selling products online without actually
touching any inventory
commonly known as drop shipping let's
talk about it if you have not seen the
last video here on the channel
go ahead and check that out after this
just because it kind of builds off and
expands on
this specific case study i'm gonna throw
up a quick screen recording of what's
going on you might have seen in the last
video
this is where we took over a store for a
client who's just starting to do a
couple bucks a day in sales
february we took it over february did
about thirty two thousand dollars in
sales
march did about sixty eight thousand
dollars in sales as of when i'm filming
this
which is the same day as of when i film
the other video so march is not even
done yet
april's on track for at least a hundred
we're just helping this client systemize
you know getting things like
automated order fulfillment much cheaper
cost per purchase on the ads
automating all the advertising but also
things like payment processors
so helping them transition off of stripe
and paypal which is going to be huge for
scaling
so in this video i want to talk about
the drop shipping side of things because
there's a little bit of a misconception
this client is currently having some
issues with cash flow
due to paypal holding 100 of funds now
only about 30 to 35
of the total transactions are going
through paypal well when the margin is
40
which is super healthy it's like 1100
bucks a day right now it's great
well there goes your cash flow so the
idea of ordering inventory is now out
the window for this client
now most people think ordering inventory
always means cheaper
right it doesn't because there's
operational costs to hold the inventory
so for example this client we actually
haven't priced out these specifics for
ordering inventory
we dropped their product cost by a huge
huge amount like 35 40 percent
just through one method which was
getting a cheaper
price and faster shipping through our
own private supplier
our private supplier barely up charges
because we send them so much business i
fulfill most of my stuff through them
and that's something that our clients
get to take advantage of so for an
example
i wanted to point this out drop shipping
like we talked about is not dead drop
shipping is not bad
it's all about how you drop ship this
client now has like
seven to ten day shipping or less which
is well under our 14 to 15 day cut off
which is what we
kind of want to max it out at we
definitely want it below that and that's
great
seven to ten days is faster than they
were getting before and
based off doing about twenty seven
hundred to three thousand dollars a day
in sales
this client is saving an extra three
hundred and fifty dollars a day right
now
but now we're not even scaling but
saving 350 a day
right now in pure profit just through
the product cost
not talking about upsells not email
marketing not raising the price not
messing with anything else
350 bucks that's over 10 000 a month
which is over three times the retainer
that this scaling client is on
right we have different retainers to
cover our different packages so for an
example
when you join inside of our agency by
the way you can book a free call for
that down below we talk to everybody one
on one before we talk about different
things that we do
we have multiple different starting
points someone who knows nothing and
they're just starting from scratch
that's where we have to build a store
find all the products we do all the
research and we do all the testing this
client already had a store already had
the product
so we started optimizing and scaling
that means we have more people working
on the project people helping with email
marketing upselling
you know resetting up the store finding
some more similar products working on ad
creatives
helping them assist with like more
systemizing in terms of automated order
fulfillment connecting them with our
processor connecting them with supplier
all these different things right
and then the scaling team for the
facebook ads so
this client in particular is doing a
huge amount of volume
just through not holding inventory now
if we were to hold inventory which
for some reason everybody in the
industry typically thinks that's such a
good thing
if this client tried to order inventory
put it like this the store would die
the reason for that is it's a cash flow
issue a lot of people doing standard
drop shipping can't
hold inventory because places like
paypal are holding 25
rolling reserve this one's holding 100
but 25
rolling reserve then you have 25 over on
stripe
and right there goes your entire profit
margin so there's no free flowing cash
for you to order inventory with now
inventory can be a great tax write-off
it can be great if you can get faster
shipping
makes custom packaging and custom
content a little bit easier
but it doesn't always mean it's cheaper
so for this client i don't think that
they could personally get it any cheaper
so that's one of those great things and
i just wanted to come on here to say
you don't have to hold inventory you
shouldn't this is a weird way to say it
you shouldn't want to hold inventory
right if you can operate just fine by
drop shipping
it's less headache it's less being tied
to the product in any way let's say i've
had so many times
where i wasn't able to sell all the
inventory because something happened
facebook shut us down and now i'm stuck
with 3 200 units
which cost like you know 36 000 and it's
just
it's one of those things you know so
this is a great way to get the ball
rolling with a new business
i have no doubt that this client as long
as they stick with us throughout this
year
and you know not to sound cocky or
anything but as long as they just you
know kind of let us do our thing and
listen to what we say and they're
they're very minimally involved as we go
on you know they don't have to do a ton
of stuff i have no doubt that this will
do a couple million dollars in revenue
this year with probably a million
dollars in profit as we scale more
aggressively
i expect that 40 margin to probably go
down to like 32 to 35
might go down to 30. i'm totally fine
with that as long as we're able to scale
as soon as they get approved for the
processor which i talked about those
issues in the last video
as soon as that happens they're going to
be able to be scaled because they don't
have to use paypal which is holding 100
of the funds they don't have to use
stripe
they're going to have no hidden reserves
no lower fees actually in terms of the
transaction rate
and faster payouts next day payouts so
that'll be super helpful cash flow is
very important in the business that is
why drop shipping
is a great way to get inside of the
ecommerce space i just wanted to come on
here and talk about that a little bit
and build off of the example that we
talked about in the last video so
be sure to check that video out as well
if you want to work with our agency and
see exactly how we structure things
make sure to click the top link in the
description it's absolutely free to
speak with someone inside of our agency
you can talk to a client manager and
they can walk you through exactly what
it looks like
because they manage every single client
scaling clients beginner clients
intermediates
you know we do a lot of different things
but it's mainly focused around
automating the advertising and just
helping you make a bunch of money with
e-commerce so
we have a lot of fun doing that we take
a retainer based off what we're doing
how many people are working on it to
cover our cost and then we take a
percentage of profits you know
just just being as open and transparent
as possible we as an agency we'd like to
make 500 000
a year or more just off this client that
would be awesome because that would mean
based off our average like 30
profit share that this client just
netted like 1.7 million dollars or so
which is great you know someone who's
never really been inside the e-commerce
space and this is kind of the first
store getting going
can net over a million dollars even
after paying us in the first year and
that'd be really cool so
we'll see what happens with this it
would definitely not be a unique
situation we've had a lot of clients do
500 000 in a month a million in a month
and it's super cool to see
i love it when things come together so
i'm excited to continue posting more
videos on the channel if you have
questions or
video topics that you want to see
addressed here make sure to leave it in
the comment section down below don't
forget to smash a quick like and with
that being said
we'll see you in the next video peace