eCommerce Lifestyle
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Building a Moat

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Is your dropshipping business defensible? 

In today’s episode of the eCommerce Lifestyle Podcast, Anton shares one of the easiest ways to “build a moat” around your business.

As always, if you have any questions and suggestions, please feel free to leave a comment below. Don’t forget to share this with someone who needs to hear it.

What's Covered in This Episode:

  • Comparing business models
  • Leveling up & building out a well rounded skill set
The podcast is also available on all major podcast players including, Stitcher and Spotify.

Links From This Episode:

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Transcript

What's up everybody, Anton Kraly here from ecommercelifestyle.com and welcome back to the podcast. Hope everybody is having an amazing week, getting lots of sales, enjoying their life and ready to learn something new. Specifically, today, what we're going to be talking about is what I call building a moat. Now, this really is about making drop shipping businesses defensible, and this can apply to really any type of e-commerce business. But as you probably know, our main source of revenue and profit with e-commerce is drop shipping. I teach thousands of people how to do this every year at my coaching company Drop Ship Lifestyle. One of the things I wanted to elaborate on a little bit more, that's why we're recording right now, is how to make a drop shipping business defensible?

To do that, what you really want to do is build a moat around your business. By that, I mean a layer of protection. The reason this is coming up specifically right now is because I just hosted a coaching call for students of my program over at dropshiplifestyle.com. I was comparing and contrasting different e-commerce business models, specifically, different e-commerce business models with drop shipping. I was talking about how with the arbitrage model, where people try to find products for cheap on eBay or Amazon, and then sell them for more on maybe Shopify or eBay or Amazon. They're just looking for price discrepancies. There's no barrier to entry because anybody can do that. There's no relationship between you and a supplier or you and a product. You're literally just going to eBay or Amazon, doing searches, trying to find low prices from other sellers, and then trying to sell it for more somewhere else. That's arbitrage.

There's no barrier to entry to there because if you were doing that and somebody else wanted to do it, no one's going to stop them because they can literally do the exact same thing because your business isn't built on any type of relationship. It's just built on manually trying to find these pricing discrepancies. Okay, the other e-commerce business model with drop shipping, where I said there's no barrier to entry is drop shipping from China. The reason I say this is because of the way most people do it is they just try to find trending products. They use different tools like AliExpress or Oberlo to try to find who makes these products? They go ahead, they start selling them..

The reason there's no barrier to entry there is because if you found a great selling product, and let's just say you were selling it for, I don't know, 20 bucks, and I wanted to sell it tomorrow and I wanted to sell it for 15. Well, no, one's going to stop me from doing that. There's no pricing control. Also, all I have to do is click a few buttons and now I can sell that product too. Because, again, it's not built on a relationship. Now, the third business model for e-commerce when it comes to drop shipping that I brought up is what we do, which is becoming an authorized retailer to sell for domestic brands. Now, with this model, yes, we're still drop shipping, we're never seeing the products, we're never touching them.

But the way that we are able and allowed and literally authorized, that's in the word, the way we're authorized to sell these products is by reaching out to suppliers, by forming relationships, and by literally signing agreements that says, "Yes, Anton's company can sell products for our brand name." The reason there is at least a smaller barrier to entry there upfront is because you actually have to get approved to sell for the supplier. You can't have 100 people jump online one day and all find the same products to try to arbitrage or to start listing the same products from China. This is based on relationships, and in order to get approved with the type of suppliers that we like to work with, silver and gold suppliers, which I cover all the differences in the Drop Ship Blueprint.

I'll link to that in the description of this podcast if you want to learn more. But, again, those relationships have to be built before you could sell. That is like the first barrier to entry with what we do. Now, what I'll say is I'm not going to get into a lot of details in this episode about building those relationships because I previously did an episode of this podcast and it was called Relationships Over Everything, and it's specifically about building up those supplier relationships. So rather than just repeat myself, what I will do is link to that episode in this podcast description, and it goes into more detail about how you can build a moat around your business by building supplier relationships.

Again, look for the link for that one in this podcast description. But beyond that, beyond just having to get approved with suppliers, what else can you do to build a moat around your drop shipping business? Well, what I am constantly trying to do and what I've been doing since I first got into this business in 2007 is leveling up and trying to build out really what I would call a well-rounded skillset. Being, maybe not the best in the world at everything, but trying to do everything better than my competitors and trying to improve at it every single day. What are some things you can do? You can learn more you can improve with to build a moat around your business when it comes to building up your own skillsets.

Well, one thing is conversion rate optimization, and what that means is being able to do a better job of getting people to choose your store once they find you over your competitors. Now I'm not going to get into a million conversion rate optimization tips, because this is a 10-minute podcast and I have three hours of training on that in the Drop Ship Blueprint alone. But with conversion rate optimization, again, it's getting more people that visit you to buy from you. Of course, there's tons of different techniques you can use, but something else you should do here is be monitoring your site's traffic, either using heat maps or screen recordings so you can see what people are doing when they visit your store. Then doing a better job of either trying to fix things or improve things so more of those visitors become customers.

But that's one specific skill. You can be better at conversions than sites B, C, and D. But if you don't get any traffic, then it doesn't matter because nobody's going to see your product pages and be able to buy from you. The next thing you can do, the next skill you can build up and level up to start building a bigger moat is paid traffic, and making sure that the money you're spending on ads is optimized for converting traffic. Because what can happen over time is as other people are competing with you, just because there's a moat doesn't mean you won't have competition is people will, maybe not stay up to date on what's working with their ads, or maybe they'll never even get great at it to begin with. Because of that, if you're just even a little bit better than your competitors, you will make more money, you'll have a higher return on ad spend on the dollars you spend on ads.

Because of that, your business will be more profitable, your business can continue to grow on itself while others fall off. I would say start it with conversion rate optimization, then start leveling up and really focusing on your paid traffic skills, trying to have the best return on ad spend possible. Now after that, a huge skill set that for a lot of people, including me, takes a long time to master. But it's just so important, especially, for long-term success. It's customer service. Because think about it, another company out there, they could have maybe built the same supplier relationships that you built. They could be amazing when it comes to conversion rate optimization. They can literally be the best in the world when it comes to paid traffic. But if they have great marketing, great products, and terrible customer service, their business will not last.

It's only a matter of time until people start seeing their negative reviews, until they start billing on themselves, until their conversion rate drops significantly because people don't trust them anymore, and until they go out of business. One way you can focus on building a moat around your drop shipping store is by offering amazing customer service. Do what I teach in the Drop Ship Blueprint, where I show you how to get reviews from everybody that buys, build up your online social profiles, build up your review database. That is something that will build a bigger and bigger moat around your drop shipping business over time. Now, something else you don't need to do from day one, but you definitely should start doing as you start to make money and profits in your drop shipping business is focusing on unique contents.

But not just any content that you're creating, because you think you should be creating it. But instead content that actually provides real value to your potential customers. What do I mean here? Things like unique product descriptions. While everybody else might have the same copy and paste product description, you can have one that is unique, not just twisting around a few words, but making it actually better and more beneficial to the person shopping for whatever product it's written for. Focus on unique product descriptions, focus on unique image assets. That also falls under content because while everybody else might have the same two or three stock photos, if you can get unique product photos, either from your customers that have already purchased from you or from your suppliers or from trade shows or from wherever you can find these products in the wild, in real life, that's unique content for your store.

It builds more of a moat. Another thing, buyer's guides, actual useful buyer's guides. Let's say you were selling stand-up paddle boards. You can write a buyer's guide about how to choose the perfect stand-up paddle board for you. That is something unique that, again, will build a bigger moat around your business. Another thing that I've mentioned before, but I think people overlook it, is having frequently asked questions for specific products on your product pages. Whatever people actually want to know about the products, ask them and answer them in FAQ format. Again, that's going to provide value to your potential shoppers that your competitors won't. It builds the moat. Another thing that is huge and something you definitely should do as you start growing is building a community within your niche.

Again, at Drop Ship Lifestyle, what we do and what we teach is build niche specific stores. And because we build niche specific stores, we can build communities and followings in that niche. You can do this with your social media pages, you can do this even with a Facebook group if you wanted to, you can do this with email marketing. But, basically, speaking directly to your community and building up a following within your niche. That is a huge part of building a moat around your business, especially, as you get bigger and bigger and get better at paid traffic and conversion rate optimization and customer service. The content is things you can do after that to continue to grow and build an even bigger moat.

Now, something else that will help you consistently over time and in the long game, put you in a much better position than a lot of your competition, is having scheduled audits of your own business. Now, I teach how to do this in the Drop Ship Blueprint, I show you exactly what we do when and when we do it. But some examples are in SEO audit, so search engine optimization, where we're looking specifically into different tools we use for tracking and we're making sure that nothing has happened either too negative or too positive. For example, if traffic is just continuing to grow at its normal rate, then we can pretty much see that there is no error reports or anything. We're good to go, don't need to change anything in terms of SEO.

If we see that all of a sudden we're seeing a dip or a drop-off in our organic traffic, then, okay, that triggers a warning, what do we need to do? What do we need to fix to get back on the path to growth? Alternatively, what if we check one of our organic reports and we see that organic traffic has spiked? Well, that's not a bad thing, but we want to know exactly what happened and when, so we can do more of it. We can see what played the role in the better results and the way that you can figure these things out over time is by having regularly scheduled audits that you do yourself or somebody on your team. The first one we do is for organic traffic, for SEO.

Now the next one is for paid traffic because a lot of people will have campaigns that work and work great, and they simply just don't check them that often. Because after time it's like, "Okay, this works, we're good." They're not like getting into the weeds. I would say, within their Google ads and Facebook ads. I don't recommend doing that every day or anything like that. Depending on the size of your business, though, maybe every two weeks, every three weeks, maybe every month, you're doing a deep dive audit of your paid campaigns. Same thing, you're looking to see is it continuing to generate the return on ad spend that you want? Is it getting better? Is it getting worse? If it got worse, what happened? What campaign broke? Is there more competition there? Are your ads just stale? What is that? What can you fix?

Alternatively, if something's working much better, okay, what happened there that we can continue to do more of? The next scheduled audit we do is with our email marketing, just to make sure, again, how are our open rates? How are our click rates? How are our click to sell rates? We use that data to improve. The reason I'm including this in building a moat is because if you do these audits consistently, over time, you will find strengths, you will find weaknesses that a lot of competitors won't find because they simply aren't doing it. Or maybe they're randomly thinking every six months like, "Oh, we should see if our email is doing better or worse than last year," or, "How is our organic traffic? What will really change there?"

A lot of people don't do this, so if you schedule it in regularly, most of the time, you'll find everything is working as it should. It won't even take you that long, maybe 15 or 30 minutes. But, again, when you find opportunities or when you find weaknesses, then you can dive deeper, fix things, improve them and build a bigger moat because you're doing what your competition will not. So hope this provides some value guys. Again, just wanted to really elaborate on what I mean when I say there's no barrier to entry with the arbitrage model or drop shipping from China. Again, the way to start to build a moat and have a defensible drop shipping business is by working with domestic brands and becoming an authorized retailer. I'll link to that episode called Relationships Over Everything below this. But then, over time, everything else I just said are ways to continue to expand that moat and make your business even more and more defensible.

As always guys, hope you got value. If you did, do me a favor, go over to Apple Podcasts and leave a review. I will link up how to do that in this podcast description. If you're listening and you're brand new and you want to get a special offer for my flagship program, the Drop Ship Blueprint, I'm going to link up dropshipwebinar.com in this podcast description. Check it out, it's a free training. Plus I make a special offer for the Drop Ship Blueprint. Thank you everybody, appreciate you, and I will talk to you on Monday for the next episode of the eCommerce Lifestyle Podcast. See you everybody.

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