Strategies To Increase Profits For Your Drop Shipping Business

Increase profits

Insider E-commerce Strategies to Grow Your Profit Margins

E-commerce entrepreneurs are driven by passion, and results.  When you have found your perfect product niche(s), killed it with an amazing Shopify website, and worked on your content strategy, the next step is… conquering your sales and profit margins.

Like every other step in your business success, nothing happens until you formulate a strategy.  Website traffic is great (but not if they don’t buy), and sales are exciting when you’ve worked the system, with insightful product research and optimized tools from AliExpress, Shopify and Dropified.

But now you are hungry for more. So where do e-commerce business owners start, when all the pieces are in place? How do you deploy an effective marketing plan to affect the three most important metrics that lead to increased revenue growth?

Here are the three key metrics you want to focus your energy on, to grow your e-commerce sales:

  1. Number of transactions.
  2. Gross value of transactions.
  3. Conversion of website visits to cold hard sales (lots of them).

Part of our job as the leading e-commerce dropship SaaS, is to provide not just advice, but the secrets behind thousands of stores that are growing exponentially, thanks to AliExpress and Dropified. 

So, let’s get into the strategic marketing behind some of the most successful stores in our member network, so that you can achieve the same results.

The Dollars and Sense of E-commerce Sales

Let’s start with the basics.  Every metric between you, the business owner and your sales process should be looked at, constantly.   There are four important elements that you can use to track your progress and diagnose what isn’t working (as well as it could) to improve your bottom line.

  1. Customer Acquisition Cost (CAC)
  2. Profit Variables
  3. Gross Revenue
  4. Operational Costs
  5. Net Profit

Your CAC is calculated by dividing all costs spent on acquiring more customers (marketing, website and software expenditures, shipping, and advertising) by the number of purchasing customers acquired in the same tracked period.

When you are first starting your e-commerce business, your CAC is going to be higher than average to account for set-up costs like web development, training and resources. One of the great benefits of providing good customer service and value to your buyers, is that they become repeat customers, with low to no further customer acquisition costs.

Building a loyal customer base is a strong factor in boosting not only revenue, but profitability. There are always ways to do more, with less, and entrepreneurs who launch with a lean model, know exactly where to cut costs.  Your profit variables start with things that you need to outsource, in terms of customer service or marketing, web development, and your own time, as a business owner.

This is always the most exciting number in your sales database, because well, it’s the biggest value financial metric that you’ll be tracking in your business.  But gross revenues are not net profit (your cost after expenses and taxes), but it is a quick-check that e-commerce owners should be watching, to determine sales activity, and new customer acquisition monthly, and annually.

If you made $3,000 in your first month as an online retailer, but you spent over 500 hours working on your business, you aren’t making any money.  Your time is one of the variable operational costs that should be calculated to track your performance, and real net revenue. 

Other fixed or variable costs can include software, personnel, hosting, pay-per-click advertising expenditures, content development and more.  

Always be looking for more effective and lean alternatives to trim your operational costs and work smarter (not harder) for better profit margins. After taxes and all fixed and variable costs, this is the number you want to watch as you grow your e-commerce business in with Dropified.

When you see this value increase monthly, that’s when you start to get really excited.  And if it is flat-lining on you, it’s time to do some homework to figure out where you can be more strategic in terms of time, expenses or product research.

Who really stops their busy day, to check out these metrics? Every single e-commerce business owner we know, making six-figure earnings with their retail site(s). 

Not only should you stay aware of what your metrics are, but always be watching for changes to these variables, as they can be impacted by supplier price increases, shipping fees and other things you can’t really control. E-commerce is an agile industry that changes constantly, and if you want to win you have to monitor your profit center constantly.

Triple Threat Content Marketing

The e-commerce research team at PipeCandy aggregates global e-commerce retail data.  They estimate that there are up to 1.3 million viable retailers selling directly to online consumers. 

They also estimate that there are up to 3 million domains (according to 2017 data) established, connected to e-commerce platforms.  People that started but didn’t quite figure out how to invest their time wisely with proven growth strategies. Strategic content marketing is one most important investments you can make to grow your customer base. 

Your customers are out there, and they are ready to buy online, you just have to find them, and more importantly, help them find your products.

Blog On Your Website

If your products are grouped by a consumer theme, i.e., fashion, outdoor camping, personal technology or home products, offer advice and write about the lifestyle that your customers are trying to create. 

A recent study by HubSpot reported that businesses who blog 16 times per month, saw website traffic gains of 3.5X compared to businesses that blogged once per week. Vary your blog length from 350-word minimums (to appease search engines) to long format (1,500 words) for best results.

Get Selling On Social Media

In our experience, the best channels for sales growth are Facebook, Instagram and Twitter. Most businesses share on social Monday through Friday weekly during business hours but vary the time of your posts to catch evening traffic and peak holiday online shopping periods.

Pay Per Click

Google AdWords may be the superstar of e-commerce advertising but depending on your niche and level of competition for keywords, it can get expensive. Try leveraging boosted posts in Facebook if you are just getting started and check out some low-cost pay-per-click courses that can help you get the most for your advertising buck.

Content Syndication

If you have some blogs that are killing it when it comes to traffic (check Google Analytics), you can leverage that content by putting some PPC push behind it, through content syndication services like Taboola or Outbrain.  Content syndication puts your flashy content on high-traffic media sites that are topic specific to the niche of product you are selling.

And if you hate writing?  Outsource your blogging and social media needs.  Seriously, check out sites like Upwork or Freelancer for virtual assistants and other affordable help. 

Hire locally, or over-shore to a person or team you can trust.  It’s a global market place, and it’s easy to work with remote content and social media service providers who will give you amazing results, at a fraction of the cost (sometimes) of working domestically with marketing providers.

There is a reason that big brands do it, and you can too.

Explore the Dropified e-commerce resource library and blog, for more actionable insights. 

2 thoughts on “Strategies To Increase Profits For Your Drop Shipping Business

  1. blank
    Philip says:

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