Case study on one of my drop shipping stores that has done over $1,000,000 in sales in just under four months. I’m going to be taking you through how I selected the product, how I run the ads, and how I managed to stay consistent as the niche was getting more and more competitive.
Without further ado, let’s get right into the content
I want to talk a little bit about the product, how I found it, and why I decided to test it. This is a one-product dropshipping store and 99% of sales came from just one product. Obviously, picking the right product played a really important part in the success of this store.
Solves a Problem and a Very Large Target Market (mass appeal)
The product itself solves a problem, and it has a very large target market. And that second part is really important. Solving a problem is really important, but if it solves a problem that is very specific, and only so many people are affected by that problem, it’s going to be hard to scale it. Versus, a product that solves a very broad problem affects a lot of people. For example, teeth whitening is a great example, a lot of people have yellow teeth, and the target market for that is massive. So you want a problem that has a very large target market and those are the products that you can scale the most.
Very competitive (saturated) when I started. Over 15k orders on Aliexpress
Another thing is that this product was very competitive even when I started. It already had over 15,000 orders on Aliexpress which a lot of people would consider saturated. To me, that was more of a sign that there was a lot of demand for this product, and so that didn’t scare me away. When you see a lot of orders on a product it doesn’t necessarily mean that it’s saturated and that you can’t make money from it. It just means that there’s a lot of demand, a lot of people wanted so it’s honestly a good selling if you see that many orders on a product
Related article How to create a dropshipping store using Shopify and oberlo
Found the product on Ecomhunt, scrolling through order pages.
How I found the product is through Ecom hunt. Ecom hunt is one of my favorite product research tools. And I was going through the older pages and I saw this product and I saw that it solved a problem and it had a very large target market. Instantly, I was like, this product probably does really well. Then I went ahead and I went on Google Trends and I saw the start of an uptrend so it was a really good time to get in for this product, and so I decided to test it right away with Facebook Ads.
Search for the product name on Adespresso, and found an ad for it from a few months back with over 5 million views.
Once I found the product and I decided to test it, the next step was to find my competitors so that I could model what they were doing except do it better. What I did to do this is I searched for the product name on adespresso. If you don’t know what adespresso is it’s a website about Facebook ads and they have a tool that allows you to find competitor ads. I went to adespresso and I searched the product name, and I found an ad for it from a few months back with about five million views. And that to me was another confirmation that the product was doing really well. I saw in the comments there was a lot of engagement, everyone wanted it, and this was a really good sign for me.
Made my own ad (modeling the one I found on Adepresso) by using clips from Youtube, and putting them together with Animoto.
What I did was that I made my own ad modeling that one except I tried to make it better so I found some clips from YouTube and I split them up and I put them together with Animoto which is a video editor.
I used what I call the “quick testing” strategy to test this product: PPE campaign to all (18-55 men and women worldwide, no detailed targeting) to get cheap views + social proof, then build a 95% video viewers LAA.
I made my own ad modeling the one that I found and right away I started testing it with what I call the quick testing strategy. Basically what this strategy entails is that you want to run a PPE campaign to a broad audience. In this case, what I did was I literally ran a PPE campaign to all 18 to 55 men and women worldwide, with no detailed targeting. And what this allowed me to do is get cheap engagement out of low cost. Facebook is able to optimize to whatever demographic is performing the best and what this does is that I’m getting a lot of engagement really cheap and then this gives me social proof and it also gives me video views and the important part here is to get the video views, because once I get the video views, I can build a 95% video viewer custom audience, and then build some look-alike audiences from that. It’s a really easy look-alike audience to test because it’s easy to get enough views to build a custom audience and then build a look-alike audience from it.
Tested 1%, 1-2%, 2-5% for US — 2%, 2-5%, 5-10$ for UK, CA, AU.
I ran this PPE campaign till I got about 100,000 views on the ad and then I built the 95% video viewers look-alike audiences for the US, UK, Canada, and Australia. I tested the one percent, one to two percent, and two to five percent for the US, two percent, two to five, and five to ten percent for the UK Canada, and Australia. And that’s how I launched the test for this product.
A lot of people ask what my testing method is? This is usually what I do, I just run a PPE campaign, get enough video views and then build some look-alikes from that. Usually, it works really well. If you have a good product, it might not be profitable right away but usually, if it’s a good product you’ll get a few sales and it’s enough to get you started and to start optimizing with. So this is how I started testing this product.
Took 3 days to become profitable. This is usually what results for me, no profitable right way.
Like I said with this quick testing strategy you’re not always going to be profitable right away. But the way you need to think of it is that you’re buying data, you’re not losing money. So in this case it took me three days to become profitable and this is usually what results look like for me, it’s not profitable right away. At the start, I’m losing money but I’m buying data. And then once I have that data, I can follow what the data is telling me and then optimize towards that and start scaling that way.
I’m going to show you day-by-day what the first three days look like so you get an idea of what I was seeing on my end.
This was July 20th before I started running ads
Then July 21st was the first day. On that day I spent $278 and only made $138 back. 0.5 roas which wasn’t good
But I would see that broad audiences were already being profitable and this was telling me that this is a good product I just need to narrow down my targeting and figure out the right audience. To me, just even getting a 0.5 roas on the first day that’s a good sign because I’m already getting some sales on the first day when I’m just trying to figure out who my audience is?.
Let’s see what happened the next day on the 22nd. Then at this point, I was creating more look-alike audiences. I’m killing what wasn’t working and as you can see the roas got a little bit better and I’m spending more so it went from 0.5 to 1.45.
Then if I go to the next day, you can see it got a lot better again and the budget went up so now we’re spending $1,456, and the roas is 1.76
So you get the idea and then I was just creating a lot of look-alikes from all the data that I had at this point, and trying to figure out what works and killing what doesn’t work.
This is why I recommend beginners to stay away from Facebook ads because, in my experience, you need to spend a lot of money to get started so if you only have like $200 to get started. In my opinion, it’s not enough to start running Facebook ads because it’s not enough to properly test your audiences. Some people make it work with $5 ads sets. It’s personally not the strategy that I use and I haven’t had experience with that. That’s why I recommend having some budget to start out with Facebook Ads because when you’re starting out you’re losing money and then you start figuring out what works and doubling down on that and that’s when you can become profitable and scale.
I want to talk a little bit about consistency and how I managed to stay consistent over the five months. And this is really important a lot of people will find a winning product and they’ll make it work for about a month and then it’ll die out, and then they’ll try to find the next thing. But it’s possible to stay consistent with just one product if you follow these tips
Introducing new creatives consistently. Sent product to 5 people on Fiverr to get content made according to my needs.
You want to be consistently introducing new creatives. Creatives, I mean new ads. This is really important, ad fatigue is when an ad stops performing well because it’s been seen too much and Facebook just doesn’t distribute it as much, it doesn’t get as much reach and this happens all the time. If you’re using the same creative for like over a month it’s not going to do as well anymore and that’s just fact. You definitely need to keep introducing new creatives and if you don’t, your creativity is going to burn out and your product will no longer be profitable.
What I did is I sent the product to five people on Fiverr to get content made according to my needs. I told them exactly what I wanted to deal with the product and they recorded these clips and then I used those clips to make different ads on any moto.
Ended up testing 20+ video variations over 5 months
Over those five months, I ended up testing over 20 video variations for my main video ads for cold traffic. Testing all these different variations and introducing new creatives every month at least it’s better to do it like weekly or every two weeks, you definitely want to keep introducing these new creatives and keep testing new things in order to stay on top of things and to fight ad fatigue to make sure that you’re getting the best possible deal for your money in terms of acquiring customers
Scroll stoppers – the main thing I test was the first 3 seconds of the video. These first 3 seconds of your ad need to be engaging and stop the user from scrolling past your ads. This is key to getting a lower CPM.
Another thing that you want to keep in mind is that scroll stoppers are the most important thing with your video. What I mean by scroll stopper is the first three seconds of your video. When someone’s scrolling down their feed because most people go on social media on mobile and they’re just scrolling at full speed down their feed and you need to have something right away in the first 2 to 3 seconds that catches their attention or else they’re just going to keep scrolling and they’re not going to engage with your ad. This is the main thing that you want to test because if you have a good scroll stopper it’s going to be the difference between a high CPM and a low CPM which allows you to be profitable.
This is the main thing that I tested in my variations. Obviously, I tested more than that but the main thing I tested is the first 3 seconds, and I kept testing different scroll Stoppers. You could have an ad that was working really well last month and then it kind of died off this month. You don’t have to change the whole ad you could literally just test a new scroll stopper so in your first 3 seconds in front of the ad, and then that could make that ad very profitable again.
Testing scroll Stoppers was a major major point for the success of the store consistently.
Different creatives for retargeting. Don’t always show the same ad – this increases ad fatigue. Image ads tend to work great for retargeting.
You don’t always want to show the same ad to the people going through your funnel. You want to show them different ads so that they’d start trusting your business and they don’t feel like they’re being spammed with the same ad over and over again. You definitely want to show different ads based on where they are in the funnel and this is really important and this will also decrease ad fatigue. If you always show the same ad your ads are going to get fatigued a lot faster and Facebook doesn’t like that. Use different ads for retargeting and you can use the same ad but don’t only use that, you also want to mix it up.
What I find works really well is using image ads for retargeting. Image ads for cold traffic usually don’t work as well for me but using them for retargeting people who are already aware of your product and of your brand usually works great for retargeting. Another thing is you can use testimonials like an image with a review from a customer. Those types of ads work great for retargeting. Don’t just use the same video ad that you’re using for cold traffic for all your retargeting audiences.
This product kept getting more and more saturated but I was able to keep dominating because I continuously made new ads.
Over time this product was getting more and more competitive. A lot of people were even copying my stores but the reason I was able to keep dominating was that I continuously made new ads and this is what sets you apart from the rest of drop shippers. Most drop shippers will not make their own content. They literally just copy people’s ads and run that until it stops working and then they’re like, oh, this product is dead. That’s not how it works
You have to keep making new ads and this will allow you to get an edge on your competitors and to keep doing well with the product over a long period of time. For this product, I’m still selling it and I’m still making new ads for it and this will allow me to keep selling it for a long time.
Killed poor-performing ad sets and created new ones similar to the top-performing one every day (10-20 new ad sets per day).
Another thing is that you want to kill poor-performing ad sets every day and create new ones similar to the top-performing ones. This is really important, you don’t want to just let your ad set be run by themselves until they die then just kill them. Because you’re not going to be able to maintain a high ad spend. You need to continuously check on your ad sets, kill the ones that are not performing, and create new ones. It’s an important point if you’re trying to stay consistent you need to keep optimizing your ads.
Net profit was around 19.8% including all fees & expenses. The biggest expense by far is advertising, second is COGS
How much profit did I actually make over $1,000,000 in sales? Well, the answer is that net profit was around 19.8% including all fees and expenses. The biggest expense by far was advertising, second was (cost of goods sold). I’m going to get into the detailed profit and loss statement in a few seconds.
This business isn’t for people scared to spend money. You need to spend a lot in order to make a lot, especially with rising ad costs.
I just want to say that this business isn’t for people who are scared to spend money. And this is something that I see a lot, especially in my comments, when I read the comments I get a lot of comments saying like only 20% profit. 20% is really not a bad profit margin at all especially when you’re scaling, you can’t expect to just spend like $10 and make back $1,000. That’s not how it works. It’s a competitive business and you need to spend money in order to make money. That’s just something that I wanted to put out there. If this is you, you need to get comfortable with spending money if you want to last long term with this business because ad costs are only going to keep increasing and it’s only going to keep getting harder.
Here’s the detailed profit and loss statement for the store
You can see, I filled in from July to November which was the 1.03 million in sales as you can see. And the cost of goods sold was about 30%, so $316,496, and the gross profit was $716,000 before ads
- The main expense was Facebook Ads as you can see $416,000. A lot was spent on Facebook ads.
- I also spent on some Instagram influencer ads so that’s for about $38,590.
- Google Ads $11,600.
- Payment processor fees are $38,615.
- Apps on Shopify $1,600.
- Shopify plan added up to $345.
- My VA is $4,975.
- Total expenses come to about $511,496. And the net profit comes to about $204,228 which is 19.8%.
There you have it. That’s the detailed profit and loss statement. And as you can see I’m spending a lot. I had to spend $511,496 in expenses plus $316,496 in the cost of goods sold. You have to spend a lot in order to make a lot.
To people who say only 20%. 20% of $1,000,000 isn’t bad over five months so I’m not complaining about 20% margins. Because if you have 10% margins and you can scale, you can still make a lot of money. You shouldn’t really care about low-profit margins if it’s profitable and you’re able to stay consistent with it.
That is it for this case study I really hope you enjoyed it. I hope you liked seeing the profit and loss statement at the end of the article because not a lot of people show that. And I’m sure that it’s going to be insightful for you to get an idea of what the expenses look like when you’re scaling a dropshipping store.