If you are looking to make as much money as possible when dropshipping you need to be selling instead of promoting.
Anton explains how in today’s episode of the eCommerce Lifestyle Podcast.
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Hello, everybody, Anton Kraly here, and welcome back to the eCommerce Lifestyle podcast. The show designed to help ecommerce store owners increase their revenue, automate their operations, and become the authority in their niche. Let me just start off by saying on Monday in the podcast episode, I was talking about my voice being off a bit saying I hope it's back by Thursday, it is definitely not as you can probably hear. Still feel good, but still can't talk. It's probably because this week this was pre-scheduled probably a year in advance, but we had our quarterly meeting for our team, so it started off with my voice like this, and then we had three days of Zoom calls where I spoke probably four hours a day. So, probably that the best way to get your voice back. But yeah, I guess I'm going to sound like this all week. So hopefully the value is still there and you don't mind.
With that being said though, what we're talking about today is promoting versus selling, and what you should do if you're looking to make as much money as possible when drop shipping. Now, this question came to me last week when I was doing our members-only coaching call, which by the way, I should mention this, if you're a member of Drop Ship Lifestyle specifically, the Dropship Blueprint, what I do the first Wednesday of each month is a coaching call where I take questions from our whole community.
Now, one of the questions that came in was in ... I'll just read the question. That's probably the best way to do it, but it said, "Some suppliers offer an affiliate program with set profits ranging from 3 to 9% max, are they worth doing business with?" So I answered this question on the coaching call, but I wanted to put this out there as a podcast to also answer it and explain when and where it makes sense to be part of an affiliate program specifically when you're using the Drop Ship Lifestyle business model.
So first, I'll just explain the difference between what it is we do as drop shippers versus what we do as affiliates. Now, as drop shippers, we have what I like, which is control. Meaning, we are actually selling products. So, we get approved to sell four different brands. We become authorized retailers. We have price lists so we know what minimum advertised price is, the price we sell for. We know what our wholesale costs are, what we pay for the product, and then our job is to acquire customers profitably and make sure they're happy.
But basically, we sell products, we get paid, and the full amount of what we sell products for goes into our bank account, and then our expenses are basically up to us. Outside of the wholesale price of the product, we can figure out the best shipping rates. We can figure out the best ad rates. We can figure out how to get the best traffic for free so we can control our expenses. That means our profit margins can be almost as big, again, outside of product costs, as we want them to be. So there's much more of a margin when you are drop shipping, when you are actually selling the products.
Now, when it comes to promoting products as an affiliate, the way that works is you can apply for a company to be an affiliate and they'll say, "Okay, you can refer business to us. You can promote our products and people will buy them from us." Meaning, let's say I sold stand-up desks. I always use that example because I'm always standing at one when I record this, at least most of the time, but if I was selling them, I can be approved to sell stand-up desks as a online retailer. So again, money goes in my account, I control my expenses, but maybe I find a company that makes stand-up desks and they say, "We don't work with other retailers, but you can be an affiliate." That would mean I would put a link to their store or their product pages on my sites and if people clicked those affiliate links and went to this stand-up desk store, the other person's, the suppliers, and bought from there, then I would earn a commission.
This is where you find yourself often with these really low ranges of 3 to 9%. So that was what the question is in regards to. And I'm assuming they reached out to a supplier and the supplier said just that, "We don't work with online retailers, but you can promote our stuff as an affiliate." So, should you do that? The answer is yes and no.
So let me explain what I mean by that. No, you should never do it for the core products that you sell. Okay. So stand-up desk example, again, if a supplier that makes stand-up desks says, "You can only promote our products as an affiliate, but you cannot be an online retailer for us," then the answer is no. You should not promote them because then basically what you're doing is taking a section of your store that all your traffic is going to, people show up at to buy, and if you're an affiliate for other stand-up desk companies, your sending them your customers and that's resulting in you earning a lower net profit. So you should never be an affiliate for your core products. Again, core products, meaning the niche you are in. In that case, stand-up desks.
So in that case, where is the yes come from? Where's the yes come from? When can you be an affiliate when you're a drop shipper and sometimes accept lower margins? When the products are related and beneficial to your customers, but not your core products. So let's say, have my stand-up desk site, I sell stand-up desks, I'm an online retailer for all of the best stand-up desk brands, well, then the way I want to start thinking is, what else might my customers wants that would benefit them that I in indirect competition with? What are things I'm not going to sell myself, but that I can promote as an affiliate to increase my lead value, increase my traffic value?
So with the stand-up desk example, maybe that is an online course about productivity. Something like that. Maybe it is an online ebook about how to set up your homework space. I've never researched this so I would hopefully have better ideas than that by looking into the industry more, but if those were the things, well, I'm not going to create my own online course about productivity. I'm not going to write my own book about how to design your home workspace, but I bet you, there are a bunch of companies out there that offer those courses and those ebooks, and I bet you that those companies pay affiliate fees for people that refer them sales. So in that case, something indirect that's not your core product that would benefit your customer where you already have that audience, then yes, it would make sense to be an affiliate for those things because it's just extra money for you. That does not take away, it's not directly competing, with the products you are selling.
Now, I hope that makes sense to everybody. If you want a full training on this where I go deep into what we do for lead value optimization I call it, I did a presentation on how we do this at one of our live events, at one of our retreats, and if you're a member of my coaching program in the Dropship Blueprint, when you log into the members area just search for lead value optimization. Again, search for lead value optimization, and you can see the recording of my presentation on this where I go deep into how we do research, how we partner with different companies as affiliates, again, that are indirectly related to what we sell, and how we promote them to our audiences to make more money than our competitors.
So, that's going to do it for this episode guys. Again, my voice has gone so I'm going to try to talk as little as possible, but as always, I hope you got value. Remember, if you're a member of Drop Ship Lifestyle, you want to see exactly how we do this, log into your members' area, search for a lead value optimization, and if you're listening right now and you're not a member for some reason, I have no idea why that would be, but you can go to dropshipwebinar.com. I'll link that up in the description. Again, at dropshipwebinar.com. You can get a free training from me there. I also make a special offer if you want to enroll into the Dropship Blueprint. So thank you everybody. I appreciate you. I'll be back on Monday with a new episode and hopefully with my voice. So have a great weekend and I will talk to you soon. See you everybody.