There’s been a lot of talk about Shopify dropshipping in the affiliate world over the past year.
You may have heard snippets about how people are crushing e-commerce.
It’s true. As an affiliate marketer, you wanna make sure that you’re on top of trends. If you hop on the trends too slow, then you’re only making it harder on yourself.
I first heard about Shopify + E-commerce in late 2015.
I was running a lot of campaigns on Facebook and kept hearing that a ton of affiliates were doing Shopify.
It didn’t make sense to me at first.
I didn’t see how the margins would work since it’s a physical product, and I didn’t think people had the patience to wait weeks for their orders to come in from China (Amazon prime has ruined us).
On top of that, I like to keep my campaigns simple. Adding in customer service and merchants seemed like a huge pain.
But my team decided to give it a go. I’ve learned that the risk vs reward ratio is always high when launching new campaigns.
And we were able to hit a 4-figure profit per day campaign after only a few days.
Since then, e-commerce has been a large part of our campaign portfolio and it’s here to stay.
There are a lot of opportunities in 2017, but e-commerce is going to be a big one.
It’s a great option for those of you who are jaded with some of the problems with traditional CPA campaigns.
It’s white-hat campaigns, and you can build an asset through an email list.
Here’s what I’m going to cover in this post:
- Why E-commerce?
- An Example: Tactical Flashlights
- Ecommerce vs CPA Affiliate Marketing
- The Platforms We Use
- Pros and Cons of E-commerce
- Tips To Make More Money From Your Shopify Store
Why Shopify E-commerce?
Dropshipping / ecommerce is one of the oldest business models in the book.
The first major profits I made were from dropshipping items from Alibaba onto eBay 10 years ago.
Before Alibaba there were guys buying tons of stuff from China straight from merchants.
What’s changed, and why has it become such a massive hit recently?
It’s a combination of things.
Facebook has really stepped up their targeting game the past year.
With much better targeting and advanced pixels, it allows us to profit easier off niche products.
It’s super easy to start a store selling any type of product you want with Shopify.
There are alternatives to Shopify, but I always prefer to go for the biggest and the best when it comes to software/services. Plus Shopify has a ton of benefits that other competitors don’t have.
Shopify is affordable to get started, plus Facebook loves Shopify stores.
AliExpress makes it super easy to drop ship products. You don’t have to translate websites & worry about getting ripped off by Chinese gangsters.
Nearly all of the big companies on Aliexpress have live chat with English speakers plus other people leave reviews on companies.
Here’s a quick product analysis that shows why e-commerce has become so big.
Flashlight on Shopify Ecommerce Example
Flashlights were the biggest item in 2015 / 2016 by far. I don’t know why flashlights, but someone came up with a great angle and thousands of people copied it.
Flashlight offers are all over Facebook ads so I’ll use them as an example.
Product: Tactical flashlight
Sale price: $29 each (including shipping)
Here’s a picture of a flashlight in a drop shipping store I found.
Here’s the kicker:
Check out this screenshot from AliExpress…
On AliExpress.com and you can buy the exact same torch for $4.69 including shipping.
It gets drop shipped from China to anywhere in the world.
There are thousands of different types of flashlights you can buy on AliExpress.
Here’s another similar one for even cheaper:
Let’s look at the math:
Cost of goods: $4.69
Sale price: $29
This means you can spend anywhere up to $24.31 to bring in a new customer. Most of the profit in ecommerce is made from repeat sales, or multiple purchases.
Don’t forget that Shopify isn’t free, plus you’ve got other costs, but there’s a big margin here to play with.
I did a quick Amazon search, and people are selling similar models there as well.
I’m not exactly a flashlight connoisseur, but this looks pretty familiar…
Here’s the link to the flashlight I found: Amazon link
This is why e-commerce is becoming so massive.
The items you can buy from China are so cheap, and the profit margins are insane.
I know what you’re thinking.
Abandon the CPA ships – throw everything into Shopify e-commerce!
I want to give you guys an unbiased view of both business models.
Here are my thoughts on e-commerce vs CPA.
Shopify E-commerce vs CPA Affiliate Marketing
I don’t think e-commerce is as different from CPA as most people make it out to be. I think of them more as “cousins.”
But I’m sure you wanna focus on one or the other. Here are my thoughts on the differences:
In CPA marketing the profit margins are a lot higher because we’re selling digital offers or going for leads. It’s not unusual for guys to make 100 – 300% ROI in CPA.
In e-commerce with Shopify we’re selling real products, and we have a lot of “real world” costs, so e-commerce margins aren’t as high.
If you get 30-50% ROI in your ecommerce store you are doing well and pushing good volume.
ROI is just one metric though – there’s a lot of money to be made with both business models.
Also, e-commerce campaigns can be difficult to scale because it’s Facebook – you’ve gotta be careful.
CPA is fast money, but it can disappear just as fast. E-commerce is slower, more predictable, long-term money.
The Ecommerce Platforms We Use
Just like CPA marketing, you need software and tools to make ecommerce work.
There are 3 main platforms we use.
Platform #1: Shopify
Shopify is the platform most e-commerce sellers are using to build their store on (they have 275,000+ store owners).
Shopify makes it easy to add new listings, customize the style and look of your store, and add different functionality.
There are a ton of Shopify ecommerce apps that I use in my stores to boost ROI, but I’m gonna write about that later this month.
The Shopify backend is easy to use and gives you all the data you need. You can see how much you’ve made, trends, manage inventory (if you decide to stock inventory in the future) etc.
Here are a few examples of Shopify stores:
You can customize your Shopify store to look however you want.
The stores above all look like legitimate brands and retailers.
This is one of the good things about e-commerce: options.
- You can start to build a brand and loyal customers, or
- You can operate on a more CPA basis where you go for the hard sell and try to make all of your money on the front end.
Want to Try Ecommerce? Get a Discount on Shopify
One of the Shopify reps got in touch with me at AWA and said he wants to offer you guys an insider deal.
(Shout out to Adam from Shopify, thanks bro!)
The deal is:
- Extended free trial (21 days free)
- 10% off for your first year
The catch is, they told us not to make the coupon code public.
Here’s the link to grab the disount (I’ll email it to you).
Platform #2: AliExpress
This is where we get our items from.
Because you can order single items, and they ship anywhere in the world for you.
AliBaba.com has cheaper inventory, but you can only buy in bulk from most stores on their platform.
Here’s my system for using AliExpress:
- All of the shipping details of people who purchase get logged into a spreadsheet
- At the end of each day, this sheet gets sent to the AliExpress store to fulfil
- The drop shipping store sends the products to the people who ordered through my store
AliExpress makes it easy to systemize your stores. This is one of the mistakes a lot of Shopify store owners make – they try to do everything manually.
Hint: Checkout the app Oberlo
Platform #3: Facebook
This is where we get customers from.
Because we’re selling niche products – we need the targeting ability of Facebook.
Some affiliates are promoting on other traffic sources, but I don’t see the point.
Imagine you’ve got an ecom store selling military gear.
Who are you going to advertise to?
- Males who like the group U.S. Army on Facebook (that has 4.5 million members)?
- Or random people on native affiliate campaigns / mobile campaigns?
It’s like shooting fish in a barrel using Facebook.
You find a group of people who you can target, find a product you think they’d like, then target them with Facebook ads.
There are a ton of tools for affiliate marketing out there that might help you as well (domains, hosting, spying etc.)
Pros of E-commerce w/ Shopify + Facebook
There are good and bad sides to every business model.
E-commerce has a lot of potential, but I wanna show you both sides of the coin.
It’s 100% Whitehat
Facebook knows that this business model is becoming popular, and they love it. When you target someone with an ad that’s about a product that suits them, that’s the perfect win/win.
- Facebook loves that the user is getting a good experience
- The consumer loves it because they are getting shown things they are interested in
- The affiliate loves it because they get paid
Warning: Just because it’s whitehat doesn’t mean you can’t get banned.
The business model is safe, but you’ve gotta be careful with the way you use Facebook. I’ve written about how to prevent Facebook account bans before so study up on that.
Here’s how you could still get your account banned:
1. You could promote your products in a way that’s not encouraged.
For example if you’re using an unauthorized image, or you promote in a way that offends people. Read up on the Facebook ToS to make sure you’re not making any blatant mistakes.
2. You could trigger their algorithms and cause an automatic suspension.
This happens when you do things that Facebook thinks someone shady would do, like double your daily budget every day for a week.
There are TONS of Products to Run
You’re not limited to the offers in your affiliate network.
There are over 3.1 million items in the Health and Beauty category alone on AliExpress.
This is still the early stages of Facebook/Shopify ecommerce and there are a lot of opportunities.
Think about the supplier in China – if you can sell a lot of products, they will do anything they can to keep you happy.
They’ll do discounts, expedite your orders, makeup custom products etc.
You’re Building an Asset
This means you can sell your business one day for a multiple of income. This is a big difference from the CPA world.
There are stores for sale on sites like Flippa.com that affiliates have built, spent a few months working on, and then selling them to people who just want a steady income stream.
There are a LOT of people out there who want an online business, but they don’t know how to build one.
This is one way to make a lot of cash in a short time with e-commerce.
You’re Learning How To Build a “Real” Business
This is a good thing depending on your goals.
When you first start out with affiliate marketing, all you care about is your Voluum profits.
Affiliates never really get what it’s like to work with customer support, inventory, suppliers, accounting and finance, shipping etc.
The reality is that most big businesses have all of these components.
You can make a lot of money fast as a CPA marketer, but often guys who do really well as affiliates want to go onto something bigger and more traditional.
Cons of E-Commerce w/ Shopify + Facebook
Scaling is Harder
When you try to scale on Facebook, there are a lot more things you have to watch out for.
- Your targeting will likely change, which means your ROI will change
- You need to watch that you don’t scale campaigns too aggressively or else you might get banned
It’s not as simple as increasing your bids. If you shift to another country, remember to localize your marketing.
You NEED to Build a Team
You’re gonna be dealing with customers, shipping, suppliers, Facebook, Shopify etc. This takes a lot of manpower.
You’ll be able to launch your first store by yourself, but when the orders start increasing, you’ll need help. There are a lot of powerful apps that I’ll show you that can help you automate processes, but you’ll still need to start building a team.
It’s Very Facebook Dependent
This business model won’t work without Facebook. I know some affiliates have tried on other platforms, but Facebook is the perfect place for e-commerce.
Facebook is going anywhere, but it’s something to keep in mind.
I used to run some dating stuff on Facebook a few years back and that got banned overnight.
So it’s not the possibility of Facebook disappearing, it’s the possibility that they might change their terms of service.
My Best 4 Tips for Making Money with Ecommerce
E-commerce is a good opportunity right now.
That doesn’t mean it’s easy.
You’ve still got to be a good marketer and come up with unique businesses strategies.
Here are my top 3 tips for building a profitable e=commerce store.
You’re building an email list of people.
It’s free money every time you email them.
There are apps I’ll show you in the future that automate 99% of your email marketing strategy.
The email list you are building is full of super hot leads. People who buy from your store will likely buy again. You can pitch them different products and offers over and over again.
Use Apps to Increase Your Conversion Rates
Affiliate marketers use “scripts” to boost the conversion rate of their landing pages.
E-commerce affiliates use apps.
There are Shopify Apps for every feature you could want on your site.
Apps will squeeze extra ROI from your store and automate and systemize your business. Without the right apps, you will struggle to get your store profitable.
I’ll talk about the best Shopify apps in a blog post soon.
Understand Your True Costs
CPA marketing costs are pretty simple.
Total revenue – ad spend = Profit.
There are a few affiliate marketing tools and software that you have to factor in, but it’s not a big cost.
With E-commerce there are more numbers to calculate:
- Cost of goods sold
- Shipping costs
- Shopify store overhead
- Your marketing team, customer service, project manager
- Ad spend
- And much more
For example this month John spends:
$2000 on Facebook ads
$500 on Product costs + Shipping
He’s excited because he broke even.
However, he forgot to account for all the extra fees and actually lost money that month.
The Shopify platform, the apps, refunds, development, email list building software etc. all add up.
You need to keep a close eye on the “invisible” numbers with e-commerce.
Decrease Your Shipping Times
One problem with drop shipping an item from China is it can take weeks for the person to get it.
If they wait too long then they might request a refund or even charge back. If they leave negative comments on your ads/pages it can turn off other customers.
One workaround is to ship it from a USA location using a 3rd party.
1. Find a working product
2. Order inventory from China -> A 3rd party fulfilment center
3. The customer will get the item much faster since it’ll be sent from a US location.
But keep in mind your profit margins will be smaller because it’s an added cost.
Use Epacket shipping as a hard rule. No exceptions. Shipping times with other companies are too variable, the tracking sucks, and you’ll get a ton of bad feedback.
What is Epacket?
It’s a deal between the Chinese Postal Service and a bunch of countries. Shipping times are much faster and they offer reliable tracking.
E-commerce is Going To Be Huge in 2017
I’m excited about the future of e-commerce.
My team are scouting for trends and opportunities so it’ll be interesting to see what they can come up with.
There’s also a next level to this business model.
Once you dominate a niche, why not work with a manufacturer to develop a custom product?
Why not develop a brand and a full-fledged funnel?
No, affiliate marketing isn’t dead.
Affiliates are still doing 5-figures a day.
But it’s nice to have options to be creative and build a more traditional business that uses affiliate skills.
Do you wanna see more ecommerce stuff on my blog?
If you want more content like this then comment/share this post for me so I know what you guys think.
I’m a data driven guy, so I can only tell if a post is good by comments/shares!