This is the rundown of what you’ll learn inside eCom Hacks by Jared Goetz.
IMO Jared is an awesome mentor on the dropshipping business model, real down to earth, straight to the point, love his teaching style.
As someone that’s done the whole drop shipping business model, I’ll give you a birds-eye view of just how this business model works. The pros & cons.
How does it compare to other types of online businesses?
The drop shipping business requires that you generate traffic using Facebook ads.
After spending thousands of dollars on Facebook ads myself, I’ll give you my explanation on why I purposely choose to focus building my online business on free traffic instead, which is why my local lead generation business is still my #1 recommendation and my primary source of income.
Its the same reason why I started this blog and why writing content on this blog or producing content on youtube is my priority, its the first thing I do every morning. Its also why many eCom guys go into selling courses and they often times will begin producing tons of free youtube content because free traffic allows you to build true hands-free, residual income.
How does the eCom Business Model Work?
- Product research – you must first find a physical product that’s converting well with Facebook ads, a product with big enough profit margin where you can scale with ads and still be profitable. A great way to find products is to look at what some of the competitors are currently selling.
- Find a drop shipper / manufacturer – once you find the product, hop on aliexpress and find a supplier from China that’s carrying the same product, negotiate the best price you can get
- Build a Shopify store
- Create Facebook Ads – Jared’s using a lot of retargeting ads to get the cheapest customer acquisition cost as possible and then once your store is generating sales, everyday you take the total sales data and you’ll email the info over to the supplier, they’ll invoice you, pay for the products with the money that you made from your customer, and the supplier will ship the products to your customers
- Track your daily sales & ad spend to make sure you’re being profitable everyday (Some days you might get some sales but not make any profit, you have to adjust ads or create new ads accordingly)
- If you’re consistently being profitable, then you can finally begin increasing your ad budget and start scaling the business up
- Customer service is majorly important as you scale and begin getting more and more inquiries, at this stage you’ll need to hire a virtual assistant to help with the workload.
- Run the ads as long as you’re being profitable
I was able to make some good money with this drop shipping model but eventually, my product went out of style so you have to make sure you’re not spending your entire profit on things. Make sure to build some working capital so that you can start other businesses if or when your product might stop producing profits.
Some of Jared’s Top eCom Tips
- if an ad on Facebook is getting tons of engagement & likes within a few days, then it’s a strong indicator that product is a winner and most likely you can duplicate that success, just find another supplier on Aliexpress that’s manufacturing the same product
- Making sure that the product has big enough margin so that you can spend money on ads and scale, as you scale your ad, the cost of customer acquisition goes up
- Jared likes to go with broad targetting with Facebook ads, and use objectives that are cheapest such as reach or engagement campaign. Which are usually cheaper than a conversion campaign, then you retarget people based on their actions. If they watched the whole video or added product to cart, etc def retarget those people, if they have not converted already.
Some of the Challenges Jared Has Faced with E-Commerce
- When you scale big, he underestimated how much extra work will be required to deal 100,000 customers
- Not doing good enough job vetting the suppliers, one of his supplier started sending out fake tracking numbers and no product, now he had $450,000 worth of chargebacks/refunds he had to deal with, not to mention thousands of unhappy customer emails.
Pros & Cons of the E-Com Business Model
- If you find a great product to sell you can scale & make really good money in a short period
- You don’t have to deal with inventory and shipping yourself
- It’s fairly easy to model after other successful e-Commerce business and sell very similar products which minimize your risk
- when you scale to big numbers, on-going effort is needed to deal with any issues that may arise
- many successful eCom products that sell like hot cakes on Facebook eventually go out of style, so continual effort is needed to find new products to sell
- Facebook ads can become very costly if you’re not careful, you need to keep a close eye on it to make sure the ads are working properly on a daily basis
I like the eCom business model because you can be in the physical product business without having to deal with packaging and shipping the products yourself.
If you go with the drop shipping model, where you have the supplier ship directly from their plant, you don’t even have to invest in an inventory, you purchase the products with the money the customer gave you.
There are certain challenges though because the items are being shipped from overseas the shipping time is very long and your profit margins are much smaller because you’re buying products individually instead of bulk.
Many successful eCom guys once they have a solid product, will invest in ordering bulk from the supplier and shipping it to some US warehouse so the shipping time can be 3 days instead of 4-5 weeks.
I think eCom is a pretty darn good business model.
I like the fact that you can sell physical products without actually purchasing inventory. So its low risk.
Its a scalable business that allows you to work from anywhere as long as you have an internet connection.
Jared’s course has everything you need A through Z to build your first eCom store.
Just know that there will be some on-going work involved in maintaining high sales volume.
You can have VA (Virtual Assistants) hired to handle most of the customer support but you’re still responsible for resolving things when an issue flares up. Jared’s advice is to fix things before they become a major problem because things can snowball quite quickly when you’re dealing with hundreds of orders per day.
I’ve made some money with the drop shipping business model also, the biggest challenge I found was that Facebooks ads becoming quite expensive at scale and when you factor in the cost of products sold, you are only left with 10-20% profit margins.
And as you scale the business inevitably the amount of customer support also increased so for me it was not as hands-free of a business as I had originally hoped.
I mean if you’re still working a 9 to 5 job, its an infinitely better way to make money because you only need to spend couple hours per day but by the time I started eCom I had already built a 6 figure residual online income that’s completely hands-off with my lead generation sites.
And what happened with my eCom biz was, eventually my audience on Facebook became exhausted with the ad and my cost of customer acquisition went up to the point where running the ad no longer became profitable.
The problem with this is once you stopped running Facebook ads, I went from making money every day with eCom to not making any money at all.
Luckily, I was fine because my lead gen properties are there to pay all my bills. But if eCom is the only thing you have, then I can see how this might be the biggest challenge or stress point of this business.
From my experience, I much prefer establishing my online business using free traffic.
With eCom yes if you hustle you can make some great money with it, but when you scale with Facebook ads, you’ll need to spend at least 2 hours every day just maintaining profitable facebook ads and dealing with customer order fulfillment duties.
So 2 hours every day just to maintain the money coming in.
Which might not seem like a lot but it adds up.
For me, that 2 hours daily is better spent writing a blog post or building another online real estate like a lead gen site or youtube videos because once its published, it’s out there forever, that can generate customers to me with zero maintenance.
I have these lead gen sites that’s ranked generating income for me month after month and I haven’t touched it in years.
These types of digital properties that I put out there that generate income without having to worry about customer order fulfillment or customer service really allows me to build multiple streams of residual income is what has really allowed me to create a life of freedom.
Selling digital product or services like selling leads or selling a course is much more scalable because you don’t have to worry about physical product breaking, issues with suppliers, inventory situations, etc.
Also, the digital product is pretty much 100% profit, whereas physical products are at around 10-20% on average.
Nothing wrong with trying out dropshipping business though, I’ve done it myself and made money so I can’t say it doesn’t work.
If you hustle you can make profits as soon as you turn on the Facebook ads that is if you find an awesome product that’s trending & you’re able to leverage Facebook ads and scale fast.
But the caveat is the results aren’t as long-lasting as building a business with free traffic, which can take longer initially but once you’re generating free traffic, then you’re making money on auto-pilot for years to come.
If you wanna try eCom, you won’t be disappointed with Jared’s course but I also encourage my readers to begin building an online business with free traffic because that’s more of the long-term play in my opinion.
Local lead generation is the best opportunity out there today for building that residual free traffic money, this is the coaching program that has allowed me to create that hands-free multiple streams of income online. & its how I make the majoriy of my income today.