In the first episode, Jake dives right into a dropshipping business in the apparel & accessories niche. After only being around for a year, the owner has grown the business to a level of $10k in profit every month! He spoke to the owner, Julie, about some of the decisions she’s made and where she sees the business going in the future.
With extensive experience in social media, she also utilizes Facebook Messenger for marketing!
Find more businesses like this one on our marketplace: http://bit.ly/2oFJjwM
Jake Davis: What if you could cut through the noise in the online business world and learn from someone who has built a real business? We verified the numbers and combed through the PNL. This is not only a real business, but a real asset that people want to buy. We’re going to pull the curtain back and give you the insights this entrepreneur has discovered, that you can use the level of your knowledge, whether you’re looking to buy a business, or looking for inspiration to take your current business to the next level.
Hey listeners, welcome to the Real Money, Real Business podcast. I’m your host, Jake Davis. And today, we going to be looking at a drop shipping business, selling apparel and accessories products that is making 10,000 dollars every single month in profit. And the interesting thing about this business is that it focuses heavily on Facebook ads for traffic. So it’ll be really interesting to get the sellers take on why the business has been operating that way. And luckily we have the seller with us. Julia, how are you doing today? Welcome to the show.
Julia: I’m great, thanks.
Jake Davis: Yeah, thank you for taking the time to connect with me today.
Julia: Thank you too.
Jake Davis: Before we dive into the questions that I have for you, I wanna go ahead and run through a quick summary of the business. Again, the business was built in March of 2017, has a monthly revenue of 24,686 dollars, expenses of 14,234 dollars to make for a net profit of 10,452 dollars which is generated on an 11 month average. Including the sale of this business are three domain, side content files, and social media profiles. Julia, can you tell us a little bit about your background in building and running online businesses?
Julia: Yeah, sure. So I studied marketing and communication and I saw a lot of girls love fashion and love the latest trends so I thought why can I not earn some money in this industry? And this is my first drop ship business.
Jake Davis: So if this is your first one, why are you selling it today?
Julia: Well, I feel like I can’t handle the growth. It has a lot of potential and I feel like if can already accomplish this in such a short amount of time, what can accomplish others?
Jake Davis: Yeah, this is definitely a business that has potential for growth as is clear by the fact that this business has … it was created a year ago and within that last year, on average you made 10,000 dollars a month in profit which, you know, very good for a first year. So when talking about growing and everything, we need to first look at what’s going on with the business today and so how much time would you say that you’re putting into the business?
Julia: Well, I think, on average, I put around two or three hours a day so on a week average, it’s around 21 hours per week.
Jake Davis: Do you feel like any of those tasks could be handed off to a virtual assistant or someone like that?
Julia: Yeah, definitely. They’re all just daily tasks and I think that everyone can do those tasks.
Jake Davis: So what are the tasks?
Julia: Well, on a daily basis, we add new products. We add new content. We write descriptions for the products and just do marketing, Facebook ads. Yeah and just improving the website, sending email marketing, customer service as well. Yeah, those are the normal tasks per day.
Jake Davis: And are you doing it all yourself or do you already have help?
Julia: No, I do it by myself and a little bit with my partner as well.
Jake Davis: So when talking about how the business makes money, can you talk a little bit about the main source of revenue for the business and how your relationship with suppliers and everything are? Can you describe the drop shipping processing or are there any risks or risk is the wrong but have there been any hiccups with that? Is everything going well with the drop shipping?
Julia: Yeah, drop shipping is a great strategy to work with. We already build a relation with our suppliers so our suppliers are doing their best for us to send products quickly and yeah, we just selected some suppliers that are trustable and have a good customer care so whenever we have a question, they answer immediately. So yeah, the drop shipping business is a good strategy.
Jake Davis: Yeah and again, I mean, it’s clearly going well since you’ve been making a lot of money.
Jake Davis: When talking about the marketing that you are currently doing, you have around 15,000 followers for both Facebook and Instagram. So how have you gone about generating the growth? That’s a lot of followers. And what do you utilize it for?
Julia: Yeah, we now we have 17,000 on Instagram and 14,000 on Facebook so that’s quite a large following and we really try to work with influencers and as I said, we have Facebook and Instagram advertisements so that’s how we provide our growth as well.
Jake Davis: You mentioned that you are adding content. Do you mean like written blog posts and stuff and do you share those on Facebook?
Julia: Yeah, for example, and also email marketing. So just send email through Mail Chimp to our female subscribers and we make blog posts as well and send them through email, Facebook, and Instagram.
Jake Davis: And how many subscribers do you have on the email list?
Julia: I’m not sure. I think around 3,000.
Jake Davis: And that list been generated, is it a responsive list? When you send out an email, do a lot people click through the emails and then go back and buy products?
Julia: Yeah, we do. First, didn’t really think that the email marketing was a thing for us but since January this year, we are really constant sending emails out and we saw an average of email … wait, I’ll have statistics for that. Yeah, so our average open rate is around 22% and I saw for the E-commerce, the average is around 16%. So we do pretty good here.
Jake Davis: Yeah, I mean, about 20% is … seems like a good rate there especially if people then click through and go buy products after.
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What do you think are some of the biggest opportunities for growth for the business?
Julia: Well, one of the biggest opportunities for the business is through expand to bigger countries, bigger target groups like Germany, United Kingdom, and Italy or Spain, for example. Yeah, and I feel like if I can already accomplish this in a small country, we now only focus on the Netherlands and Belgium. They’ve only 60 million and 11 million people in the whole country so I feel like if you would focus on bigger countries like you can really expand the business there.
Jake Davis: Have you looked at expanding into the United Kingdom or even America?
Julia: Yeah, I did. We already tried to have some ads on United Kingdom and United Kingdom, we already sold some items so we feel like this is a big opportunity here and we also get a lot of free traffic from the United States without even promoting there or marketing there. So here’s also a big opportunity, yes.
Jake Davis: And so that’s certainly something that a new owner could take advantage of because just to restate something that Julia said which is a very, very good point. She has grown this business making 10,000 dollars a month in only two countries, to relatively small countries compared to countries like the United States or United Kingdom or Germany or something like that. So there seems to be a lot of opportunity in those areas.
Julia: Definitely, yeah.
Jake Davis: Do you feel like there are other marketing channels that would be an opportunity like for instance, have you done a lot … I know you primarily do Facebook marketing, you said, and then emails but have you have done a lot with like Google Ad Words and working on SEO?
Julia: Yeah, here are a lot of opportunities as well with Google marketing but we didn’t really get into that for now but this is an opportunity and also, yeah, what you said with SEO. That’s a great opportunity for free traffic and also with the Instagram influencers, this is also a good strategy and bloggers.
Jake Davis: Have you pursued that or has it just been something that you haven’t gotten to yet? I mean, the other thing to keep in mind is that, again, this is a relatively new business. It’s found massive success but in its first year, you know? So are some of this stuff like getting on Instagram influencers and the other things like that just something you haven’t done because of time?
Julia: No, we already did some of these strategies. We worked with some influencers before and we saw some great successes here. Google marketing is something we didn’t really get into yet but yeah, this is definitely for the future thing to work on.
Jake Davis: Do you feel like there are any big risks associated with this business a potential buyer should be aware of?
Julia: Well, not really big risks. The risk now is that the site runs on paid traffic so yeah, if you would not have paid ads and you would have less customers on your website but yeah. You can lower this risk by working more on SEO and back links through blogs.
Jake Davis: So if you look back on the numbers for the last year, you see that there was a big spike in June of last year, making 26,000 dollars in that profit and keeping in mind, this was only the third month for the business so that’s a very huge month.
Jake Davis: And then it leveled out at about 10,000 dollars, a little bit above, and then the last couple months have been lower. Can you talk a little bit about why that happened? You know, what’s that pattern looking like and how do you feel it can go back up?
Julia: I think this really has to do with the seasons in fashion. In the summer, the … it’s high season for fashion. Everybody loves fashion. Everybody loves summer clothes so I think this is why in the June, it has a big peak, as you say, and in January, February, we were a little bit down with paid ads and that’s why we got less customers.
Jake Davis: Yeah and that totally makes sense as to why it’s down if you get most of your traffic from paid ads and you’re running less ads, I mean, it makes sense that you’re going to have less traffic and then the other thing is, you know, myself, I’m not particularly knowledgeable on fashion beyond the fact that there’s certainly a winter season and a fall season and a spring and a summer season when it comes to fashion. So if you’re selling a bunch of summer fashion products it makes sense to have that peak. Is that peak something that you expect to see again this year?
Julia: Yeah, I hope so. It also depends on the Facebook ads we run. It’s a strategy to have a higher paid ads when the season’s high and lower paid ads if the season low so this is something that we would do again, yeah.
Jake Davis: Would you commit to a non-compete?
Julia: Yeah, of course.
Jake Davis: And how much support are you willing to offer a buyer during the transition period?
Julia: Well, I would like to share my experience and knowledge that I’ve learned over the last year so whenever there’s help needed, I would be happy to help.
Jake Davis: And that would consist of emails and Skype call?
Julia: Yeah. Whatever is necessary for the buyer.
Jake Davis: Are you willing to discuss something like an earn out?
Julia: Yeah, definitely. Yeah.
Jake Davis: Awesome Julia. Thank you so much for taking the time. I do have one final question for you before we get to that though, I want to go ahead and run through that quick summary of the business again.
Jake Davis: The business was built in March of 2017, has a month revenue of 24,686 dollars, expenses of 14,234 dollars to make for a net profit of 10,452 dollars which is generated on an 11 month average. Included in sale of this business are three domains, side content and files, and social media profiles which include Facebook and Instagram and worth noting with the domains is one is the primary domain and two other domains are country specific domains redirected to the primary.
So Julia, can you just kind of recap everything that we’ve spoken about and in your words, can you tell me why this is a business worth buying?
Julia: Yeah, sure. We have set this business up so it’s easy to run and sell immediately for the next owner. We practically did all the work that is required for the business. Yeah, the business has a lot of content. We already have 900 products in total and all these products are provided with full descriptions and all the photos are provided with a logo in it and as we spoke before, we worked our social media up to a big following of 31,000 in total and counting everyday. So yeah. Every girl loves fashion and this business is here to fulfill their dreams so yeah.
Jake Davis: That’s it right there. Everyone loves fashion and-
Julia: Yeah, everyone.
Jake Davis: Yeah, and it’s something that this business has had a great first year and that’s when you were still figuring things out and now that you have the processes in place more, you have a system with the advertising and you have the email list already established and the social media, there’s no reason that this coming year can’t be even greater than the first.
Julia: Yeah, indeed. And you can also expand to men’s fashion and more on fitness or wherever you’d like to go with the business. So yeah. This has a lot of potential.
Jake Davis: This is just looking for the right person who has the time and expertise to be able to put in and grow this business more but with that said, if you do have the expertise and desire to grow it but you don’t have a ton of time, a lot of the day to day could be outsourced to a virtual assistant or something like that to bring your time commitment down. So you could grow it like that too.
Julia: Yeah, indeed.
Jake Davis: Julia, thank you so much for taking the time with me today.
Julia: Thank you so much!
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