RMRB 2: Utilizing Email Marketing

This episode looks at a two-site dropshipping business in the apparel & accessories niche. Listen to find out how Chris grew the business to making $25k/month in profit in only a year and a half! With one of the sites focusing on the UK and the other going after a worldwide audience, he used email marketing to passively grow the business. 

Find more businesses like this one on our marketplace: http://bit.ly/2wF1Yx8

Check Out This Week’s Episode:

 

 

Speaker 1:           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 P&L. 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 up 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, very excited to have you with us for the podcast today. We’re going to be looking at a drop shipping business in the apparel and accessories niche that was valued at nearly $800,000. We have the owner of the business with us today to look at it and answer some questions for us. Chris, how are you doing today?

Chris:                     I’m very good. Thank you. How are you?

Speaker 1:           I’m doing really well. I am glad that we were finally able to connect today.

Chris:                     Yeah, me too.

Speaker 1:           So before we dive into the questions that I have for you, I want to go ahead and run through a little quick summary of the business. Again, the business was built in November of 2016, has a monthly revenue of $205,143, expenses of $179,551 to make for a net profit of $25,592, which is generated on a 12 month average. Included in the sale of this business are domains and site content and files, all social media accounts, Shopify accounts, branding and logos, email lists, all advertising information and data, supplier contacts and all SOPs.

                                Chris, can you tell us a little bit about your background in building and running online businesses?

Chris:                     Yes, so I originally started when I was about 12 years old. My dad, he created some websites as part of, he was doing a course on website design and I built my own sort of little projects as a kid and made like a good living from the ages of maybe the 13 to 15 years old with advertising on my websites. But as I’ve got older I got a normal job and I sort of, I was a little bit fed up with corporate life and I always sort of had in the back of my mind that I wanted to run some websites again.

                                So I ended up moving to a different job, but the company was struggling. So I thought this is the time to come back and do what I’ve really wanted to do. So I’ve gone through, I’ve been working online now for about three and a half years. I’ve done a range of different things. I’ve done website design, I’ve done ecommerce, I’ve done some news websites. I also had a friend who was working in ecommerce and I saw like how successful his business was and I thought this is something that I’d love to do. And that sort of how I ended up getting interested in ecommerce and doing it today.

Speaker 1:           And how did you come up with the idea to start this specific business?

Chris:                     So when I met with my friend I saw his earnings and I thought for the traffic that I get with my existing businesses, if I was selling products I would make so much money. So we actually agreed to do a bit of a joint project, which was within the men’s fashion niche. But unfortunately it wasn’t successful but I was always watching the sort of sites that were successful and I was aware of the free plus shipping sort of method that people were using. I saw awesome science students and things and I thought I could actually do this with men’s apparel and do a really good job and create a brand around it.

                                And I gave it a shot and launched through, it was Black Friday of 2016 and the whole business took off. And sort of we’ve carried on from that ever since.

Speaker 1:           And when you say it took off, how long did it really take for this business to start making money?

Chris:                     This was probably about, I did, I launched the website on Shopify on let’s say, I think it was probably a Tuesday. It was very last minute because I wanted to get it done for Black Friday just by chance, how the time it landed. I think I went out for a meal leaving the ads running on the Thursday evening and it was a little bit worried because for me at that time spending maybe 50 pounds and not knowing if I’d get a return was a little bit riskier. I came back and I saw that I was, I think it was doubling the money at the time or even more than that. I thought this is unbelievable.

                                So within the space of probably the Tuesday to Thursday, it started to make money. Then Black Friday came and Cyber Monday and the whole Christmas period and it just went from there.

Speaker 1:           With the two businesses within the package here, are they both pretty even in terms of bringing in revenue? Or is it a little split and one brings in a lot and the other brings in a little?

Chris:                     So it’s changed a little bit from when we started. Because I’m from the UK, I launched it focusing on the UK market and we were focused on it .co.uk domain and pound sterling currency. Well this actually limited the sales to just one country. So after, I think it was around three months, I switched the site around so that the main focus was on a .com domain. So that gets most of the ones with being focused now on a worldwide market. So we focus on a lot of US traffic but we get sales from across the world. So the main .com business itself generates most of the money.

                                Originally the UK site used to be the main one but it changed around and as the .com site, which is the busiest. But we still do a lot of sales as well through the UK.

Speaker 1:           So you mentioned that the Black Friday this last year was a big turning point for the business. How do you anticipate sales looking going into this year up until Black Friday? Do you feel like sales will be up higher than they were last year?

Chris:                     So we’ve just been through our second Black Friday because it was 2016 Black Friday that we launched. The 2017 Black Friday, that was even bigger. We hit even higher records. But actually at the moment, this month of March, we’ve been doubling our biggest records in sales. So looking towards Black Friday, it could be unbelievably big. I’d hope. You’ve got to see how it goes at the time. But providing that we’ve got good products, there’s no reason why not it could be the biggest day we’ve ever seen.

Speaker 1:           So this is consistently going to be a seasonal business in your opinion?

Chris:                     No, no, no. This is not a seasonal business because we saw an started with Black Friday and that’s how we gained attraction. But throughout the year we’ve continuously out sales. So it’s not a seasonal business at all. Like I was saying, if you look at the sales in March as well, right now we’re having one of the busiest periods that we’ve ever had. So it’s not seasonal.

Speaker 1:           Well that definitely makes it a lot more appealing for a buyer. So then if you were to talk about growing the business and trying to keep up with that trend, what are you actively doing to try to grow the business?

Chris:                     So at the moment, what I’m spending a lot of my time doing is launching new products. But recently we’ve launched a women’s section. So primarily we’ve been focused on men’s fashion and we’ve actually neglected half of the market itself. So the huge growth opportunity that we’ve actually just started to see now, it’s something that I’ve not looked into previously, is also women’s apparel. So that’s something that the new buyer could work on. And it could potentially be a spin off business as well if we wanted to do that.

                                But other than that, we’ve just agreed to a placement with GQ Magazine. So we have a good relationship with Conde Nast. So hopefully as well if we were to create maybe a women’s site that splits off part of the brand, or if we just have it as a half section of the website we can work with, we’ve got contacts at vogue, so that’s a great thing that we could look at doing.

                                In addition to that, we’ve been contacted by SnapChat and recently Pinterest just because of the reach of our marketing that we already have on social media. We’re starting to get attention from a lot of other social media websites and able to attract our advertising spending there. So that’s definitely an area for growth.

                                The email lists that we have, that’s got, we’ve got about 1.2 million people on the email list and to be honest with you, email marketing isn’t something that I ever really focused on because I felt that I can just increase the market in that we have existed and generate more sales and more profit. But we could basically generate a lot of free sales through email marketing, which is something that we’ve, I’ll send an email out maybe once a month, but again, with having 1.2 million emails, it’s trying to find a cost effective solution as well. So it’s balancing the two, but for someone who specializes in email marketing, that’s definitely a great area for growth.

Speaker 1:           Yeah. At 1.2 million emails, that’s a very, very, very large list. I know you said it wasn’t your strong suit, but is there, I mean, really a reason to not utilize this list? Are these products that are suited for recurring buyers? Could you send out emails trying to get people to buy again?

Chris:                     Yeah, that’s something that I do want someone, but I just, just personally myself, I find I spend a day creating the email at least and then customizing like the new products that we want to add in. And to do that on a weekly basis, it’s something that doesn’t really interest me. I should focus on doing it but I don’t. It’s my own fault and it’s definitely something that I should look at doing because it’s men’s apparel. People will continue to buy anything within that sort of niche again and again. But it’s been an avenue that we’ve not really bothered to approach because we continuously have sales from our existing marketing channels.

Speaker 1:           With all of that said, if you had to quantify the number of hours that you are putting in on a weekly basis, what would you estimate?

Chris:                     I’d probably say around 25 hours a week. I’m quite a control freak. If I have products, I could outsource it to somebody else and have the team do it, but I’d rather personally you do a lot of these things. Manage the advertising myself, manage any sort of escalated customer queries and things like that. Just because I like to be involved in the business and it’s sort of my baby that I created from the start and I sometimes don’t trust other people to do these things.

Speaker 1:           Yeah, and that’s totally fair, but a good point to make, and you already said this, but a good point for a new buyer could be that if you look at this and don’t think that you have the time to put in 20, 25 hours a week, but you like the business, you can definitely hire a virtual assistant or somebody else to handle a lot of the marketing and everything else going on with the business.

Chris:                     Yeah, yeah, like most of the tasks, they breakdown to email marketing is something that the new hires should probably look at doing. Like we discussed the advertising, launching new products, all the viewing stuff and any escalated cases, but those are the core tasks, which obviously you can get someone to do any of those things. If you put a manager in place, they could do that no problem.

Speaker 1:           Hey listeners, do you want to find a business that is just right for you? head on over to Empire Flippers and have a look at our marketplace where you can see you real businesses making real money just like the one we’re looking at today. In fact, don’t miss out. Get over now, share your email address and we’ll send you hot, fresh new listings of successful businesses every week to your inbox. Now back to the interview.

                                We’ve already spoken a little bit about the future opportunities for growth that new owners for this business can take advantage of. Are there any more that we haven’t mentioned yet that you want to touch on?

Chris:                     Yes, so something that we’ve not really done before which probably would work within the niche itself is influence a market in. So we could be, on Instagram we get a lot of influences who sends messages or emails and they ask for a product or maybe payment in exchange of a feature on their Instagram. That’s something that we’ve not done before just because again, it’s time consuming and compared to just spending on advertising, it’s more complicated to do. So if we were to increase our budgets on let’s say Facebook marketing or Instagram marketing, it might take me 10 minutes. But for me to deal with an influencer and send the product out and just to generate maybe a few hundred dollars in sales, it’s not worthwhile time wise. But it’s something that’s not been done at all.

                                SEO is something that we don’t do all. There’s some organic rankings for some good keyword terms, but if someone’s got a background in that, that could definitely work. Trying to think of any other opportunities. We’ve been approached by Pinterest this week and they want to work with us with the social media market and so that’s another platform that we just haven’t ever used before. So it could be an avenue to test out and try.

                                We’ve also been approached by SnapChat. We’ve tested the ads through SnapChat and it’s 50/50 whether it’s worthwhile because it gets interest, but it doesn’t convert that well. But it’s still something to, we’ve got contacts at SnapChat that we can work with to test new things and grow a market in on that side.

                                But that’s about it for the opportunities, as well as the previous mentions with the the women’s apparel and testing new products.

Speaker 1:           Do you feel like there is potential international interest if you expand beyond the UK and the US?

Chris:                     Yeah, so currently we do market to worldwide audiences and we’ve found certain countries have also been successful. But mostly it’s been the approach where we’ve done the US, Canada, Australia, New Zealand. So there are other countries that you could look at targeting a little bit more. And we generally do overall worldwide targeting. So that has been a little bit, but it could still be grown further.

Speaker 1:           Do you feel like there are any potential risks with this business that a potential buyer should be aware of?

Chris:                     Yeah, so the problem with the business itself is that we do rely on Facebook and Instagram marketing. So if the costs of Facebook advertising go up or Instagram go up, that does take part of the margin away. So the new owner has got to be constantly testing new products. That’s sort of the nature of the business with most ecommerce businesses that generate the sales through Facebook. The other thing would be that when products, they do get saturated eventually, competitors come along and try and sell the same things in times, but as long as someone is constantly refreshing products, you tend to see a refreshed interest in the brand and products. But yeah, it’s just the marketing channels are a little bit concentrated. Instagram and Facebook, that’s the the main risk.

Speaker 1:           When talking about the designing of future products, you say a big opportunity would be to try out new products. Do you design the products yourself?

Chris:                     No. At the moment, a lot of the products, they’re already predesigned by factories in China. We do have good relationships with most of our suppliers. So if we do want anything customizing with branding, different designs, it can be done. But at the moment it’s something that probably wouldn’t generate an extra margin for us. It could be a different sort of spin someone could put on the brand and they could probably charge higher margins for products that have got interest in design tweaks, branding and maybe higher quality aspects to them.So it’s something to look out for sure.

Speaker 1:           Yeah, that’s what I meant. Obviously it’s a drop shipping business, so it’s, you’re out outsourcing these products from a supplier, but perhaps adding branding and other little customizations could be something that customers would be interested in.

Chris:                     Yeah, yeah, definitely.

Speaker 1:           Would you commit to a noncompete?

Chris:                     Yeah, of course. I understand if somebody else is going to take this business, they don’t want me to compete with them as well, so that’s not a problem.

Speaker 1:           How much support are you willing to offer a buyer during the transition period?

Chris:                     Pretty much as much as the buyer needs. I’ve put down on the listing the 30 days. But if someone wants to give me a call every week for as long as they need, I’m more than happy to help and make sure that the business succeeds and as well, long term,

Speaker 1:           Is there a large learning curve if someone is unfamiliar with this specific niche?

Chris:                     I wouldn’t say there’s a learning curve any different to whatever exists in ecommerce businesses. There could be a few days worth of training but the upside is the most of the tasks are managed through the team. So on a day to day basis they manage most things. It would just be learning about advertising and learning about new products. Maybe a little bit about men’s apparel and women’s apparel but apart from that, it’s fairly basic.

Speaker 1:           Are you open to discussing something like an earn out?

Chris:                     Yeah, I’d definitely consider it.

Speaker 1:           Awesome. Chris, thank you so much. I do have one final question for you, but before we get to that I want to go ahead and run through that quick summary of the business again. The business was built in November of 2016, has a monthly revenue of $205,143, expenses of $179,551, to make for a net profit of $25,592, which is generated on a 12 month average. Included in the sale of this business are domains and site content and files, all social media accounts, which include Facebook, Instagram and Twitter, Shopify accounts, branding and logo, email lists, all advertising information and data, supplier contacts and all SOPs. One thing worth noting is the email list has over 1.2 million subscribers on that list, which is a, let’s be honest, that is a massive list.

Chris:                     It is huge. It’s to the point that we couldn’t export it from Shopify where we were trying to get the numbers together. So it’s very large.

Speaker 1:           So with all of that said, Chris, can you kind of just kind of recap everything and in your own words, give me your best 30 second pitch on why this is a business worth buying?

Chris:                     Yeah. So the business has a proven track record, has been running for nearly one and a half years. If you look at the sales currently, the numbers that we’re going to release for March, we’re thriving with this new areas of the business that we’re looking at exploring, such as women’s apparel and also new men’s products. The brand itself is well recognized. And the advertising has reached more than 120 million people across the world. So if you do market new products, people recognize the name.

                                On top of that, you’ve got a 1.2 million person email list, which has barely been marketed to, and an existing team of staff, which are pretty good at what they do.

Speaker 1:           Chris, thank you so much for taking the time to be on with me today.

Chris:                     No problem.

Speaker 1:           You’ve just learned how this business works and I want to give you the opportunity to learn more about what you can do to buy real online businesses just like this one. If you want to find out more about businesses making real money, head over to empireflippers.com and sign up for our mailing list. There is an entire world of people quietly investing their money into online businesses and seeing great returns. Now we want to help you do the same thing.