that you wish you knew before you started?
Also, make sure to subscribe and keep learning.