eCommerce is a hot topic in affiliate marketing circles. As affiliates look for ways to expand beyond running campaigns, they often turn to eCommerce as a next step.

Is eCommerce a good idea for affiliate marketers? What are the potential downsides? In this episode, we discuss different areas of eCommerce and how you can use it to expand your business.

We also have a transcript for this episode!


David:     Hey, everybody! Welcome back to the Aff Playbook podcast. We are going to be talking about e-commerce today, and I have Jason and Jacob on the line with me. They are going to be asking me some questions about some of the e-commerce stuff that I’ve done and kind of chime in with their own observations and experiences. So, yeah. I guess let’s get started. You guys want to go ahead with your questions?

Jason:     Yeah. Sure. It’s been a while. So, let’s see if we can get back into this. All right.

David:     No problem. We are professional.

Jason:     Exactly. So anybody that’s been paying attention to the space, nevertheless, here is seeing e-commerce just completely explode. I mean it seems like every guru and their mother is pitching an e-commerce course. Why do you think that is? What’s your take on it?

David:     So I think there is a couple of reasons. Number one, I think that affiliates are kind of always looking for something to branch out into and is certain areas of affiliate marketing get harder or more restrictive, they see that as a way to kind of get into something that’s sort of like affiliate marketing. Not exactly but sort of like doing your own business online and that kind of thing. So I think a lot of affiliates are looking expand into that. Possibly little more stability. I also think that it’s cyclical just like literally anything else. I mean e-commerce it’s been around for a while. So it’s not a new thing, right?

Nobody is doing any new special techniques they weren’t doing like years ago. Really. I mean maybe there is some new stuff but the idea of doing an ecommerce store is nothing new. So it’s to like this new hot thing that suddenly is making everybody tons of money. I think that the third thing I guess is that certain ways of doing it. There is a lower barrier to entry like if you are doing drop shipping and I think that in kind of gets back to the cyclical thing that you see gurus coming out with the stuff… that that’s kind of what they focus on, right? Stuff that is…like we saw that with Teespring a while back, right? Because Teespring is pretty I mean it’s pretty low barrier to entry there. And just every guru had a course on it. It got supersaturated. So that’s kind of what sells guru courses I think, that’s driving the popularity quite a bit. And then of course it makes other people talk about it because people want to hear it so…kind of like along with that. But I think that’s why it seems to have taken off so much.

Jason:     That makes sense. So, like if you are going to compare it to affiliate marketing like how would you say that e-commerce is better and how is it worse?

David:     Yeah. There is definitely both I would say because a lot of people think “Oh screw affiliate marketing. I’m going to do e-commerce.” Because it’s going to be better like the grass is always greener, right?

Jason:     Right.

David:     And something is always going to make more money or be easier or something. It is definitely not like that. There are things that you have to worry about in commerce that you don’t have to worry about at all with affiliate marketing. Stuff like, it depends on what type of e-commerce store you are running, whether it’s like drop shipping, designing your own product but stuff like dealing with overseas suppliers, dealing with customer service, inventory, storage space for your inventory. None of it you have to worry about with affiliate marketing. You are just sending traffic to offers basically. So, I think affiliate marketing is easier in some ways.

After I started doing e-commerce for a little while it kind of gave me a little bit of a new found appreciation for affiliate marketing. Just because I was like “Man, everything I complained about,” because I complain about affiliate marketing like anybody does. But I’m like “Man! Some of the stuff I was complaining about, I kind of take that back because e-commerce has its own challenges and issues.” I think the good things about e-commerce are that once you get something going, it can be really stable and you can easily take yourself out of the business and just outsource it or automate a lot of it.

So, I think it’s usually a little bit slower growing but it can definitely be a lot steadier. You have, with affiliate marketing depending on the offers you are running, you can be limited on what traffic sources you can do, like kind of promotional things you can do. And with e-commerce you are not faced with that so much. You can for example advertise on Facebook which is something that we don’t really recommend you do. It’s like a weight loss offer or something.

So, yeah each one has its pros and cons. I definitely don’t think one is better than the other, maybe for certain people. One might fit what they want to do better but and there is no reason that you can’t do both, it’s not… Affiliates always think like how to do this or this. And I mean I do both. I’ll probably never stop doing affiliate marketing just because there is a lot of really good opportunities there. But I think there is also good opportunities in e-commerce just kind of depending on what you want to spend your time doing.

Jacob:     Yeah. I think that’s a great point you mentioned that you can do both. You don’t have to stick with just one source of revenue on it. And you mentioned real quick doing, being able to remove yourself from the business. Is there anything upfront you should be considering for being able to take yourself out of that business? And at what point in time down the road are you able to do that? With affiliate marketing like you said you don’t have to do anything. The customer service, the shopping, or shipping out of items, but at what point in time can you remove yourself from that business?

David:     I think if you had to set up kind of a simple drop shipping type business, I think you can remove yourself from it pretty quickly but it depends on… my personal recommendation would be it depends on how comfortable you are with the business. Because the main thing I see people messing up with doing any kind of outsourcing whether its e-commerce or anything else is that they try to do it too soon, before they really understand the business. And then stuff is happening in the business they are not really aware of, or they don’t really know how to direct their people as best. So, I think you can safely outsource once you have, once you feel like you are getting to the point where it’s getting kind of well…or like you have this routine, it’s kind of boring, there is not…there is not any big you have kind of handled all of the like I don’t know customer service things that pop up or shipping issues that pop up, and you can make like a very clear plan for people to follow. I think that’s when it’s best to kind of remove yourself from it or when you can remove yourself from it.

Jacob:     Yeah. I like that answer. Once it gets boring.

David:     Yeah.

Jacob:     It’s already late. Once you already know everything, right? And I think for me I have made that mistake in more than one business where I have outsourced way too soon. Thinking this is the full process but I didn’t fully understand the process. When issues arose I didn’t even know they were issues until it was like oh man! I’ve been making a big mistakes here. But had I have been involved in the business more, I would have known. And so yeah great points. Thanks for those.

David:     Yeah.

Jason:     You mentioned customer service, that’s like one of that things that is always like shifted towards the affiliate marketing side.

David:     Yeah.

Jacob:     The idea of dealing with customers like gives me like… Do you have any like horror stories or is it as bad as I’m thinking it is?

David:     I mean I think no matter what you do whether you are… no matter what you are selling or doing, you are going to have customers who are just unhappy. I mean there are just people out there who really love to take their anger out on companies, or they feel like if I don’t know a product gets in to them that’s broken or something I mean they almost take it very personally. And they extremely angry about it. So I don’t know, you kind of just have to realize that there are people like that out there.

Obviously, you don’t want to get upset or yell at them or anything. It’s a lot of times you can turn those stories around though just by offering them something even though if it’s kind of like a token thing. Like here is a coupon for free shipping for the rest of your life. Or something that seems big but it’s not really and lot of times that will kind of get them to go away. But yeah certain percentage of the customers are just going to be like that.

You can’t please everyone. It’s not…I don’t know. It’s not as bad as it sounds, I mean maybe. I don’t take it very personally at all but some people might. Probably especially if you have a product that I don’t know you designed or manufactured yourself and it was really personal to you, I could see someone maybe getting upset about that. But yeah you just kind of have to not let that stuff bother you.

Jason:     Do you handle it all yourself or do you outsource it?

David:     Yeah. At this point I’m handling it all myself because it’s really isn’t that much. Actually, I don’t even remember the last time I’ve had much of an issue. Besides you just…it’s usually questions like where is my order or something like that or sometimes something arrive to them broken or damaged or defective or something and we just send it out. So I haven’t really had the need to outsource that yet just because it’s really not taking that much time at all.

Jacob:     Cool.

David:     Yeah. Probably depends on what you sell and everything.

Jason:     That sounds like technical anyway, is that right?

David:     No, no.

Jacob:     So, David how did you get started?

David:     So, I got started doing retail arbitrage, which is where you just basically like buy stuff, it could be local or online. Say I go to I don’t know at a discount, like you go to target, right? And in their clearance section they have like ten whatever marked down like crazy or something and you buy those and then you resell them on Amazon for a higher price. And there is a ton of opportunity out there for that. It’s a lot of legwork, right?

Because not only do you have to do like online but you do local. And you really have to know like, you really need to be able to spot the deals like knowing something is a good price, you have to know what it normally sells for, what it sells for on Amazon. And there are tools and stuff that will tell you that. But that’s kind of how I got started and it just wasn’t going to scale to degree that I wanted it to without me having to be doing it like 10 hours a day which I didn’t really want to do.

So, after that I kind of went straight to private labelling my own products. So that’s where find a supplier, it could be US or overseas and basically get something designed. It doesn’t have to be like an original design, it could be something like I don’t know, a water bottle. And it’s the shape isn’t original or anything, but you put your logo on it and that’s considered private labelling. So, did that. Bought a bunch and have been selling them on Amazon and also through the Shopify store. So, that’s kind of how I got started.

Jacob:     Very cool. So, you got your feet wet doing arbitrage and just put another example out there I haven’t done this but I knew a lot of people who have done arbitrage in many different ways. Sell it on eBay, then buy it on amazon and vice versa. You know they are selling on eBay for a higher fee or something but somebody local here who does arbitrage. He went into like CVS and bought all these walking dead toys and come super cheap. They are usually like 20bucks a pot for these walking dead toys. And it’s a TV show that has a really huge fan base. And then he sold them on Amazon. I was like what type of people were buying those? Yeah clearly they are fans but aren’t these being sold all over the place? And he is like yeah. A lot of them are being sold at a lot of places but the thing is a lot of his orders that he was getting on Amazon were in rural areas. United States is pretty big. And we have a lot of small cities out there who don’t have access to these type of things but they want them still.

David:     It’s true.

Jacob:     And so I mean that really kind of opened up my mind is to why arbitrage can really work well because don’t think of all these people don’t have necessarily assess to those goods that you are buying. So, and so if they want them, they have to kind of look them online and where are they going to look? Of course they are going to look on Amazon, right?

David:     Yeah. The only caution I would throw out, I probably should have said this in the beginning. If anybody, before anybody runs out and buys a lot of whatever did you retail arbitrage, you have to make sure you can sell it in Amazon. And they…Amazon has an app that you download on your phone. You can scan products and it will tell…it will tell you like what the product is selling for in Amazon, it will tell you if you can sell that because there are certain categories that you are going to be restricted on it.

First like clothing and what else can you sell? I don’t remember the whole list but… yeah you are basically barred from a lot of different categories at first and also like with the…sometimes with the branded stuff you have to be careful because it can enforce a certain price from what I remember. So, not always but it gets more risky the more…like the bigger the brand. If it’s just a small brand, it’s probably not a big deal but bigger brands you kind of have to watch out for that.

Jacob:     Yeah. And you can also…to that point you can also get barred from selling a particular item even if you could sell it before. The Disney princess dresses kind of come to mind where everybody was having all these Frozen dresses that were fake. And because of that pretty everybody got barred from being able to sell it unless they had a proof that they had a license through Disney to sell it.

David:     Yeah.

Jacob:     So, if you buy that particular brand item then just something to watch out for. You could get stuck with the inventory.

David:     Yeah.

Jason:     So, then where did you go to find your products? Like how did you decide? And like was there a lot of testing involved? Or?

David:     So, I kind of. I know we are going to talk about this later but I’ll just… I’ll kind of say it now, because it fit in what we are talking about. But looking back I didn’t start the right way. Like I definitely shouldn’t have gone right into private labeling. I wish I would have done more drop shipping or testing small batches of products or something. Because I kind of went straight to like ordering a lot of like 10000 kind of thing and there was…

Jason:     Confidence.

David:     Yeah. And there wasn’t. So there wasn’t when I did that portion of it, there wasn’t a whole lot of testing. It was just like okay I had CVs and obviously they were like selling well, and I have an idea for a design or whatever and so yeah I just kind of went for it. And it took a long time to kind of start making money on that just for a lot of reasons, learning what I was doing and everything.

So, looking back I definitely wouldn’t advise anyone just to jump right in that way because I think you can test for a lot less money. But as far as picking up products at that point, it was just stuff that I saw used like the jungle scout browser extension thing and just kind of did some research and looked at I don’t know what was selling and I had interest in selling and yeah kind of did that. But I don’t think that is the ideal way really.

Jason:     Okay. So, like for like the newbies starting out you would suggest more like testing by drop shipping, that kind of stuff?

David:     Yeah. You can either do drop shipping where you don’t actually stock the product at all. Basically you are just, you are kind of an inner media, and it is sort of like affiliate marketing a little bit where you’re kind of the bridge between the traffic source and the offer. But yeah with drop shipping you basically have a store with a bunch of stuff on it but you are not, you don’t have it in your house ready to send out. The company that you are ordering it from sends it directly to the consumer.

So I would say either that or you can stuff where you do, where you test small lots of stuff like you can go on AliExpress or even Alibaba or there is a lot of places you can do that. And just get, you can order like 5 per 10 of things, or even less and feature those under your store. You would be shipping them out yourself probably. So, you order them from Alibaba and you get them and you might, I don’t know put different packaging on them or something. And then when you get orders you send them out or if you are doing like…well that opens up a whole another kind of…because if you are trying to sell them on Amazon.

That’s actually I guess another one of the reasons that I did private labeling is because when you sell on Amazon, people think that you can just go and buy like 5 water bottles and list them on Amazon. But unless you have like your own brand and your own skew and everything, there is a good chance that somebody else is already listed it and you are just going to go on their listing and you have to complete for the buy box which is where you are like, the featured seller. You know you go to Amazon and it says sold by XYZ. So, private labeling gets around that. So, you always have your own listing of that. And that’s… so if you are like dead set on going to Amazon, you are probably going to have to do that sooner rather than later. But just for a small test and you can still do it in just, sell on other people’s listing or…something like that.
Jason:     Okay. That leads right into my next question. Do you use other fulfillment company or did you do everything under your garage?

David:     So, so this is kind of. I have pictures somewhere, but I had some of the merchandise shipped to my house because I was going to sell through Shopify and just fulfill it myself. And then some of that was sent off to Amazon. So, I have stuff that Amazon fulfills. Right now, I’m just filling myself on Shopify because it’s not that many orders. And this is just for private labeling.

So, this isn’t for any of like the drop shipping stuff that you do. That’s kind of like a whole another thing but because all I’m saying is in drop shipping the fulfillment is handled on the sellers end, I just kind of coordinate the orders more or less. But yeah with the private labeling, I mean Amazon is… it’s really good for fulfillment I think. You can use the companies to do it which is just kind of depends what you ultimately want to do.

Jason:     Jacob do you have any question?

Jacob:     Yeah. Where do you find the drop shippers? You mentioned them a few times.

David:     Yeah. So like the most well-known are like AliExpress. And so technically like it depends on what you mean by drop shipping. What a lot of people do is they just go and they find like an item and they put it on there, on their e-commerce, they throw up a Shopify store and they feature it on their store. And then when someone comes to their store and orders it, what I would do then is just go to this seller and place the order. I would pay for it but I would have it shipped to the customer who bought on my site. So that’s basically how it works and you can do that.

So, technically the company doesn’t have to offer or the seller doesn’t have to offer drop shipping. Once you get up to the point where you are doing a lot of like you are really trying to scale it or something, you probably will move on to something that… it is more like a standard drop shipper where stuff is a lot more automated. It’s not like you are going placing the order for somebody. It’s all handled through your software and tools and stuff.

And so, beyond AliExpress, there is places like worldwide brands. But I think a lot of the best suppliers have founded like trade shows. And a lot of the really serious people go to… they actually go to China because there is a lot of trade shows over there about it. And it seems like the people that get really serious about drop shipping almost always do that, because there is just there is so many sketchy sellers online and it’s just hard to know who to trust and what to trust. So.

Jacob:     Yeah. Yeah. Thanks there. And so trade shows are going to be local or they have some big ones. And generally that’s going to be B to B. So, you are doing business with the trade show person who is pretty much doing almost, they are the ones who are ordering from China in bulk. And so they are just trying to sell the other businesses to sell their goods.

David:     Well, I’m…No. I’m talking about actually going like say if you go to China and you will meet with the actual companies that do that. Like the manufactures, the warehouses and stuff. So, you will actually be communicating directly with who is going to be doing the drop shipping and fulfillment.

Jacob:     Yeah. That’s like a whole another level.

David:     It is. Yeah, that’s what I mean. So that’s kind of like the… if you go all in on the drop shipping that’s what you are going to probably want to do eventually, if you really want to scale it.

Jacob:     Yeah. And then one last question before I get off the drop shipping bill. And that is I see these drop shipping companies out there. “Oh! We specialize in drop shipping.” And that’s popped up and got in and out of favor over the years. But when I looked into them years ago, they were all pretty much scams in my opinion. They just mark up on the products that they had or just like crazy! Have you looked at any of those companies recently at all or used any of them?

David:     Any of the sketchy ones or? Which companies?

Jacob:     Drop shipping companies in general.

David:     Yeah. Yeah. Definitely. There are a lot of good ones out there, but there is probably more crappy ones than there are good ones. And a lot of times it’s just individual relationships like you will find a seller or a warehouse. And instead of like some kind of like drop shipping arrangement, you will even find places like that will… you can just export your orders from say like Shopify, just send them like an excel file with all your orders.

At the end of the day, they just fulfill them for you. So, there is kind of a lot of different levels that you can do. About getting the best price, you are right. So if you got to say AliExpress or something, you are definitely not going to get the best price on the product. And you kind of start out from a position where you are not in as much… you don’t have as much leverage, something with affiliate marketing, right? So you start running an offer and you are like “Hey! I need a payout bump on this.”

Sometimes the affiliate manager will give it to you but sometimes they are like “We need to see that you are sending traffic and sales.” It’s kind of same thing with e-commerce. So, the people that are going really far in e-commerce and making the most profit are ones that are building relationships with their suppliers and getting to know them, getting better prices on stuff. And that usually comes after you have sort of established yourself as a merchant, as a seller.

Jacob:     Yeah. Yeah that makes perfect sense, right?

David:     Exactly.

Jacob:     It all comes back to relationships. And so how do you deal with returns when somebody ordered something, they don’t like it, and do you have a process set up? Is it pretty routine?

David:     I found that it’s almost always better just to do a return. Unless it’s something just really ridiculous. But most of the times I mean you are going to be selling products that didn’t cost you a lot, a whole lot to buy, right? I mean if we are talking about specifically about drop shipping or just even private labeling stuff, but generally it’s going to be something that didn’t really cost you a lot. So you are going to have a pretty good markup on it and if you refund them you are not actually really losing much money.

That’s almost all because what happens if you don’t refund them, they get even angrier and then all of a sudden they are posting on Facebook and they are contacting the better business bureau, and just… It’s crazy the lengths that people will go if they feel that they have been wronged in any way. So it’s almost always better just to be like “Okay. Here is your refund.” And you can add them to like a blacklist, so they can’t buy from you again or something. But I would say like 99% of the times it’s better to just like refund and move on depending on what it is.

If it’s someone is like “Hey! This arrived broken or something.” kind of go, I think going above and beyond is almost kind of what you have to do. There is just so many stories and things competing for people’s attention and money these days that I think you kind of have to stand out. So, offering something like…I referred to earlier where it might not be a lot to you but it seems like a lot, like just be really apologetic and go like “I’m so sorry about that.

Here is a coupon for free shipping the rest of your life anytime you shop at our store.” And you have already marked up the product and the shipping. So, you are not losing a lot of money. The person may never come back and buy anything. But they are left with a good impression of your store. And I think that’s like… that’s really crucial because I mean we have all seen how social media can result in a lot of bad publicity and negativity. So…

Jacob:     Yeah. I like that answer. That was pretty good. So what platform you use for your online store? And then have you tried more than one? Have you tried multiple and then you ended up settling on one? Or what?

David:     Just… I just use Shopify now. I have tried WooCommerce. I haven’t really tried any of the others. I’m not sure what all of them are out there. WooCommerce I don’t think is really a good option for most people. It’s… yeah you are paying a monthly fee for Shopify but they really do everything. With WooCommerce you have to worry about a lot of stuff.

You have to worry about security. There is like different plugins that you have to get working together. If you really want to make it robust. I don’t know. I’ve seen a lot of cases where people go down the WooCommerce road and then they really wish that they wouldn’t have. So, I’ve just, so I just kind of stick with Shopify for that reason. I mean Shopify is not perfect either but it’s pretty good and they have a lot of really good features and plugins you can use.

Jacob:     Yeah. And is…

Jason:     Oh sorry. Does it integrate with like if wanted to have like a WordPress site that had a store or like…can you integrate it or is it like a subdomain thing?

David:     Well, Shopify is kind of like its own platform. So like if you bought a domain davidstore, it would, you would point it to Shopify and Shopify kind of… Shopify is kind of like an all in one. So it’s kind of like WordPress where there is plugins and pages and stuff like that. So you wouldn’t really… I mean I… I mean you can have a blog on your site it wouldn’t be necessarily be WordPress. I mean I guess you could but there is no real reason to.

Jason:     Okay.

David:     Yeah. Because you can do it through Shopify I mean.

Jacob:     Yeah. So it’s on CMS that you are not putting…

David:     Yeah.

Jacob:     On other things to it. And then is the payment process already in there or do you have to go out and get all that stuff on your own?

David:     Yeah. It is. So that’s another good thing about Shopify. It’s the payment processor is already included. You can add more payment processors if you want, but I think Shopify payments covers most of. So yeah, they handle that SSL certificate, all that kind of stuff you need to function as an e-commerce store.

Jacob:     Yeah. So they take a lot of the headache out for you? Right?

David:     They do.

Jacob:     And that’s like one of the pains I think that’s held a lot of people back on e-commerce in general is before it took a lot of tech knowledge.

David:     Yeah. It did.

Jacob:     CMS. Project management skews. It can be a huge headache. And I think that’s one of the reason why it’s stated to take off even more. It’s just because of how automated it’s becoming.

David:     Yeah. That’s probably…just like you said going back to what we started with, that’s probably another reason that it’s taken off. That’s a good point. It’s just yeah… just way more accessible. With Shopify you do have monthly fee but it’s definitely worth it. There are some other… some functions that aren’t built into Shopify that you kind of need, but they have a whole plugin repository kind of that you can use. A lot of the plugins are paid though, or there are like a monthly fee. But definitely it’s stuff that is very helpful and it saves you a lot of time and energy versus trying to hack together something yourself on WordPress or wherever.

Jacob:     Yeah. Yeah. Have you sold? Let me ask this first because we are still on like the CMS. Did they automatically allow for like the business listings, so the shopping listings for being an AdWords or is that a separate extension?

David:     So the AdWords shopping thing is a whole separate thing. They do have a plugin that does whatever the part on your site is that you need to do. I can’t remember off the top of my head when I set this up. But then…yeah. You still have to do the AdWords thing where you claim your site and in the AdWords merchant dashboard or whatever it’s called. So yeah, you can definitely do that.

Jacob:     Yeah. I could probably have a whole show on just like the features itself and setups.

David:     Yeah.

Jacob:     But yeah. I’ll move on to save people. Do you find that you sell more on your store or more on Amazon?

David:     With a private labelled stuff, definitely more on Amazon. With the drop shipping stuff I don’t sell on Amazon. So obviously that’s more through Shopify to do more volume that way. It’s I mean it’s hard to compete with Amazon right? I mean Amazon is like this huge e-commerce juggernaut. And it’s like “Okay. Why am I going to go buy at this store that I have never seen or heard of versus Amazon?” So, that’s one of the benefits of selling on Amazon. This could be a whole another show too. So, I’ll just say real briefly. You kind of have to figure out where you can add value as an e-commerce business, even if it’s just drop shipping. Like why is someone going to your store versus Amazon?

Well, maybe it’s… you have, it’s something really specific, and like I read some case study about…I think it was like woodworking tools. Something about that, that somebody had done. And I mean yeah you can go to Amazon, you could find woodworking tools, but it’s kind of like “Okay. What brand am I supposed to get? And what exactly tools do it I need?” Versus going to a site that’s like “Okay. This is what you need here and here. These are the best brands.” It kind of walks you through the process. That’s… you kind of go to those types of stores where, you kind of go there versus Amazon when they have information that you can’t get somewhere else.

Jacob:     Right. Like knowledge?

David:    Yeah. And so you have to be careful I will say because Amazon charges you fees on selling there. It’s not just a free platform or anything. So you have to factor that into the cost. So it depends on how much margins you are working with your products. If you have like huge margins, it could possibly be effective. But there are definitely scenarios where you will send money to like pay to have it to Amazon and lose money. But that’s perfectly fine because …okay if you just throw up a product on Amazon, you are probably not going to get sales. You will probably just…

Jason:     Reviews.

David:     Yeah. You need the reviews, you need what they call sales velocity. So it’s like numbers of sales and kind of like increasing numbers of sales. And really the only way to do that is to send some kind of pay traffic Amazon ads might be. So they have their own PPC platform that’s probably preferable to something like AdWords. But I mean yeah you can definitely do that. I have tried it. It hasn’t been super successful but it’s… I was doing it in the beginning just to get like more sales and reviews. It definitely helped. I wasn’t really making money. I think I was like probably losing money on it.

Jason:     Speaking of reviews, it’s something I was getting curious about like what’s the percentage do you find of people that buy versus people that leave reviews?

David:     It’s very low. And I think that’s normal. I don’t remember… I’ve read the statistics somewhere but yeah it’s very low. And you can do stuff to try to encourage reviews but it’s still…yeah it’s pretty low. And Amazon had, just before I started, I mean they were having a huge issue with fake reviews. They still do to some degree. Because what happens is people… there were all kinds of places right, where people could buy reviews or solicit reviews and everything. And Amazon wasn’t doing anything about it.

So, you would have specific…like you would have Chinese factories that would put something on the market and then they would in the first day it was on there, they would have like 500 reviews, right? That’s totally not fair. And so Amazon recently went through and removed a whole lot of those. There is still a lot on there. But they are trying to get better about that. But yeah there is still kind of an issue with reviews. And there is still I mean sometimes Amazon removes reviews for no reason. It’s kind of a weird system. It’s definitely not perfect but yeah.

Jason:     Alright. So, coming back to the pay traffic and all that. Obviously you want to be able to pay traffic, you want to be able to track things like what… how do you track like your sales and traffic and that kind of stuff?

David:     Yeah. It depends on what you are doing. On Amazon they have like if you are using their PPC platform, the reporting is just awful. I mean it’s almost unbelievable. It’s like almost like a Stone Age version of AdWords or something, where… It really is and you can’t, like you have to download stuff to excel reports and do pivot tables and stuff to really analyze things. It’s just…

Jason:     Oh wow.

David:     Yeah. It’s kind of a mess. There is some tools that are supposed to help you with it but I have found them like a little buggy. Not really working too well. But so anyway, if you using Amazon ads it let’s you track and see. You can see like what keywords led to sales and they have a metric, average cost of sale and stuff like that that you can look at and kind of analyze. If you are doing… So I’m trying to think of other scenarios. If you are doing something like AdWords pay traffic to Amazon, that’s a little trickier. You can’t. There is not a good totally white hat way to do it. And I’ll just probably leave it at that because I don’t want to get into trouble.

But so yeah, if you have your own store though, like if you have Shopify and you run any pay traffic, obviously that’s super easy. You can just track with pixels. And some people use excel sheets or something. Because like if you have. Okay so say I’m running on AdWords or Facebook or wherever and I’m using their pixel, and I can see where I am getting sales and stuff like that. But that doesn’t tell me how much I had to pay for the product, or how much it cost to ship? So usually you need something else, a lot of people just do like an excel spreadsheet or something just to know, or they just know like “Okay. I bought this product for X. So whatever I… I can spend up to that or whatever on ads.”

Jason:     Cool. So, is this something that you are going to like keep going with? I mean..

David:     Yeah.

Jason:     You have had a pretty good experience.

David:     Yeah. I think so. But if you had asked me that same question 2 months in, I would have probably said “No.” I was not happy when I started. I was like “This sucks. I have all of these boxes and crap all over.” like I didn’t throw it up on Amazon and it started selling 500 units a day…and stuff. And it was just… it’s a lot of work depending on how you do it. So, like I said, I wish I would have started with drop shipping. I’m glad I stuck with it though because I finally got to the point where I was getting consistent sales. That did take a while but yeah I’m glad I did. I definitely plan to continue it especially since I got past the hard part and the sucky parts.

Jason:     Right. Yeah it’s kind of like tracking for affiliate marketing.

David:     Yeah. Kind of like bad times five because there is just weird and especially for private labeling, there is a lot of courses and stuff but I didn’t really find anything that was answering all my questions. Like just getting barcodes is a whole topic unto itself. Getting like a skew for your product basically and that took a long time to figure out. And yeah.

Jacob:     And that’s a segment into the next question but also you are planning on expanding out the e-commerce section on Aff playbook website, right? And are you planning on having more of this type of information in there then?

David:     Yeah. Definitely. I’d like to kind of…I like putting things in kind of like a logical order and there is different ways that you can do e-commerce. So I’m going to kind of split it up into like if you are going to do drop shipping, or doing your own product and that kind of things. So, yeah definitely.

Jason:     Yeah and question based upon what you were saying is if someone listing wanted to get started, what would be your top comments for them to get started?

David:     Probably number 1 just to have realistic expectations. Know that it’s…that you are. Just because everybody is talking about it, it’s not some new, wonderful, great thing, you are going to throw up and make money. It is a lot harder now that even though more people are talking about it, it’s a lot harder than it was, because going back to what I said y is someone going to shop at your store versus Amazon? How is someone going to find your store?

And stuff like that. So I would say having realistic expectations, committing to sticking with it for at least like 6 months to a year to… I mean you really have to see it out because you are going to be… depending on what road you go down, you are going to be put in a lot of time and energy into getting it going. And you don’t want to quit it just because you get frustrated or you are not making sales or anything. It’s a lot slower to ramp up usually than affiliate marketing. And I would say I would definitely suggest starting with something like drop shipping or ordering really small quantities of stuff, even if it’s just on AliExpress.

And knowing that doing that you are not going to get the best price on stuff and you are probably not going to make a whole lot of money on it, but you are just looking to kind of test the waters. It’s like testing an affiliate marketing campaign initially. And you are just kind of looking for signs of life. You are not hoping to be profitable right after that. Same thing with testing products. Know that you are not going to get the best price right away, but you get an idea like hey, can I actually sell this.

Jason:     What kind of like…how much like capital should someone have access to if they are going to like plan this up? Because like you started drop shipping I imagine fairly cheaply. If you find a product that you want to scale out, like are we talking like a 1000 dollars or talking like 5000 dollars? Like how much should they have set aside?

David:     Yeah. That’s a good question. So, for drop shipping, you really don’t need much. I mean you need 10 dollars for a domain, right? I think Shopify is like 29 a month for the lowest plan or something like that. So you need those and then if you have some plugins or something extra, so your total costs are going to be probably under 75 a month or something.
You do have to plan for like returns that we talked about. So, if you make a sale don’t go out and buy a video game or whatever with it. You kind of have to hold stuff back because you will get refunds right? And you don’t want to not have money to refund somebody if they are upset or whatever. So, for drop shipping you really don’t need much of anything. It doesn’t cost you.

You are not buying the products. The next level if you are kind of ordering really small quantities of products like 5-10, I don’t know, I’d say it depends upon the product but I’d say maybe like 500 to a 1000. If you are going to the like full on private labeling thing, you need quite a bit. But it really does depend on the product and I hate saying that because it sounds like a non-answer. I think spend about 15000 on my products.

Jason:     Like water bottles versus water beds.

David:     Yeah. Yeah. But I mean it depends because some things you can order smaller quantities of. That’s another thing where you definitely have a disadvantage when you are starting out because well there is a few reasons. Number one: to get the best prices you have to order the kind of larger quantities. To do that requires more capital of course.

Also you have to figure if you are ordering something like from China, it’s going to take like, and it could take 3 or 4 months if you are doing sea freight to get here. If you do air, it could get here a lot faster but that’s very, very expensive. So, there is kind of all these things. But there is some products you can definitely get into for fairly cheap, usually smaller lighter easier to ship stuff is better to start with. But yeah, so… I don’t know. It really just kind of depends. You can go on Alibaba and just look at a product and it will show you a minimum order quantity.

Or you can email the seller and ask them. But it will show you how many units you have to order to do something. And then for them to like slap because you don’t want to just order, if you are private labeling you need to put your logo and stuff on it. So you have to find out how much that costs. That costs extra because that’s kind of on top of ordering the product because they have to actually do it but… I don’t know if that was a good answer but really just kind of depends. Yeah.

Jason:     Oh it’s good.

Jacob:     It kind of segments for me what type of margin do you look at then on the products initially? So I’m initially going to order a few of these, what margin do you need or you are not so concerned about margin upfront. You are more worried about does it sell? And can I get a bulk discount down the road?

David:     Those are all valid considerations and there is like different schools of thought. Some people like to go for more expensive products, where they feel like they don’t need as many sales to net the same amount as maybe a smaller product. So stuff like a common example you see thrown around is like everyone knows that accessories have a way bare markup.
They are not… people are not as price sensitive to accessories as they are to bigger purchases. So, like when I when you go buy your 70 inch big screen TV, you are probably not just going to buy the first one you see. You are going to look at like I don’t know best buy, and you are going to look online, you are going to compare this one has HDMI and this and that right? But so and then you order the TV but then when you order your HDMI cable, you just grab the first one that looks good, right?

And it’s like 20 bucks whatever. That cable probably cost, I don’t know, a dollar to make or something. So, there is a lot that’s kind of something the people like to look at, how much it can be marked up for because what it’s worth versus what you can sell it for, are often very different things. In terms of margins though, I wouldn’t really say I look for anything in particular because there is a lot of unknowns like you don’t know how much advertising is going to cost, and you have to factor in…you have to see how many you can buy and what the unit cost is?

What and you have to add the shipping to it, right? Because if you order… trying to think of an easy math example for myself. If you order like a 1000 units that are a dollar each right, and you say “Okay. This cost me a dollar each” But then say shipping is like a 1000 dollars. So then all of a sudden these cost you 2 dollars each. I did that right. Right?

Jacob:     Mhmm.

David:     Yeah. So stuff like that and people I find that people especially when they are getting don’t factor all that stuff in. And then if you have any like if there is something on Amazon, there is FBA fees. There is also storage fees on Amazon. They not just letting you use their warehouses for free. It costs you money when your stuff is sitting there. So if it’s not selling, that kind of sucks because you are getting charged for them like sticking their warehouse basically.

So in terms of margins it’s… I just look for stuff where I know there is like a pretty good margin. If I look at something I’m like man this is really close, right? Find a product but you look on Amazon and it’s selling for a few dollars more than what you can buy it for. That’s not good at all. We are also going to have to look at what’s the trends with the product? And I kind of got into a little bit of trouble with the water bottles specifically because when I originally bought them, got the idea and ordered the and got the logo and everything, there was a really healthy margin that I was looking at.

And in the time that I was getting the logo put on and communicating with the supplier in China and getting it shipped over. It was like months went by, right? And then once I got them on Amazon, I was like the prices have fallen 50% on these things. Just in those 3 months and I’m like “Man! That sucks”. So, yeah that’s… One of the really sucky things about Amazon is that you have companies like in China for example that they can sell directly to, or they put their stuff directly on Amazon.

And obviously, they can put it on for way cheaper than you can. And they… so they can throw up a water bottle and they can charge $5 for it because it cost them a dollar to make and you have to charge 15 because of what it cost you to make like the markup that the seller put on. And what it cost you to put your logo on it and stuff. So, that’s another reason that I would kind of say stay away from the private labeling until you really know what you are doing. You know how to sort of follow trends. So I learned a lot of valuable lessons doing that, like what not to do.

Jacob:     Is there any like huge, I mean you have discussed a part of it, for some reason I’ve read a research on this a while back and hearing like horror stories of shipments getting trapped and customs, because people don’t have the right paperwork or talk to the right people. Like are there any huge pitfalls like that that either have experienced or you know that people should watch out for?

David:     I’m definitely not an expert in this. So on the preface that I don’t know that… I know that yeah there are I think it depends on what you order, the type of product and also how it is shipped like whether it’s sea or air. I think that going through air is a little bit faster if I remember. I think things can get really held up at like at a portfolio when it gets into shipping. You also have to figure like if you, say you live in like the middle of the United States, well the closest port is…I don’t know wherever.

Say it’s like California or wherever, and then you have to pay a company to get it from the port to your house. So, that’s another extra cost. Some sellers or what I want to say like manufacturers that are sell say like on Alibaba, some will coordinate that whole thing for you. But yeah going back to the customs and there is like some fees that you can’t really get around.

One was… it was some weird thing that I had to pay that was like, it was some tax and it was specific to California because California has weird things anyway. Yeah. But yeah there is some fees that you kind of have to watch out for. It wasn’t anything that was like Oh my God! But it was stuff that I didn’t know. I think it was like a few 100 dollars here or there. It wasn’t anything. But I don’t know all the customs stuff so definitely research that if you go down that road.

Jason:     Cool. So can you give like a general outline of when somebody else wants to get started? Like here is key point A, key point B, key point…you know what I mean like just like sum up the bullet points of beginning to rolling in cash?

David:     Yeah. I would say… probably I would start with the drop shipping or ordering really small quantities of stuff, or even doing some retail arbitrage just to get practice with it. But if you are doing drop shipping you would, this is just a very quick summary. I’m leaving a lot of things out. But you would get a store setup on Shopify, you decide what you are going to sell on it, if it is going to be like a general store or niche oriented or something.

And then say go to AliExpress and find some products you want to sell, list those on your site and then send traffic to it. Get familiar with how the whole process works when someone orders something. Then you it order from the seller. There are also plugins on Shopify that simplify a lot of the stuff for you.

Some of them will like automatically list stuff on your store from merchants on like AliExpress for example. You don’t have as much control but you can automate a lot of it if you want. So, that’s kind of the nitty-gritty. Just definitely keep track of everything that you are spending and factor in all the cost because it’s different than affiliate marketing where you just pretty much have the traffic cost. There is other things involved that people don’t always take into account.

Jason:     Alright. So, since everybody loves numbers, what do you think is realistic for like someone just starting like 6 months 1 year down the road? Like low side high side? Like let’s get people dreaming.

David:     Yeah. So, I think if you are doing drop shipping, it’s more like affiliate marketing in that you could hit a really good product or a really hot seller. And you can take off pretty quick and do quite well. It might not be as stable as say like you are private something you are building a brand up, and you have lots of different sales channels, or maybe you are doing some wholesaling and you are selling on Amazon, you are selling on your Shopify site, that’s a little bit more stable than…usually with drop shipping people are, there are stores out there that build brands around drop shipping and that’s totally fine.

But I don’t know. I mean it’s kind of like affiliate marketing where you could hit something really good in the beginning and do really well. Other people, depending on what kind of education they get and how well they put on the stuff together, I mean they could kind of struggle for a while, like I did. It just kind of depends.

Jason:     So what…

David:     What your resources are.

Jason:     Closely then like 6 months 3 year o kind of like get moving, get some traction.

David:     Yeah.

Jason:     Kind of sort that.

David:     I would say for private labeling, I would say more like a year and that is not just using down the computer, figuring out your advertising thing. It’s like the months that it takes to go and forth with China, and get your logo on something, and the shipping time, and then the time to get it the fulfillment setup. It’s just a lot and like get barcodes in order.

There is just a lot of things. I would say before you even actually start selling, so I would say more like a year for that stuff. With drop shipping, I mean it could literally be like the first week you do it, you can hit something good. It’s not guaranteed and there is knowing your shortcut to picking a product that’s going to sell. But, I have seen people hit on stuff really quick and do quite well with it.

Jason:     Cool. So, looking back what was your biggest mistake?

David:     Doing private labeling from the start probably. Yeah. I definitely would have started out with drop shipping and learned more about it. I think it would have saved a bit of money. But I’m glad I did it. I mean I have the experience with it now. I know a lot about what not to do. It was kind of expensive but it’s making money now. But it think…so I don’t know if you can say it’s a mistake but I would have had an easier time had I started out smaller.

Jason:     And you were able to reach like profitability within like under a year, right? With all that…i mean didn’t you start last year?

David:     It was like…

Jason:     Late summer?

David:     Yeah, I think it was late. So yeah I guess a little less than…No. It was right about a year maybe from the time that I first started looking for products and going down that road.

Jason:     Did you have someone that kind of knew the business like show you around? Or did you kind of fumbled through it all yourself?

David:     So, my girlfriend had done a lot of e-commerce in the past and she did consultant with some e-commerce companies. But never done private labeling. So, she knew a good deal about it and kind of different things that we needed to do that I wouldn’t have known without a lot of research in different areas. But so that definitely helped a lot. There was still areas that we had to like the barcode thing was really confusing. I know a lot of people are probably listening to this like “Oh! I just went out and bought barcodes from this guy on eBay…” or whatever.

And you really can’t do that anymore. If you are going to sell on Amazon you kind of have to go with the GS1. Whatever the barcode standard thing is. That’s kind of the lead body that sells barcodes and everybody else is kind of like a reseller. Sort of like they do with domain names. And a lot of times you can buy a real cheap barcode but it’s been sold to other people or something and so if other people are using it on Amazon, then guess what you cannot then use that or something or you get.. So that was like a whole thing that it’s way more confusing than it needs to be. But that was probably one of the more frustrating things I would say.

Jason:     So I imagine that for someone looking to get into this it’s probably pretty important to have like some kind of like support group or mentor before like just diving in?

David:     I think so. And that’s one of the reasons I want to do more educational stuff with e-commerce in at Aff playbook is to make… like a logical that people could follow because I’ve seen like we are talking about in the beginning there is a ton of resources out there and I’m not saying that mine are better than anyone’s. Though they are. But no, I’m really not saying that.

But I didn’t really find…I honestly didn’t really find anything that laid it out like specifically what I needed to do. I mean sometimes it was just kind of like go here and do this. Like with the barcodes are a good example like yeah you need to get barcodes. That’s a whole huge thing that like if you try to do that, you are going to…I mean it was very frustrating. That was probably the worst part of it was figuring out the barcodes. Not because it’s technically hard themselves, it’s just that website and the way you have to do it, it’s not user friendly at all. And there is just things like that that i think could be explained way simpler and save people weeks or months of headache kind of.

Jason:     Cool. Yeah. It’s those weird things that you would…like I couldn’t even have thought of barcodes.

David:     Yeah.

Jason:     Probably until I’m ready to list on Amazon I’m like “ah! Crap.”

David:     Yeah. Yeah.

Jason:     And then wasting like 2 weeks.

David:     Like yeah, there is… like I say it’s not that e-commerce is hard or anything, there is just a lot of little things like that that are you have to do. That was another frustrating thing is like I didn’t really… that was getting me really frustrated when I was doing it. Like I said if you would have asked me 2 months in, i would have been like “No. I’m not doing this again.” Because it was like “Oh wait, wait. I have to do this now? Oh I forgot to do this. Or what about this?” And delays because I didn’t order something. And yeah so it can definitely but made a lot smoother I think.

Jason:     Well cool. Thank you. That’s all I have. Jacob you have got anything else?

Jacob:     No. Besides just telling the listeners out there make sure to rate, subscribe and if you have any feedback on today’s show or any of the shows we have done in the past, or questions in general around digital marketing, or show topic ideas, I know we would love to hear them.

David:     Sounds good. Cool. Well, thanks. Yeah and definitely check out the form for our upcoming e-commerce content. And talk to you guys next week.

Jason:     Yup. Thanks for your time.

Jacob:     Thanks.

 

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