eCommerce Lifestyle
Shares

Are One Product Stores the Future of Dropshipping?

Shares

​Many people have been wondering if a one product dropshipping store will be competitve enough in the market. But some do not know which factors to consider.

​In this episode, I will be comparing a one product dropshipping store to a traditional dropshipping store. If you're one of those curious to know, ​then don’t miss this episode.

What's Covered in This Episode:

  • ​One Product Store Dropshipping Model
  • ​How One Product Stores get traffic
  • ​Traditional Dropshipping Store Model
  • ​Pros and Cons of One Product and Traditional Dropshipping Stores
If you liked today’s show, please subscribe on iTunes to The eCommerce Lifestyle Podcast! The podcast is also available on all major podcast players including, Stitcher and Spotify.

Links From This Episode:

This ​podcast is also available in video form. Click ‘Play’ below to start watching. Make sure to subscribe to our YouTube Channel for weekly updates and insights!

Transcript

What's up everybody, Anton Kraly here from ecommercelifestyle.com and welcome back to the podcast. In today's episode, we're going to be talking about one product stores and if they're the future of dropshipping. The reason I wanted to hit on this episode today is because if you follow any YouTube channels that are about eCommerce or if you're somehow in the audience of people that Facebook, thinks is interested in eCommerce, you've probably seen that term, "one product to dropshipping stores," popping up a lot. So definitely getting a lot of hype around it, a lot of people talking about it and that's why I just wanted to spend the next 10 minutes or so kind of going through each business model and the differences and also, the pros and cons of each.

What we're going to be talking about is that one product store dropshipping model versus what I would consider a traditional store, a traditional eCommerce store working on a dropship model. Now, you should also know that when I'm talking about traditional dropshipping stores, I'm referring to stores that are using the dropship lifestyle model. So specifically, building an online store that is selling for domestic suppliers. So if you're in the US, your suppliers would be in the US. If you're in Australia, your suppliers would be in Australia, and so on and so on. Okay.

So let's say you wanted to build an online store that sold surfboards and let's say you were interested in doing the one product store approach. Now, the way this typically works is you would go on Google, on Facebook, you would do your research, you would try to find out what surfers are looking for and then you would try to figure out a way that you can maybe make a little bit of a unique product, have a unique spin on it. Sometimes it's with product design, sometimes it's with just branding and messaging, but once you had that product that you thought surfers would actually want, your next step would then be to find suppliers that are willing to private label because again, we're still dropshipping here, so we're not going to China having something manufactured, having a warehouse. You're just trying to find companies that make something similar to what you want to sell and then you're seeing if they can private label it for you so when it ships, it would look like it would be from your brand rather than theirs.

Now, once you've found a supplier and had a deal in place, your next step would be to build your online store. Now, many people with these one product stores still do use Shopify. You can just modify it so it only has one product, turn your homepage into basically a sales page, which works. But a lot of people also use click funnels when they're only selling one product. To be honest, if that's your goal just to sell one thing, click funnels is probably the best solution for you. But that's pretty much it. That's the beginning set up process. Now, the next thing that's really important about these one product stores is how they're getting traffic. Because you're private labeling a product, because you're putting your own brand name on it, at least in the beginning, nobody is going to be searching for it. So it's very hard to run intent-based ads because if nobody's searching for your thing, how are you going to put an ad in front of them? You could set up ads and Google for it, but if the searches aren't there, your ads not appearing.

So the way most of these stores do get traffic is from Facebook ads, from Instagram and influencer marketing. Those are the three main channels you'd want to look at should you want to go this route. Now, let's compare that to the traditional store route. Again, using the dropship lifestyle model. So with the traditional store route, the process kind of starts the same in the beginning. You're doing your research out there on Google. You're trying to find what people that are buying surfboards, in this example, are already buying. But instead of just trying to find that one top product, you're trying to find the top brands and ideally as many of them as possible. Hopefully, you can find at least 20 different brands that are making surfboards that people are actually buying, that people are leaving good reviews for, things that people actually want.

Now, with the traditional route, your next step is to build an online store. With this model you're not using click funnels. You're building specifically on Shopify, maybe it's called AntonSurfboards.com and once that site is set up, I would then go ahead and reach out to all those 20 surfboard brands that I could find, specifically the ones that work with online retailers like us. Now, in this step of the process, what we're doing is applying to become authorized retailers to sell for those brands. So with the traditional route, I'm not saying, "Hey, can you private label this and call it Anton Surfboard?" I'm saying, "Hey, surfboard company ABC, we want to sell your products on Anton Surfboards." And then again, I'm filling out an application. I'm becoming an authorized retailer. When I upload their products to my Shopify store, I'm not trying to hide what they are. In fact, the opposite is true. I'm including the brand name. I'm including the product names, the skew numbers, everything that I can because the next step of the process is where things shift and that's how we get traffic.

So with a traditional store, what you're doing is actually bidding on keywords and search terms for things like the brand name, the product name, the skew number. That way, you can get the people that are searching that actually have intent to buy to find you to land on your website. From that point, your job is optimizing for conversions to make sure people choose you over your competitors. But again, the traffic kind of shifts to how it comes in. I should also note that with the traditional store method, we are still leveraging Facebook ads and Instagram ads and influencer ads, but we have these huge top of funnel things with Google ads and Bing ads where we're bringing people in that have intent for the products that we're selling.

Okay, so now that you have that overview of the one product store versus the traditional store, let's talk about some of the pros and cons with each and these are the things that you should think about if, again, you're debating on what type of business to build. So the first thing we should talk about is risk. Which is more risky? Where are you going to end up putting in more time and money, and possibly not seeing the results that you're looking for? Well, without a shadow of a doubt, the more riskier play here is the one product store because, again, the research goes in up front and you might think you have a great idea, but once you get these products private labeled, once you invest the money into the branding, the website design, once you start running Facebook ads and Instagram ads and paying influencers, only then are you going to know if your one product idea is actually worthwhile or not. And if it's not, well then you're starting over, right?

It's not like, "Well, let me just swap in this thing and let me just sell paddleboards instead of surfboards." And of course you can do that, but you're basically starting over every time. As far as a risk perspective of if you'll see returns or not, it's much more risky to only have one possible thing that you can sell. Not only that, but let's just say that your product idea does take off and it does do well. Well, because it's one product coming from one supplier, what happens if that supplier goes out of business or what happens if the owner of that brand has a heart attack? Which by the way happened in one of our companies, not to someone that works with us, but a supplier whose products we sell for.

So anything's possible. The more you're putting all your eggs in one basket, the riskier things could be. Of course, you could say, "Well, then I'll find another supplier." And yes, that's all true. I'm not saying all these things mean you're out of business, but there's a lot more risk when you're focused on one supplier and one product and just hoping that it works and then being able to maintain it when it does work, especially if you're dropshipping, which you would be if you're still listening to this podcast.

So the next thing to consider is profit margin and where you have more of a potential upside. Now you might think, "If I'm private labeling, then of course I'm going to have more of a margin because I could sell the product for whatever I want." And that's true. So this is a difference where if there was a supplier that private label the product for you, they would give you your wholesale costs, and then there's no pricing controls for what you should sell it at because, again, it's your product now. So if you said, "I want to make this $1000," you can make it $1000. If you said, "I want this to be $1200," it could be $1200. That's up to you. Yes, there can be a higher profit margin built in, but this is going to play into the next thing that I want to talk about, which is competition.

So let's just say in the beginning, you have this store set up. You build in huge margins for yourself and you're getting them. Well, there are a lot of people out there that are building online stores and they're using spy tools and they're seeing who's spending a lot of money on Facebook ads. They're seeing what products work. So let's say your surfboard takes off. You're spending more and more money every day on advertising. It's generating you great returns and then five of the top direct response Facebook marketers in the world see your ad, see your landing page, and they cloned the thing within a day. Well, now price is not something that you can control anymore.

You can. But if you're running a surfboard at $1200 and the other five guys are saying, "Hey, I'm going to do it at $1000," somebody who's like, "Hey, I'm just going for $600 bucks and I'm doing volume." Well, now that profit margin's not really there anymore because there is no pricing control. And I'm telling you, it's sad to say, but these people that spend absurd amounts of money, the direct response Facebook people that literally this is what they do, they clone funnels, they find the same products, they duplicate it, they have no problem putting people out of business with a snap of a finger. So unless you're up there already and you have a ton of marketing experience, this is something that will happen if you actually start to scale and if you find one product that works extremely well.

That actually brings us more into competition and I can give you just a real world example of this, and you've probably seen this in other podcasts or articles, but a huge one product store idea that blew up maybe last year were these back braces that people wore when they were sitting at work, right? The idea was fix your posture, you put this strap on and you sit up straight and your back doesn't hurt anymore. There were a couple stores that took off like crazy, right? one product stores selling a ton of these things through direct response Facebook marketing. But what happened? Well, exactly what I just said. All the people that do this every day that have more experience than the people that brought these ideas to market, came in, found the same suppliers, put their own label on it, copied the websites, actually made them better because they have more experience and then what happens? The market just gets totally saturated and starts to disappear. So competition on the traditional store side is a little bit different because there is that barrier to entry.

Like I mentioned earlier in this podcast, when you are an authorized the retailer, you're actually reaching out to the suppliers and you're getting approved to sell their products. So there is that barrier right there, right? Then once you are approved, you're also getting pricing terms that you have to agree to. For a surfboard, it might be that they say, "Okay Anton. You can sell our surfboards, but map minimum advertised price for the surfboard is $1000," and what that means is I cannot advertise it for less than a thousand dollars and neither can you and neither could the other top five marketers in the world. So it's not this thing where competition pulls price points down to where everybody's out of business or running in the red.

So two more things that I think are important to hit on. The first is the sellability of your business. You might be thinking like, "Anton, I didn't even start a business yet. What are you talking about selling it? There's nothing here." I get that, but I want you to think for the longterm, and I want to go back to the risk factor. When you're selling a business, which you definitely can. We've sold a ton of online stores. Our members have sold even more, and when you're selling these businesses, one of the main things that the potential buyer looks for is the risk factor. If you're selling a business that's a one product store that again, has one brand that makes the products for you, then they are just taking on so much risk, right? Because if they buy it again, what happens if that supplier has a heart attack or what happens if they're terrible with finances and they go out of business? Then the business basically drops to zero.

On the other hand, if you're selling a traditional store where you have 20 different suppliers and you're getting traffic from all these different channels, then the risk to the potential buyer is much lower. What that means is you can sell at a higher multiple so you can get paid more for your business and it means it will also sell a lot faster. I know that might not be something on your mind yet, but I encourage you to think of it now because who knows where you'll be three years from now, five years from now, and you should always have this asset in your pocket that you can sell fast and for a lot of money should you ever need to or want to.

Now, the final thing that I want to talk about is scale and scalability. So how much more can you grow? If you're building this one product, the question is: do you really think that this one product can dominate your market? Do you think it can compete with the top five different suppliers that are making the same products in your niche right now? Maybe you do think you can and that's great. I would say go for it, but if you think that it's just going to be like a, "me too," product, then my advice to you and really to everybody that is watching this or listening to this right now is to follow this approach.

Step one, build a traditional store in whatever niche you're thinking of getting into. Get approved for all of the different brands that you know are the top in that industry. Again, if you could find 20 surfboard brands, get approved for 20 different surfboard brands. Get traffic from Google ads, Bing ads, Facebook ads, Instagram ads, influencers. Run that business, make money, get data. At this point, you'll have a real business setup that is an asset that you could sell should you ever want to. You'll have orders coming in. You'll know what people are buying. You'll know what people like.

Then if you decide, you know what, a year from now, six months from now, whatever, you still have your one product idea and you want to release it. Well, now you can release it. It could be a standalone site, but you can also sell it on your traditional store. You can add it to your product collections. Not only that, you can email it to your list to have them buy it. Not only that, you're not just dealing with one asset, you have to now. You have your one product brand, you have your traditional store, and you have another source to bring in traffic. So again, instead of just relying on Facebook ads for that one product, you're getting sales from your traditional store as well.

So that is the move, guys, regardless of how much money you have, regardless of you know how much you think something's going to work, my advice is still build that traditional store, get sales, make money, test the ideas on there. Then should something work, you could spin it off into its own brand. That way you have two assets, you're making more money and you're in a much better position with a lot less risk associated to your livelihood. All right guys, so that is it. Those are my thoughts on one product dropshipping stores versus traditional. I hope you got value from this episode. I hope it gave you some clarity.

If you want more information on how to get started with the traditional store approach, be sure to go to dropshipwebinar.com. I'll post the link in the description, but it's D-R-O-P-S-H-I-Pwebinar.com where you can get a more in depth free training from me. As always, if you got value from this podcast, please do go over to Apple Podcasts and leave a review. It really helps. With that being said, I will see you on the next episode of the eCommerce Lifestyle Podcast. See you.

  • Jerome says:

    Thank you Anton! Once again, great value in there!

    You mentioned spy tools to see who’s spending a lot on ads . Can you share what are these tools? Would you recommend to use them during niche selection?

    Thank you!

    • Anton Kraly says:

      Thanks, Jerome!

      While you can’t see exactly how much businesses are spending on ads, you can get an idea and see what’s working by using tools like AdSpy[dot]com

  • >