Can an Amazon affiliate site be turned into a dropshipping or even an eCommerce site? How would one go about doing that?
I’ve always been interested in eCommerce from my eBay dropshipping days back in college and this week we were excited to sit down with Andrew Youderian from eCommerce Fuel to discuss how to build out niche dropshipping sites. He’s put out some killer content on dropshipping and eCommerce and we just had to have him on the show to find out how he’s built profitable sites from scratch.
If you’ve been interested in finding out how to expand your niche sites into “authority” sites or you’d rather focus on less sites that require more of your time, this is definitely an episode for you.
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So…are you digging the eCommerce approach? Do you think Amazon sites can easily be converted to dropshipping sites? Let us know on Twitter, drop us a voice recording, or leave us a comment below!
Speaker 1: Welcome to the Empire Flippers podcast. Are you sick and tired of gurus who have plenty of ideas but are short on substance? Worried that E-book you bought for $17.95 won’t bring you the personal and financial freedom you long for? Hey, you’re not alone. Join thousands of others in their pursuit of niche profits without the bullshit, straight from your hosts, Justin and Joe, from Empire Flippers.
Justin Cooke: Welcome to episode 59 of Empire Flippers podcast. I’m your host, Justin Cooke, and I am here with Joe “Hot Money” Magnotti. What is going on, buddy?
Joe Magnotti: Hello, everybody.
Justin Cooke: We’ve got a great episode lined up. We are going to be delving into the details about building a niche dropshipping site, and we’ve got Andrew Youderian on the program from eCommerceFuel. The guy is a super stud when it comes to E-commerce, dropshipping, so we really want to talk to him a bit. It was really exciting to talk a little bit about how to take Amazon sites and kind of like develop those into dropshipping sites, so that’s kind of like the next level up. We’re going to get into that in the program. Before we do that though, let’s go over some updates, news and information. First thing, buddy, three new five-star iTunes reviews.
Joe Magnotti: Hit me up, man.
Justin Cooke: So I’ve got Jamie from the U.K. He says, “My favorite podcast, my New Year’s resolution, was to earn myself a side income, and I’ve got myself up to around $500 a month.” We’ve also got [Parvinder 00:01:20] from the U.K. He says, “I love your podcast. I make sure I listen to at least one a day,” so it sounds like he’s been catching up. We’ve got [Ello Todd 00:01:28] from above the pack. He says, “It’s a great podcast, definitely one of the best in the entrepreneurial niche, as these guys actually run businesses.” Well, thanks to all you guys for the five-star iTunes reviews. Really appreciate it, and if you’re listening to the show and you like it as well, please give us a review. We’d really appreciate it.
Joe Magnotti: Yeah, and it’s so cool to hear about people making money after listening to our advice.
Justin Cooke: It is. I was actually having kind of a bad day earlier and I read those and I was like, “Yeah, man. I’m feeling a little bit better now. That’s pretty cool.” The next thing we want to cover is we’ve got two new feature sites that are either going to be published this week or next. They’re much larger sites than we’ve sold in the past. One of them is in the $120,000 to $150,000 range, one of them in the $60,000 to $90,000 range, so we’re going to be looking at those, reviewing those, and probably putting them up this week or next. So if you’re looking for sites in that range, definitely give it a look this week and check it out.
Third point we wanted to talk about is the thing we can’t really talk about is, we’ve been wrapping up a legal issue here in the Philippines. We can’t really get into it yet, because it’s still kind of … We’re putting the final touches on everything, but we will be able to talk about it just as soon as we can. It’s been quite a bear though, but I’m looking forward to that episode. That’ll be pretty crazy.
Joe Magnotti: I’m looking forward to getting it off my chest. I mean, just so much time, energy and emotion has been delved into this issue, that just talking about it is going to be therapeutic.
Justin Cooke: It’s like our therapy session, right? All right, man, enough about the news and info. Let’s get right into the heart of this week’s episode.
Speaker 1: This is the Empire Flippers podcast.
Justin Cooke: All right, let’s get right into it. We’re really excited to have an interview today with Andrew Youderian. He’s from eCommerceFuel.com. You’ve probably seen me mention him in the podcasts and on the blog before. Really love his content. If you’re at all interested in building an E-commerce site, a dropshipping site, he is my guy, the guy I trust to provide information regarding E-commerce and dropshipping. Andrew, welcome to the program, buddy.
Andrew Y.: Hey, thanks, Justin. Appreciate being here with you and Joe.
Justin Cooke: So today, as we mentioned, we’re going to be getting into a dropshipping case study, and we’re going to talk about things like niche selection, traffic sources, platforms to use, customer support. How do we scale this? But before we even do any of that, let’s talk about your first dropshipping site. What interested you about dropshipping, as I mentioned even before the show a bit, I’ve done a little bit of dropshipping when I was in college, just a bit, and I thought it was pretty interesting, so it’s exciting to have you on the program. What was your first dropshipping site, Andrew?
Andrew Y.: My first dropshipping site was a site called Right Channel Radios, selling kind of short-range radio equipment here in the States. It’s still one that I’m running today, one of our sites we focus a lot on. Man, I was just in a job like a lot of guys I imagine listening to this, and it just wasn’t working out. I was spending way too much time on a career I wasn’t madly in love with, and so I ended up quitting and was looking for a business model that didn’t require a ton of capital up front to start. That was requirement number one.
And requirement number two was that I could run from anywhere. It was location-independent, and so I did a bunch of research and ended up on the E-commerce model and then even further still, settled on dropshipping because it met those two requirements. You could sell physical products, and maybe we’ll get into this, but you could sell physical products from anywhere. You didn’t have to run a warehouse. You didn’t have to manage inventory or buy a bunch of stuff, and so that’s initially what got me into it, what interested me in it.
Justin Cooke: Andrew, can you explain to our listeners a bit, what is the difference between an E-commerce site and a dropshipping site, and why did you choose the dropshipping route?
Andrew Y.: Yeah, so do you mean like the difference between say dropshipping and like the stocking-based approach where you’d order inventory?
Justin Cooke: Yeah, exactly.
Andrew Y.: Yeah, so normally a stocking-based model is where you go out and you buy all of your products or most of your products from either a wholesaler, which is a middleman, or directly from the manufacturer, and you stock them in your own warehouse. So you’ve got to outlay a bunch of capital up front to buy that. You’ve got to run a warehouse and maintain it, or you’ve got to pay a fulfillment center to manage it all, and so that’s the traditional model.
With the dropshipping model, you actually contract with a wholesaler that already has all of the inventory that you want to sell. A lot of times these wholesalers will focus on a niche. Maybe it’s the electronics niche or the marine niche or the craft niche, whatever it is. And so they’ve got all these products, and the beauty of it is, you don’t have to buy any of these products until you actually have made a sale to your end customer. And so on my sites, when a customer comes and they buy something from my store, I actually don’t own that product yet.
Once I get that order from them, I actually forward that on to my supplier and only at that time, once I’ve received money from them, do I purchase the product from my wholesaler, and then I ship it straight to the customer, and so I never see the product. There’s a bunch of stuff that I’ve sold that I’ve never even touched, which is kind of crazy, but that’s going to be the biggest difference between the two models.
Justin Cooke: So I see a big downside, obviously. If I have to go to Alibaba and try to source items from China, a lot of times they force me to go in batches of 2,000 or 4,000 or 10,000 units, and that’s a lot of upfront costs. I’ve got to outlay that cash, get the items in, and then start shipping them out as I sell them. So I mean, I can see the benefit to a dropshipping model from that perspective. I’m not fronting all of that cash. What’s the downside of a dropshipping model? Why would you be less interested in doing dropshipping?
Andrew Y.: Oh, there’s a ton of downsides. It’s a great model for getting started for ramping up with not a ton of capital, and so definitely some advantages there. But on the downside, probably the biggest one is just margin. You’re not going to get nearly as much of a margin. Average dropshipping margins are anywhere from, oh, 10 to 25 or 30%. Some people, some folks, a guy I know really well has had a lot of success with dropshipping really high-end industrial equipment, and he’ll get good margins on that, but I’d say generally the rule is your margins are going to be much lower, and so that’s one problem.
The other problem is logistically, it’s a lot more difficult. If you’ve got one warehouse and all of your product is there, it’s pretty easy to know what your stock quantities are, you know, how much of a product you have. It’s easy to … Usually, all your shipments are going to originate from one place, because everything’s in one location. When you’re dropshipping, it just gets really confusing because all of a sudden, let’s say you’re working with three suppliers, and three suppliers are where you get all of your catalog. Let’s say an order comes in for five parts.
Well, you may need to ship those from three different suppliers to one customer, because supplier A only has two of them. Supplier B only has one, and supplier three has the other two. And so it’s just a nightmare. You’ve got one, inventory management issues. How do you know what’s in stock? Because not only are you dealing with multiple suppliers, but those inventory levels are changing because other people are dropshipping as well, so that can be complex.
And then shipping costs; you’re building a catalog off of four different suppliers. You can’t pass through shipping costs onto your customer. I mean, you could. Your conversion rate would just plummet, and so you’ve got to figure those things out. And then so there’s a whole host of logistical issues that goes with managing that kind of supply chain.
Justin Cooke: Yeah, you’re making my head spin just thinking about it.
Joe Magnotti: Yeah, okay. No dropshipping for me. I’m out. I quit, man. You lost me. That was the quickest interview we’ve ever had.
Andrew Y.: Well, it’s been good, guys. Thanks for having me on. Maybe next time.
Justin Cooke: Yeah, so you know, the one thing I’m thinking about though, and probably our listeners are thinking about, so if you’re working with a dropshipping wholesaler, and they’re dropshipping to your customers, what prevents you from getting cut out of the situation and the customers just going directly to the dropshipper, or someone else finding your supplier and using that dropshipper?
Andrew Y.: Sure, well, wholesaler dropshippers, there are some. You know, there are some wholesalers that also will sell retail and have their own stores, so that’s a risk sometimes. Some people do do that, but I’ve found a lot of wholesalers, you know, it’s just a different business. The wholesale business really is just buying a ton of stock, running a warehouse and making your money on volume because some of my wholesalers, they’ll make … I’ve talked to my reps. I’m like, “Why are you guys in this business? You make like 5% or less” when I’ll make significantly more on an order.
And you guys do all the hard work in terms of … Or at least the capital-intensive work, and so there’s the risk, but it’s just a different business. It’s a different model. One of the downsides, you said what’s to prevent people from coming in and just taking in your niche and competing with you? A lot of times there’s not much, because the dropshipping, the barriers to entry are really low, and so again that’s another downside of dropshipping is, it’s easy for anyone to come in with a business license, set up an account and start selling online.
And so you’ve got to figure out a way, if you’re going to be dropshipping, a couple things that I think are really important, and maybe I’m getting beyond this question to one of the different sections, but being able to market really well is crucial. Being able to add value to your products is crucial, because yeah, the barriers to entry are usually pretty low.
Justin Cooke: Yeah, we’re going to talk about that a little later on. I really like your post you just came out with recently, the four different ways you can build an E-commerce site, and we’re going to talk about that in a bit. One of the things that’s always fascinated me is at eCommerceFuel.com, you’re very open about the niches that you have, for example your TrollingMotors site and your CB site. Why are you not worried that as you’re building an audience over there, a ton of people are going to see your content, go in there and just totally rip your site off and start competing with you in the same niche? Why is that not a problem for you?
Andrew Y.: Well, I think it’s a balance of two things. I think from the worrying about being ripped off side, with dropshipping you’ve got lower margins, right? And so one of the things you can’t do is you can’t buy paid traffic very profitably. Because if you’re operating on a 10 or 15% margin, it is hard to make money with Adwords on margins that low. You can do it if you’re strategic, but it’s pretty difficult most of the time. And so what that really leaves for promotion and being able to build up a business is you’ve got to be able to market organically really well, through traffic or through search engines, through kind of direct traffic from other sites, through building relationships.
And so in one sense, I’ve been doing it for a while and building up that organic traffic takes a while, and so that’s a fairly large note to be able to compete in those industries well. And the second one is, we know those niches really, really well and feel like they’re solid sites. They have a ton of quality information, and while it would be possible for someone to rip them off, it would be a lot of work. And so it’s definitely possible, but the barriers to entry on the information side and the organic SEO marketing side make me feel a little bit better about sharing it.
And then third, from just an eCommerceFuel perspective, I think one of my big pushes this last year has been eCommerceFuel in the community and trying to get out a lot of really quality information about E-commerce. I think that’s so much easier to do and so much more applicable and useful when you can see real-world stories and case studies. And so on one side, there’s a small risk that people could rip off my sites, but I think the increased benefit and advantage of being transparent and showing some real-world examples to build trust, to build credibility and also just to be helpful for other people outweigh the worries of having somebody rip it off.
A lot of times when you look at these things, the people that can rip you off on a lot of these businesses, they’ve got a million ideas going on. They’ve got so much stuff going, they really don’t need your idea to come and copycat. The guys that are going to completely copycat your business most likely more often than not aren’t going to have either the endurance or the skill set to be able to actually pull off a copycat site.
Justin Cooke: Cool, Andrew, and that totally makes sense. I mean, so your biggest barriers to entry for other people competing with you are the fact that SEO content and content in general takes time to develop, and you’ve got a huge headstart. The second thing is you know the market really well, and you speak to that very well on your site, so your content marketing is on point. You’re involved in it, and there’s a barrier to kind of getting in there and kind of figuring out the products, figuring out the customers that you’ve already got settled.
Andrew Y.: Oh, absolutely, and if I was going to start doing AdSense stuff, the last … Let’s say I was going to start, yeah, coming to you guys’ niche, I wouldn’t want to come into areas where you guys already were. I mean, you guys dominate. You know it. It’s your expertise. I’m going to want to try to go to an area where you guys aren’t, and so I don’t have to compete with you. You have a ton of experience in the space.
Joe Magnotti: So let’s talk a little bit about niche selection. You know, I tried to get into the E-commerce learning curve in the beginning of 2013. I took a little course. I went through it. What’s the first thing you look for? Do you look for the key word, or do you look for the product first, when you’re trying to do niche selection? When you were doing the trolling motors and the CB site, give us an example. Did you do product or key word?
Andrew Y.: You know, in terms of my niche selection, I’ll brainstorm a bunch of ideas, and hopefully I’m answering this question kind of in the way you were thinking through. But when I’m looking for a niche, I’ll go through and brainstorm just an insane number of ideas, 50, 100, 150 ideas, and then I’ll go through and narrow those key words down based on search volume, and so it kind of depends. I look for … So I guess the long answer to that is, I look for key word volume first and then kind of dig in deeper.
Because if you don’t have a market, if you have a market that’s too big, chances are you’re going to have just gobs and gobs of competition that it’s going to take forever to be able to compete on an SEO basis. And if you’re too small, you know you’re not going to be able to make any money on it, so brainstorm ideas. Run all those ideas through a keyword tool, and I like to look for, again it varies based on a lot of different things, but anywhere from like say 3,000 to say 20,000 exact match searches for kind of your head primary term. That’s kind of my sweet spot. That’s where I like to look, and then from there, narrow it down to maybe your top three or four, and then do some really deep diligence at that point.
Justin Cooke: So yeah, that’s the next step. So the first filter is exact match searches, between 3,000 to 20,000. You’re in that range. You have that selection up. You found two or three that match that criteria. What’s the next filter that you put in place?
Andrew Y.: If you’re going to be doing dropshipping, there’s a lot of different attributes I like to look for in dropshipping as opposed to if you’re stocking your own product or if you’re manufacturing your own product. And almost all of those have to do with the fact that if you’re dropshipping, like we’ve talked about, lower barriers to entry, anyone can come in. And also, your margins are going to be a lot smaller. And so some of the attributes I like to look for are, I like to look for confusing niches, niches where it’s not necessarily inherently apparent what a customer should buy.
So for example, on my TrollingMotors site, we sell tons of different trolling motors. There’s tons of different type of boats. Each of those motors has all sorts of different thrust options and wiring that you need to set up, and all these different questions that most people, they don’t have a clue about when they come to a site. If they go to Amazon, sure, they can get the same product but they won’t get the level of detailed information about what boats it fits, how much thrust they need, all the different kind of selection criteria.
And so I look for niches where I can add a lot of value, because if you can beat on price and dropshipping, you’re going to get killed. But if you add, you create a really high-value, authoritative site on a topic, you’re going to be more likely to build trust. You’re going to be more likely to earn sales. It’s just the only way you can compete with dropshipping.
Justin Cooke: Well, the thing I like about TrollingMotors is that people can have a passion for that, right? For fishing and their boat, whatever, they’re really into that, and so they’re going to really deep dive on the right motor and have all the different pieces that fall into place. As you mentioned, it’s also a bit confusing for someone just getting in, so they may look at your site as being kind of a nice introduction and kind of guiding them through the process of purchasing. Let me ask you though, Andrew, did you have a real interest in trolling motors before you got into it? I mean, do you suggest that someone have, for lack of a better word, passion for the particular industry, or is that not as critical?
Andrew Y.: Personally, I did not have a passion for trolling motors. I had never even seen a trolling motor when I sold my first one, you know?
Justin Cooke: That’s awesome, yeah.
Andrew Y.: And for me, I take more of a top down approach. That’s changing a little bit over time, but when I first got started, right, I was getting out of a job that was crazy, insane hours, never saw my family. My number one priority was, get something online that can create some cash flow, that can create some kind of cushion so I have some options and I can, in the future I don’t have to go back to that job. And so for me, priority number one was building a viable business, and so I didn’t care about the passion aspect at that point.
And even with TrollingMotors, when I … so that first site, Right Channel Radios, I picked purely based on market research. Same with TrollingMotors, but I think it comes down to where you are in your personality. If you’re the kind of person that loves to sell things, that is just kind of an entrepreneur by nature and loves hustling, and just the business aspect is what you love, I think you can sell anything. I think you could sell crazy baby watches or trolling motors, whatever it is. But if you’re the kind of person who really, entrepreneurship and building businesses isn’t really something that you’re intrinsically passionate about, I think you really need to be passionate about the products. I think it’s a very personal decision.
Justin Cooke: So let me ask you, because I’ve talked to Dan and Ian from the Lifestyle Business podcast about this a little bit. Whenever they get into a new E-commerce niche, they’re thinking two years, three years out, are they still going to want to be building this business? Is this something that they want to continue? Whereas with us a lot of times, we go after random key words. We don’t care about the key words particularly at all, and what we look for, the cream that rises to the top, the sites that are earning, that are profitable for us, that can be expanded, and we generally sell those sites on. Now when you get into it, is it quantity or quality? I mean, do you have the two- or three- or four-year vision on the site, or is it more like, “I’m going to build a few, see which one sticks, and roll that out”?
Andrew Y.: No, definitely the former, the longer-term vision. I think increasingly, it’s getting more and more important to be able to build a brand, and kind of that post you mentioned on, kind of being able to rank sites with kind of low, kind of scammy SEO tactics and harder to do. The bigger brands in Google are starting to rank more, and I think building something long-term is becoming increasingly important. And so when I start something out, I usually focus on that one thing with a long-term horizon, and also because I think it’s a lot harder.
I think a lot of times people’s kind of reaction when they start something and it’s not going well is to start something else to kind of maybe diversify and increase their chances of success. Like with Right Channel, early on it was hard going. It was tough, tough work and I thought, “Hey, maybe I’ll start a second business, and then I’ll double the chances that one of them will do well.” But I think that’s like the worst thing you can do. I think the most important thing, one thing I’ve been increasingly kind of I guess convinced of in the last couple years is if you want to get something going, whether it’s a blog or an E-commerce site or an AdSense, like a really big AdSense engine where you can crank out a bunch of smaller sites, the processes you guys have created, it takes like six to 12 months of dedicated, focused effort to build momentum to get that thing ramped up. It’s hard to do four or five or six of those at a time.
Joe Magnotti: Yeah, we have so many friends that have trouble with that. They get the shiny new object problem where they, “Oh, squirrel,” you know? They look at the new thing and they say, “Well, this thing isn’t going well for me right now, but what about this new thing?” And it’s, the grass is greener on the other side.
Andrew Y.: I think they convince themselves it’s diversification. “Oh, I don’t want to be just reliant on one thing.” No, hell no. Be reliant on one. In fact, double down on that one thing. If it’s working, double down on that, right?
Joe Magnotti: And be patient. I think you do need to be patient, so I think that’s definitely good advice, Andrew.
Justin Cooke: Joe, you know because we were talking about this pre-show, a lot of times dropshippers, their respect for you is kind of based on whether or not you have a site that looks good, that has some visitors already, and they’re going to give you better deals or terms or actually accept you at all for dropshipping their product.
Joe Magnotti: Yeah, so one of the courses that I took in the beginning of the year, that was the biggest problem I had with the whole niche selection process was selecting the dropshipper. You know, you get like a list of the 50 best dropshippers for that particular niche, but then to actually get approved for them, you needed to have a site, which means you had to build a whole site. And even if you had like fake data in there or something like that, you had to have the site first so that you get approved with them so that you can actually put the real products on the site, which seemed ass-backwards to me, and just seemed like getting the actual supplier and finding the right supplier was a really difficult part of the process, and kind of should dictate the niche. So, what do you think about that, Andrew?
Andrew Y.: I think suppliers are crucial. There’s a lot of suppliers. I mean, because you don’t have any of your stock, they’re your entire warehouse and so if they do a great job of keeping inventory in stock, packing your products, getting them out on time, then their business looks great, and vice-versa. If they do a poor job, your reputation suffers. That’s kind of strange. I’ve heard, when you mentioned having the site online first, I’ve heard that from a number of people that they say where a dropshipper requires somebody to have a site online first before they sell to them.
I’ve never run into that personally myself. I’ve always run into, you know, a supplier is going to want to see that you’re a legitimate business, that you’ve got line an EIN number of you’re in the United States, and they’re going to want to see more than anything else that you’re credible, and you’re actually going to get a business up and running so you don’t waste their time. You know, I think dropshippers a lot of times just get a lot of people calling them up, asking this and that. “Oh, I maybe might think … I’m thinking about potentially starting a business in 2015. I want to chat with you for three hours,” you know?
Joe Magnotti: So, how do you separate yourself? So let’s say I have no site, but I’ve done my market research. I get these guys on the phone and I say, “Look, I’m going to build a site in this niche. I want to work with you.” How do they take me seriously?
Andrew Y.: I think it’s all about just building credibility. So I mean for example if you guys were going to do it, you could get on the phone with them and say, “Hey, I know you’ve got this requirement for a site, and that’s fine, and I can go out and build one for you that’s going to be a placeholder. But what I’d rather do is go ahead and market your products and increase the chances that I’m going to sell them immediately, and here’s why you should trust me. Here’s why I’m going to be a good bet. We’ve got [inaudible 00:22:03] flippers, or EmpireFlippers.com. We’ve got this track record of selling these businesses. Here’s what we’ve done together,” and just anything you can do to build credibility, to show that you’re serious, is going to be what dropshippers are going to want to see.
And you can go out and you can build a site. One trick that a friend of mine taught me is if you ever do have to do that, you can go out and build a complete site based on Amazon products. So put all the products up. Throw up a Shopify site. List all the products, or some of the products you’re going to sell, and if somebody happens to order on it, just haphazardly, you can fulfill it through Amazon.
Justin Cooke: I’ll tell you, Andrew, I love this idea. Because we’ve always considered this. I mean, we have these niche sites and for the ones that are taking off, it’s kind of like converting down the funnel. I mean, you could then put on Amazon products. You could then move into dropshipping. Eventually if you’re getting enough business out of it, maybe you want to improve your margins and source directly. You’re willing to do the cash outlay because you know the business is proven, because people are buying shit.
Andrew Y.: Mm-hmm (affirmative), right.
Joe Magnotti: So typically though, how many dropshippers are you actually doing this sale to? So when you were doing the CB site and the TrollingMotors site, how many dropshippers did you call and have to sell yourself like this to?
Andrew Y.: You know, I don’t think I … So for each of my businesses, I used two or three different dropshippers. And for the guys I’m thinking of now I used when I originally contacted them, it was just as simple as calling them up, chatting with them, letting them know what I was doing, and they didn’t require a website. So it’s again, I’ve never had to … There’s been some other people in niches I haven’t necessarily pursued. I’ve been chatting with, and I’ve maybe had to convince them a little more heavily that I was a serious person, or someone to take seriously. But in the businesses I run now, I’ve never had to do that. I think it’s a lot harder than people … Or it’s a lot easier than a lot of people think, just to get set up with a dropshipper. I think there’s a misconception about that.
Justin Cooke: So I’ve heard from other people as to actually create a barrier of entry, sometimes it makes more sense to try to reach out to someone that is a supplier of this, and convince them to dropship for you. And if you can bring them into the dropshipping industry, it may keep other people out because they know you, trust you, and you’re the one that convinced them to do that. Do you recommend trying to get people to set up a dropshipping piece to their business, or do you go with more established dropshipping wholesalers?
Andrew Y.: I think if you can find a business, a niche or a manufacturer that you think you can market well, that has all these attributes that could make a successful dropshipping site but you don’t have a supplier, and you can convince somebody to dropship for you, oh, absolutely. Because it’s going to be that much harder for somebody else to be able to call them up and source that product. So any time you can limit the availability of competitors that source your products, yeah, you’re going to have a big advantage.
Justin Cooke: All right, well Andrew, let’s get into our second section a bit. That was a lot of niche selection, but I think that’s a really important piece. But let’s talk a little bit about traffic sources. Now-
Joe Magnotti: Yeah, Justin, sorry to interrupt. Do you mind if I add one more thing on the niche selection side?
Justin Cooke: Yeah, of course.
Andrew Y.: One thing I think is really important we didn’t touch on but I just wanted to say is, if you can find a niche with a lot of accessories for dropshipping, that’s huge. I love niches with lots of accessories, because the big-ticket items that people sell, a lot of times the margins on those are tiny. The example I love to use all the time is like big-screen TVs. You go into Best Buy or something, you’ve got a $500 TV. They might make $30, $40 on it, like four or 5%, if that. Where people are really making their money is on the accessories, the HDMI cable that’s $30 that they source for $1 in China. The DVD player-
Joe Magnotti: The monster cables that cost you $90 or whatever.
Andrew Y.: Yeah, exactly, you know? The one with=
Joe Magnotti: I totally get that, yeah.
Andrew Y.: Yeah, so if you can find a niche where you’ve got lots of accessories, not only are the margins better, but it’s harder for people to comparison shop. If somebody’s buying just a big-screen TV, they’ll shop all over because in their mind, like price anchoring, that’s where the most potential for savings is. And so usually, at least I haven’t scientifically tested this, but it’s the way I work, I’ll go to find one retailer with the best price, and then usually I’ll buy all the accessories from them. It’s a lot harder to price shop a bundle of five or six accessories over four or five retailers as it is just one big product itself.
Justin Cooke: Oh, Andrew, I totally remember doing this. I remember walking into Circuit City and I had been shopping for a couple of weeks, just here and there, and I knew the TV that I wanted. I went in there because I’d shopped the hell out of it. Go in there, buy the big flat-screen TV, and all the accessories I just kind of grabbed on the way out the door, and that’s where they’re really making their money.
Andrew Y.: Yeah, they made way more on that than the TV, most likely.
Joe Magnotti: And when you live in someplace like the Philippines, you start to realize how cheap those little accessories can be. We have a place here called CDR King. I picked up an HDMI cable for literally $2.
Justin Cooke: I bought a remote control helicopter for I think $22 the other day, just for the hell of it, because it looked like fun. So let’s move into the next section a bit where we talk about traffic sources. It’s easy to do link building for Empire Flippers. I don’t really have to do much. People build links to me. But if I’m selling, I don’t know, trolling motors, or if I’m selling, I don’t know, something particularly boring, it’s harder to get those links that are needed to compete, especially if it’s a more competitive niche. So, what do you do for link building? What is your link building strategy for E-commerce sites?
Andrew Y.: Yeah, it’s tough. One of the things I think even before you get to the link building section, and it kind of ties into niche selection, make sure you pick a niche where you know how you’re going to market it, or at least you hae an idea, because that’s just crucial. And so I think one thing that helps with that is if you can go into niches where there’s an enthusiast base, a hobbyist base. People are passionate about things, like you mentioned trolling motors. People love fishing. It’s amazing what people will spend on like a fishing boat and a trolling motor. I mean, people will spend $40,000 on a decked-out bass boat and $2,000 on a GPS power trolling motor. So if you can find niches like that where people are really enthusiastic about it, that helps.
So from that being said, probably the best way that I’ve gotten links and the best way I’ve marketed E-commerce sites is really by guest posting. That probably has been far and away the most successful, and usually what I’ll do is, I’ll go and I’ll find industry blogs, kind of forums, communities, forums that maybe have article resources attached to them, thought leaders, or maybe not thought leaders but people who are well-known in that little section of the enthusiast space, and I’ll get to know them.
I’ll try to create a relationship with them, and then I’ll usually try to pitch them on a value-adding article for their website. Approach and positioning is really important, and so usually I’ll try to contact them and say, “Hey, I love your website. I love what you’re doing here. I run TrollingMotors.net. I noticed you don’t have an article about selecting a trolling motor. If you think this would be of interest to your visitors, I’d love to put together a comprehensive guide on how to select a trolling motor, some of the problems people encounter. If you’re interested, let me know.” And so usually it’s a proactive approach of posting high-quality, informative guest articles on related sites. That’s been the best way for me.
Justin Cooke: I hear that, Andrew, and I think to myself, if I’m going to be writing guest posts in that industry, I better kind of be interested in it. I mean, even if you weren’t interested in trolling motors before, you probably at least had to be. I mean, you had to dig into it a bit. I mean, you had to make these connection.
Andrew Y.: Mm-hmm (affirmative).
Justin Cooke: With your content marketing strategy specifically, what if it wasn’t such a hobbyist industry? What if it was selling lawn mowers or something? You know, there’s not a bunch of hobbyists buying lawn mowers.
Andrew Y.: Yeah.
Justin Cooke: How would you approach content marketing in a different niche that wasn’t the hobbyist niche?
Andrew Y.: That’s a good question. I think that’s why it’s such a crucial thing to think about before you get into a niche. It’s going to be a lot harder. For the lawnmower niche, you could go out and I’m sure there’s like lawn care directories. I’m sure there’s manufacturers. You could go out and try to get links from some of the manufacturers. I’m sure there’s lawn care blogs, or like landscaping blogs. I would maybe look for ancillary related items, maybe not lawnmower specific, but maybe gardening, maybe landscaping. Things like that, maybe organic farmers, communities.
Look for things that they don’t … The Buffer blog does this really well. I don’t know if you guys follow them, but Buffer is an app that they just help you schedule your tweets and Facebook likes so they all go out at a regular schedule, even if you queue them up at once. But their blog, it focuses on all sorts of stuff. They focus on productivity and lifestyle and technology, all these things that aren’t necessarily directly related to their product but they know their user base is going to love reading about.
Joe Magnotti: Yeah, that’s kind of the strategy we take with Empire Flippers is, we don’t just talk about building your empire or building AdSense sites or stuff like that. We talk about business stuff in general, so that’s part of our content marketing approach. That works very, very well for us. That makes people naturally want to come to us.
Justin Cooke: Yeah, I like the ancillary approach to niche that does have hobbyist, right? That does have an engaged audience, because you can bring in that traffic and they can start to see what you’re selling and see if it’s a good fit for them. You know, the other approach that I know because I’ve read your stuff is specifically being extremely helpful in complicated markets. So, I don’t know whether I buy the HT9X5 or the HT9X6. How do I know which one? And so that seems to make a lot of sense for content, really helping guide people through the process of making sure they’re picking the right pieces to fit with what they need.
Andrew Y.: Yeah, but it’s true. I mean, the more … If you’re at a point now where I’ve got some cash flow and thinking about future ventures, going forward, getting into a niche where I’m interested in it is increasingly appealing just because, yeah, you’re going to be able to write. You’re going to enjoy it more, and you’re going to be able to probably market it better. You’re going to have better content for it, and so it’s definitely, if you can find a niche that is really interesting, that has a lot of hobbyists and also fits all the other criteria that you love and are passionate about, wonderful. But it’s hard to find those that meet every single one of those boxes. If I’m starting out from scratch, I’d rather take profitability over passion any day.
Justin Cooke: We talked about this a few weeks ago. Tim Ferriss wrote about it in The 4-Hour Work Week with the muse businesses, but he advocated testing with paid traffic to see if the niche makes sense, if it works. Do you advocate the same strategy? Take a few hundred dollars, see if you can get that traffic and see if there’s interest, see if people are interested in buying it? I mean, is that something that you advocate, or what do you do to test it out, test market something?
Andrew Y.: I do, but on a slightly different model. So I imagine Tim Ferriss, he’s probably going to be advocating to kind of vet out an idea, put up a landing page with the basic merits, have an opt-in thing and drive some traffic to it, see how many opt in or are interested. With E-commerce, it can be a little more difficult to do that just because a lot of times, most E-commerce stores are going to have multiple items and you need to build out a store a little bit more to get people seriously interested.
And so what I like to do, after having launched a couple sites, done it right in some cases and really botched it in some cases as well, is I like to sign up as quickly as possible a very basic site. Manufacturer descriptions, stock pictures, something, a minimum viable product, to borrow from the lean startup kind of mentality. And then for that first month or two, drive pay traffic to it, which will do a couple things. It’ll give you a sense for how well the traffic converts. You need to be a little more price-competitive in this area, because your website’s pretty vanilla, but drive basic traffic to it, see how it converts.
Put a big, fat phone number up there and start talking with customers to get a sense for who they are, what they want, what problems they have, and get a sense for the market. And so you can do that and in a month or two you can get a real sense for, is this a store that has some potential, or is this a huge time suck that’s not going to make any money?
Justin Cooke: What kind of budget do you need to get started? Because you know, when I hear paid traffic, I’m always concerned that you go in there. You start setting your daily budgets. You start putting this money in there. You have your credit card attached. Before you know it, you get a $5,000 bill from them.
Joe Magnotti: Yeah, $10,000 later, “Oh, I guess that’s not a good niche.”
Andrew Y.: Yeah, I think you can do it for under $1,000. I think it depends obviously on the niche you’re in, right? If you’re trying to sell something insane like Viagra, which the clicks are, I don’t know, how much are they, $10 a pop or more, probably? Yeah, you’re going to burn through that pretty quickly. But if you’re trying to sell something that has clicks in the 50 cents to $1 range, you’re going to … You should be able to get enough traffic to get a sense for it with under $1,000.
Joe Magnotti: So how many niches get to the testing phase that you don’t go through? So how many times do you have to spend $1,000 before you find one that works?
Andrew Y.: I haven’t done that personally. I mean, that’s just advice that I kind of give based on having done it in the past, and so I’ve yet to go through the process of building out a store, getting it up and running, and kind of closing shop.
Justin Cooke: Joe, I think what he’s saying is that, because he’s kind of an all in on a niche, right? So when he picks a niche or whatever, he’s done so much market research beforehand that he’s all in with it. So maybe testing it out to kind of determine or whatever which products are working kind of might make sense, but it doesn’t matter because he’s looking at it from a two-, three-year perspective. It’s not test out a few different sites, whip out a few different sites and then go with the winner. It’s, “I’m all in on this one, baby.”
Andrew Y.: Yeah.
Justin Cooke: So let me ask you this, Andrew. How many products do you start with? I mean, I know they may have 5,000 different products you can sell. How do you choose the products to start with, and how many is it, usually?
Andrew Y.: Yeah, that’s a good question and just to kind of preface what you said last time. Some of the advice that I give is stuff that I’m giving based on mistakes that I’ve made in the past, or things I wish I would have done differently. And so not every single thing I give is stuff that I’ve done nuts to bolts all the way through, but some of it’s just based on, “I screwed up here. Don’t do this. This is what I wish I would have done.”
Justin Cooke: Yeah, you might do it this time around or whatever. Yeah, no, I get it.
Andrew Y.: Exactly. But in terms of the products, I think you chat with … If you can build out your store with kind of as few products as you need to get up and running quickly and then add to those, I think that’s a good approach. And so I think the best way to do that is chatting with a supplier, like your supplier rep. A good supplier will have a great rep, and you can just call them up and say, “Hey, what are the top 10 products in each of these four major categories, or three major categories?” And they’ll get you running, and those are going to be the big money makers right there, the ones that are popular.
And so it’ll depend on the niche, the specific number of products, but if you can get started with a store with 20 or 30 products. The nice thing about that too is you slap those up. You get those, you do some testing, and then if you focus on improving the product pages for your best sellers first, you’re going to get the best ROI for your time invested, versus writing detailed product descriptions for 10,000 products. Some people will launch with like 10,000 products in their E-commerce store. I just don’t understand how they have any chance of trying to be able to add value to that many products.
Justin Cooke: Well, they’ve got to be automating it. But I like the fact that the manufacturer is on your team. I mean, you can call them up and say, “Hey, look. What are your best sellers?” They’re going to work with you, because they are invested in your success. I mean, the better you do, the better they do. But let’s switch up gears a little bit. Let’s move on to like software and platforms. We always recommend trying to go with platforms that are … Because we sell a lot of our sites … That are easily transferrable. There are a lot of different E-commerce platforms out there. What do you recommend? Do you go with Shopify? Do you build WordPress sites? What CMS platform do you use?
Andrew Y.: So I’m on Magento. Both of my E-commerce stores are on Magento, just the free community edition. Looking back, I kind of wish I hadn’t done that because Magento is really powerful. It’s got a lot of functionality, but it is a pig in terms of resources and customization. It’s just rough, and so a lot of … I’ve gotten to be fairly comfortable with it now, and so the investment in it is making it worth sticking with it, but it’s just brutal. And so for someone starting out, especially if you’re starting out, I’d recommend something like Shopify or BigCommerce.
Both are hosted platforms that are like $20, $30, $40 a month and you can get a store online super quickly. One of the guys that works with me, he also works part-time on his own business and he’s used to Magento. He’s getting ready to re-launch one of his stores. He’s moving from Magento to Shopify, and he got in there and he gave me a call. He’s like, “Andrew, I can’t believe this. This is so easy to do. I can just add products and customize it.” He was just blown away, and so because early on, what’s important isn’t having an amazing design or having every single functionality.
Justin Cooke: Yes, yes, yes.
Andrew Y.: What’s important early on is proving concept and marketing and getting customers. And once you have those in place, yeah, then spend some money on design, build out your features. But to get up and running quickly, Shopify or BigCommerce, those are the ones I’d recommend.
Joe Magnotti: Yeah, that’s why Justin and I are big about easy to use technology, especially if you’re going to sell the site afterwards. Because the new person might be very new to the industry as well, and if you make it something complicated or some sort of piece of technology that nobody understands, nobody’s going to want to buy that stuff, so yeah.
Andrew Y.: Plus, even if you’ve got the money, why build out this crazy, complicated platform? That’s just going to lead to more resistance. “Oh, it needs to be perfect, and I need to make sure this works with that.” Whereas an all-in-one solution like Shopify, I mean you’ve got everything in it. It’s relatively cheap. You can always build out the big platform later on when you’re making $50,000, $60,000 a month. Okay, then you can pay for any developer you like, but …
Justin Cooke: So we have the basic platform down. You recommend Shopify. What other type of software are you going to need, and what are the software leaders in those areas?
Andrew Y.: In terms of the help desk, I think having a help desk is really nice. When I started out, I was tracking like all my customer support emails by an Excel spread sheet and it was just a nightmare, you know?
Justin Cooke: Oh, yeah.
Andrew Y.: I wish I … I’ll have to go find that and see if I can post it on the blog. It would be pretty funny.
Justin Cooke: Oh, that hurts my skull, man. Spread sheet customer support, oh my lord.
Andrew Y.: It didn’t last long, yeah. I mean, this was like early days, like 2008, when I didn’t know anything about anything, and so … But quickly realized what a pain that was. And so there’s kind of two big ones I’d recommend. Zendesk is what I use. It’s really highly customizable, a lot of kind of workflow automation and macros you can put into that. It’s great. It’s a little more expensive, especially for some of the really high-end enterprise features, but it’s one of the most well-known ones. And then Help Scout, HelpScout.net is another really interesting solution for providing customer support, much more lightweight, kind of has a natural email feel versus like a ticket-based feel, again a really good solution. So those are one of the two I’d recommend on that front. In terms of other software, I’m trying to think through the-
Justin Cooke: Andrew, I get the support. We use ZenDesk too, big fans of ZenDesk. It is a little pricey, especially when you get a bunch of team members on there, but it’s fantastic. You know, one thing though that confuses me a bit is, I mean I understand you don’t want your customer support handled via spread sheets, but I mean the integration between customers, between you, between your suppliers, I mean how does that ordering process work? I mean, there must be some software that you use. I mean, does Shopify just do all that for you?
Andrew Y.: No, and so that’s the part that’s difficult to set up depending on where you’re at. So for example, order routing and like order flow, we use something called EcomHub. It does a couple things. It syncs inventories between some of our warehouses and our shopping cart, and it also has some order routing functionality. But we use it for inventory syncing, but we don’t use it for order flow. This is probably going to … It pains me to say this, but a lot of our orders we just forward manually onto our supplier. I’ve got a VA who will look at it, and there’s a bunch of criteria like where is it being shipped to? Who’s the closest supplier? Does the supplier have that?
Justin Cooke: I would actually prefer that, you know? We talk about all these different software platforms. It scares the shit out of me. Like at least manually you know that, okay, order comes in. You have a process to order from here. That’s very open to mistakes, so if you’re processing a lot of orders, I see that could be more problematic.
Andrew Y.: It is, yeah. It’s not ideal, and it’s something where one of the things that I probably need to get better at is really investing in some technology to automate a lot of stuff. But so there are platforms out there like EcomHub and Ordoro I believe does a lot of that forward routing, but some of that, because we have some really complicated if/then rules for where we fulfill stuff, we do manually.
Justin Cooke: And then EcomHub, you can have run multiple E-commerce sites through their platform, so I can have ordering for all different kinds of products from all different kinds of suppliers?
Andrew Y.: You can, yeah. It’s nice, because they’ll sync up with multiple store fronts, so you can have two or three Shopify stores on there and all those connect with different suppliers.
Justin Cooke: I can see why this is a bit intimidating for someone just getting into dropshipping. I mean, I’m looking at Joe. I mean, it is late here at night but I mean his eyes are going, “Oh my God,” right? But I see the all-in-one solution, as best as you can get it with the Shopify or BigCommerce, and then yeah, literally spread sheets. ZenDesk for customer support, that’s real straightforward, right?
Andrew Y.: Yeah.
Justin Cooke: I mean, that’s something that I can sink my teeth into.
Joe Magnotti: Yeah, I think the real problem is going to be the sync though between what your suppliers have available and what your shopping cart has. So you don’t want people to buy stuff from your store that’s sold out, right?
Justin Cooke: What do you do in that situation? We’re going to get into that actually, customer service. When you start, what that branding is, you start getting your first orders going through. Do you deal with that? I mean, are you the one handling those support requests?
Andrew Y.: I have been, yeah. So for both of those stores I started, I was the guy on the ground kicking things off. Now I’ve got a team in place that kind of handles the day-to-day, but yeah, I was doing all of that.
Justin Cooke: Okay, so someone … You have a problem. Someone orders something that’s not available. What do you generally do with that from a customer service perspective?
Andrew Y.: Usually, if it’s possible to upgrade them for free, I’ll try to do that because yeah, that’s one of the big things. If you’re not on top of your inventory, it’s probably one of the biggest problems with dropshipping. If I can upgrade them for free, I’ll always try to do that because it does two things. If you don’t have it and they cancel your order, you’re going to lose the revenue anyway. And if you upgrade them for free to something that’s in stock, you may not make anything on the order. You may even lose a little bit on the order but you’ve got a customer, and not only that, you’ve got a thrilled customer. You know, how awesome is it to order something and have a company say, “Hey, we’re out of stock on that. We’re going to upgrade you for free”? And so that’s generally what I’ll try to do in that situation.
Justin Cooke: So what other things do you do to thrill customers? I mean, I remember when I signed up for Shopify just briefly, I wanted to kind of test through it and check it out. I got an email from a guy that says, “No, no, no, it’s really me.” It has a picture of him holding up a sign with my name that he wrote on it. It was really cool. I remember reading Derek Sivers, who I’m a huge fan of, but when he was running CD Baby, he would send these nice little messages, and he would try to include little snacks or gifts or whatever in their packaging when he would send them a CD. What kind of thrill or kind of Zappos-like service do you provide, especially when you’re starting off the business, a dropshipping business?
Andrew Y.: Yeah, when you’re starting out customer service, building that reputation is so important. So starting out, just a lot of phone support. I think phone support is something that makes sense for some businesses when they mature. It doesn’t make sense for others, but I think early on providing really good phone services is crucial. Other things we’ll do is, we’ll do things like really try to take a really empathetic approach when things go wrong. So if a customer gets a crappy product and it’s a defective product from the manufacturer, let’s say like a $25, $30 product, normally they’d have to ship it back, and then a warehouse would have to wait to get it, and then once they receive it, they’d ship them a new product. It’s just a huge hassle.
And so depending on the price point, if it’s not egregiously high, we’ll try to send customers just free products. Something breaks, we’ll send it out that same day, no questions asked. Let them toss the old thing, and people love that, you know? They just really appreciate that. On some of our products, especially some of our bundles, like installation kits for CBs, we’ll include nice little installation accessories. We’ll include a little card that says, “Hey, thanks for ordering from us. If you have any questions, here’s a place on the website where we’ve got all these detailed tutorials.” It’ll be hand signed by our sales manager, and it’ll have a bunch of just small stuff that’s not expensive, but little zip ties and grommets and little things that make installation easier. Those are the-
Justin Cooke: All the little extras to really support your customer.
Joe Magnotti: Yeah, things to endear you to the brand. I get that. That works, but here’s what I’m thinking. If you’re new to dropshipping and you’re trying to set up this kind of stuff, I mean unless you really understand the product, how are you going to come up with these little endearment packages? Is this something you’re going to learn along the way?
Justin Cooke: Joe’s not worried about how you do it. He’s just hot money over there and he’s thinking, “Oh my God, I don’t want to spend all this money out of my pocket.” No, just teasing you, buddy.
Andrew Y.: Yeah, so are you wondering, Joe, kind of how can you scale this or process this, and how can you do it without actually getting in the trenches and kind of just spending two months in the industry and learning what everybody needs?
Joe Magnotti: Yeah, exactly.
Andrew Y.: Yeah, I don’t think there’s a way to do it. You know, you’ve got to either come in being a member of that community, whatever it is, being one of the end customers yourself so you know the market, or you’ve got to learn it, you know?
Joe Magnotti: Yeah.
Andrew Y.: You can’t … You’re not going to be able to outsource that to a VA or someone else, so I think, yeah.
Joe Magnotti: And hence the reason why you’re willing to share your niches, because nobody else is going to be able to figure out that you need twist ties and grommets for your CB radio installation.
Justin Cooke: Yeah, difficult. So okay, so let’s say you’re handling … You offer phone support, which is a high level of support, especially starting off. And you start to realize, okay, you start to figure out your customers a bit and you get a really good feel for them. I love that. You can support them and wow them. How do you go from handling those phone support requests to handing that off? Do you go the FAQ route first, or do you go straight to an outsourcing situation? How do you transition that?
Andrew Y.: It’s a good question. It’s a gradual process, and I think the way that we’ve done it is, you kind of look at … You build out efficiency systems for the phone, and so for example on Right Channel Radios there’s a lot of technical questions and technical issues that always would come up. That’s one of the reasons I like being in that niche, is because there’s a lot of confusing aspects to getting those things set up. And so first thing I did was, using what I had learned, I built out a knowledge base. You know, a lot of technical trouble-shooting issues, flow charts, things like that. That was step number one.
Step number two is you bring on, I brought on a VA after that was established, and really started to teach her about the industry, had her go through those tutorials, had her understand how that stuff worked, and then I would kind of slowly move her in to starting answering customer service tickets and requests, using that knowledge base, and then over time she became really competent at that. And now, we’ve gotten to the point where we’ve got actually a couple tiers. We’ve got VAs on tier one support, and they do a great job, so a lot of questions that come in, order status stuff, it’s kind of some basic to intermediate troubleshooting or product-related questions, they’ll tackle. And then if they can’t handle that, I’ve got a sales manager who it’ll bump up to him. He’s kind of tier two support. They’ll take care of that, and so that’s kind of the high-level process for moving away from doing it all myself, to having a team take care of that.
Justin Cooke: Cool, so these VAs that you have, they work directly for you, or did you hire a company to introduce them to you? How does that outsourcing relationship work? We’re outsourcers, so that’s why I’m-
Joe Magnotti: He’s curious, yeah. He knows how it is.
Andrew Y.: No, absolutely. They’re actually both in the Philippines where you guys are at, it started out with the first one, hired her through an agency. The agency ended up pulling out of the Philippines and kind of, I don’t know if they went belly-up or what happened, but after that happened I ended up working, hiring her back directly, which worked out great for both of us, both on a … I paid less money and she made a ton more, and so win/win. And then the second one hired directly as a referral, so they work just directly for me from their homes.
Justin Cooke: I like hearing about your customer service support transition, and we’re going through that right now. We use something that we learned in the past from one of my mentors called the skill transfer process, which is a great way to basically transfer skills and not lose kind of the love and soul that you put into the process originally. And I know support for us and support for you obviously is really important. Some of the questions that we had, Andrew, was about scalability and repeatability. We like to get into industries where we know that it’s something that we can set down, lay down a process for and really knock through it. I don’t know, I’m worried a little bit about, especially when it comes to niche selection, how that can be kind of processed out.
Joe Magnotti: Yeah, that’s what attracted us to outsourcing to begin with, right? Is that we like to build human machines, right?
Andrew Y.: Human machines, yeah.
Justin Cooke: Mm-hmm (affirmative).
Joe Magnotti: And this gives us the ability to do it from a reduced cost of labor point of view. Just looking at what you’ve been telling us, my concern would be is that some of it is done a lot more by feel than by the numbers, you know? It’s more of an art than a science, so how-
Justin Cooke: Do you think that statement is true, or do you think that niche selection can be really put into a process and kind of hammered through?
Andrew Y.: I think you could process. I think you could create a process for niche selection, for example like when I go through stuff, I’ve got a bunch of … There’s a check sheet or a checklist with all the attributes, and so in some sense you could do that. Personally, I would not outsource niche selection, because the way I approach it and the way I look at E-commerce businesses, instead of building a lot of smaller businesses you’re building up one business that you’re putting a fair amount of time and capital and effort behind, and you’ve got a two- or three- or four-year horizon.
And so I think in that position, in that kind of mentality, I think niche selection should be something the entrepreneur and the owner is doing. I think where the scalability for the dropshipping E-commerce model comes in more so is in the content creation, the adding products. Some of the marketing in SEO you have to be careful there, but yeah, I probably would not outsource niche selection.
Justin Cooke: You know what I do like though, and I think is possible, is when you’re doing the key word research, I mean we could have people behind the scenes that are just constantly looking up. And we could set rules, right? It has to be product-based. It has to be hobbyist or it has to be around a hobby, or it has to be either hobby or confusing, right?
Andrew Y.: Mm-hmm (affirmative).
Justin Cooke: A confusing niche. And by the way, Andrew, I just love the way that you tackle things that are confusing to others. You run towards confusing, because you know that you’re going to be able to help customers in that space. I think that’s a pretty interesting tip. But I think regarding the key word, I think you can have people behind the scenes just constantly knocking it out. It saves you a ton of time of doing it yourself, so all the prep work for finding a niche can be done, and then you make the final decision when you dig through them.
Joe Magnotti: Yeah, I think of Andrew and I sat down for an afternoon, he’d be able to give me categories and then we’d be able to assign number to those categories, like values, one to five. You could rate them on a one to five, right? So this way, you could make an objective scale out of something that’s a little more subjective, right?
Andrew Y.: Oh yeah, definitely.
Justin Cooke: We’re dorks at this. We’re deep diving on this a little bit, but obviously once you get it up and running, I listened to an interview with James Schramko the other day, and he was talking about he has a build team and a maintenance team. So what if you had a couple of agents, and you went around and you were the ones that kind of built these sites out, got them up and running, and then handed them off to a larger team that’s kind of the nurturer team, right? And like kind of runs with them. So let’s just say Andrew, you, and you have three or four other people, three or four agents that are working with you, that are building out each new site. Maybe it takes six months. Let me ask you that. How long did it take to get the site to the point where it’s kind of chugging along?
Andrew Y.: So do you mean in terms of getting a site that you feel really good about that’s up and running, or do you mean more in terms of getting a site that’s generating some decent profit?
Justin Cooke: Getting a site that’s generating some profit, but also is like it’s not in the babying phase anymore. You can move it on to a support team and trust them to continue running it, like a maintenance position.
Andrew Y.: Yeah, I think you can probably do that. It depends on … I think you’re probably looking at least six months minimum, I think. It may be a little bit faster, but I think to really be able to understand a niche, to systemize things, to create a lot of those knowledge bases and FAQs, I think it’s going to take … And get the marketing ball rolling for SEO, I think it’s going to take at least six months to get to that point. That’s probably the six- to 12-month line.
In terms of building up a site that’s a really high-quality one, kind of the approach I’ve taken for both of mine is, get a site up and running. Learn more about the market. Realize my site is terrible and needs to be redone, and then go through a complete site overhaul process from the ground up. Those usually take … Those are pretty time-intensive. Those take two to three months of cranking through stuff to really create a high-value site, in my experience.
Justin Cooke: Let me ask you, Andrew, because we’re getting toward the end of the interview. What questions should we have asked you that we didn’t get to in this interview? What value can you add that we might have missed?
Andrew Y.: One thing I, kind of looking back in retrospect is, what should you be thinking long term in terms of dropshipping? And one thing I really wish I would have done starting out is looking at a niche, make sure you’ve got enough room to grow all the way through into the stocking phase, if you want to. And so for my two niches, for various reasons, it’s difficult for me, the point where I am with those niches, to really stock inventory. Like for the CB business, I’ve looked at the increased margin I would get buying from the manufacturer for a lot of my top items, and it doesn’t really … I don’t get that much more of a margin to justify stocking it myself.
And on the trolling motors side, because trolling motors are really expensive, $1,000 a pop, and so if I wanted to be able to stock those completely and get that extra margin, which would probably double my margin if I stocked them, but there’s 300 or 400 different motors between, maybe there’s 30 or 40 base models and then each one of those has 10 different varieties. And so to be able to offer those all in house, I’m looking at hundreds of thousands of dollars in capital expense, and so it’s difficult.
Because I’m at this point with both businesses where I’d love to be able to invest more capital and increase the returns, but it’s not really feasible. And so that would probably be the biggest thing I would look at, and so getting into my next business I’m going to be looking at something where I could probably invest a little more capital up front to see a longer-term return on the business.
Justin Cooke: I see how today you’d want to get into those niches that do have that ability, or the ability to source yourself and then get those higher margins. But isn’t it okay to just have a dropship site? I mean, if that’s as deep as you can take it, your margins are okay and it’s running not on autopilot, but you have a team of people running the business, I mean that seems like a fairly good end position to me.
Andrew Y.: Oh yeah, it’s good, and hopefully I’m not complaining too much about it.
Justin Cooke: No, no, no.
Andrew Y.: I love both businesses. They’re great for … They’re location-independent. I can run them from anywhere, and able to provide a great income, and I love them. So it’s just as an entrepreneur, you’re always looking like, “How can I improve the business? How can I make it better? How can I make more money out of where I’m at?” And it would just be such a logical step to be able to take that next path. When I’m weighing options versus building out site number three versus leveraging my existing two businesses, you almost always are going to be able to make more money leveraging and improving and expanding your existing businesses, versus starting a new one. It would be really nice to have that option.
Justin Cooke: Andrew, you have a course that gets into this. I mean, how detailed do you get? Do you think if someone took your E-commerce course that they could go start to finish and start looking for niches, building out an E-commerce site?
Andrew Y.: Yeah, absolutely, and that’s why I built it, was with a sense of the goal of having somebody who’s never been into E-commerce, somebody who is smart and driven and interested but doesn’t have the foundation to be able to go through the whole course and build a site soup to nuts. And so like the first section, it goes everything through building, setting up your business from a legal standpoint, financial issues, niche selection. Kind of one of those things Joe was talking about from grading different attributes, and having all your attributes having like a number that you can assign to it for which one’s most important. There’s a whole worksheet in there that does exactly that.
So it’s got a really robust section for niche selection, for setting up your store quickly without spending a whole lot of time making a store that you’re going to have to change later, a marketing module and an optimization module that really goes through and looks at how I’ve built my two businesses, and some of the mistakes I’ve made, the things that have worked well. And so yeah, it’s pretty comprehensive.
Justin Cooke: Sweet, Andrew. Well, I can tell you we really appreciate having you on the show. I mean, I’ll tell you personally, I’m a huge fan of eCommerceFuel.com. You were chugging along. I came across your column. It was like, “Man, dude, this guy’s killing it, just delivering value bombs, basically.” And the post on the popcorn site that you were investigating for your friend, doing due diligence for, originally grabbed my attention. I’ve been following along, man. I really appreciate the content you’re putting out. I think, and I love your approach to delivering a ton of value for your readers.
Joe Magnotti: Yeah, that popcorn post is something we refer to all the time.
Justin Cooke: Oh yeah, all the time, man. So if someone wants to reach out to you, I know they can go to eCommerceFuel.com, but where else do you hang out, on Twitter, email?
Andrew Y.: Yeah, I hang out on Twitter at Youderian. Facebook as well, Andrew.Youderian. The blog, eCommerceFuel.com, and then I actually have a podcast coming out in the next week. I’d love to have you guys on in the near future as well, so that should be coming out in the next, I think it’s July 30th, so eCommerceFuel or Twitter is probably the best place to get a hold of me.
Justin Cooke: Awesome, man. We’d love to be on the podcast. Anyway, Andrew, really appreciate it. Let’s move on right to our tips, tricks and our plans for the future.
Speaker 1: The Empire Flippers podcast.
Justin Cooke: So it was really interesting to talk to Andrew about the way he built his sites, as far as like expecting it to be a much more long-term plan, not just kind of building some sites and kind of seeing which one sticks, but actually devoting a time and interest into those sites that they deserve. I mean, it’s pretty different from our process but I definitely think it’s something that we could implement. I don’t know. What do you think, Joe? What do you think about the dropshipping business for us?
Joe Magnotti: Yeah, I mean I think that the research that I did at the beginning of the year, like I said during the interview, led me to believe that a shotgun approach would be quite difficult, like the same approach that we use with niche sites. So that’s why what he says jives with what I found out about it, and that’s that you have to be super careful about what niche you pick, and you have to be dedicated towards building that site to have some sort of authority in what it’s talking about, and the genre that it’s in. Otherwise, you’re going to have trouble making it different from its competitors and from the market leaders.
Justin Cooke: I think though, because the niche selection is obviously pretty important, right? But I think we could adjust. I mean obviously right now our people are just running through key words like it’s going out of style. They put them all on a spread sheet, and then we have guys go through and pick out the ones that meet our criteria subjectively. But I think we could probably apply a lot of the same, a similar process to niche selection for dropshipping. It would be different but similar in that there’s a process to it.
Joe Magnotti: Yeah, I understand what you’re talking about, and perhaps there would be pieces of the niche selection that we could break down and have them help us with. But then, what about after that when you really have to provide value to the visitors? Like something he was talking about is that you have to know what people need in that particular niche. Like he was talking about the little bundles that he sends with the CB radios. The only way you know that is because you really know a lot about dropshipping CB radios. You’ve done a lot of research. You’ve talked to a lot of customers, and you got their feedback and you made your service better by including a free little bundle. I don’t know, man. I don’t know if the people that work for us could do that. We would have to do that ourselves.
Justin Cooke: But he was describing … Well, I don’t think you’re right there, but he was also describing the way that he does it, and he’s been doing it in that niche for years. I would imagine we would have team members that are applied to that site for the content marketing, and also on the service aspect or service side of things. So those people, right? I mean, we wouldn’t be doing it. They would be running that piece of our business, so I mean they would be the ones that would be required to delve into the subject that deeply.
I think that is doable. I mean, I don’t think you can have some five hour a week O-desker trying to knock it out, but I mean team members that we’ve had for a long time and our guys, I think our guys could handle that side of the business. I mean, it is something that we would have to be involved in to start, and then kind of like pass on to them. Again, it would be kind of passing on our understanding and knowledge in the space, but I think it’s doable. I mean, that’s saying that like right now we provide value through Empire Flippers, right? You don’t think that we can provide value to people with our team?
Joe Magnotti: No, I think we can. I just think for this very particular thing that he’s doing, the way he’s describing it, I think it would be difficult, but I’d be willing to test it out, that’s for sure. So you know, I think it’s something we should get into. Like you said, it’s a natural progression for us. It would be a challenge. I’m not saying it’s impossible. I’m just saying it would be very difficult.
Justin Cooke: I just think it’s interesting, because right now we’re able to sell sites in the $20,000, $30,000, $40,000, $50,000 range. I mean, those are basically mini-businesses, right? They’re small businesses that people would take over and grow, and it can replace full-time income potentially, right? Especially in the $60,000, $70,000, $80,000 range. And I think right now we’re brokering those sites. We’re allowing other people to sell their sites through us. I really think that if we built those sites and were selling them as well, I mean obviously that’s more money in our pockets, right?
But it’s also an interesting thing to do, and that’s really where we want to go I think with Empire Flippers, is being able to flip, or being able to build out these profit streams that are little mini-businesses on their own. And if we’re allowing other people to basically buy those up and snatch those up and to build their empires, we’re supportive of the empire building and flipping industry. Do you know what I mean? So that would be interesting to see if we can head down that route and make it successful. But anyway, enough about that. Let’s get right into our tips, tricks and plans for the future.
Speaker 1: You’re listening to the Empire Flippers podcast, with Justin and Joe.
Justin Cooke: So Joe, you’ve got our first tip for us, buddy. It came from a good friend and buddy of ours, Greg, so hat tip to you. Tell us about it.
Joe Magnotti: Yeah, so Greg was a little bit interested in importing products from China, not actually to sell via E-commerce sites. He wants to sell them physically at small fairs in the U.K. He’s from England. But, there’s this site called CantonFair.org.CN, which is a fair happening in China about small factory items that you can buy and import into your country. So if you guys are interested in getting E-commerce ideas, I could see how this site would be really cool. If you have the money and you want to travel to something like that to expand or source your E-commerce business from, it might be a really interesting place to start.
Justin Cooke: It’s like Alibaba in person, right?
Joe Magnotti: Yeah.
Justin Cooke: I mean, Alibaba is great for looking through the different products that are available, and looking at potentially sourcing them from China. But if you go to the fair, you’re going to be talking to the people on the ground, and I think you’re going to make closer connections. They’re going to know you’re serious. And when’s it happening? It’s in October, I think?
Joe Magnotti: Yeah, there’s three phases that happen in October. It really depends on what genre you’re looking to go after. So just go to the website and figure it out, and if you’re interested in E-commerce, I think it’s a really good thing to start with.
Justin Cooke: Cool. Another tip we want to give you, especially dealing with China and E-commerce is I wanted you to check out TheElevatorLife.com. A couple of Americans run it, Tim and Nick, and basically they’re your men on the ground in China. They’re over there dealing with products, manufacturing, and what they’re doing is they’re trying to show people that it’s relatively easy to basically get your foot in the door in China for products, for E-commerce business, or even doing import/export. And so they’re over there making connections, meeting with people, and showing other people how to do it as well.
Joe Magnotti: Why The Elevator Life?
Justin Cooke: Because they’re talking about China as an elevator, and basically being able to rise through the ranks and a rising tide lifts all boats kind of thing. And China has been doing so well over the last few years, they want to be where the action is. So as a couple Americans, they decided to move to China and see what happens, man. Make it work, right?
Joe Magnotti: Cool.
Justin Cooke: All right, so that’s it for episode 59 of The Empire Flippers podcast. Thanks for being with us. Make sure and check us out on Twitter at Empire Flippers, and we’ll see you next week.
Joe Magnotti: Bye bye, everybody.
Speaker 1: You’ve been listening to The Empire Flippers podcast, with Justin and Joe. Be sure to hit up EmpireFlippers.com for more. That’s EmpireFlippers.com. Thanks for listening.
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