The success of Andreas and Alexander’s dropshipping business had a few hiccups along the way. But, working through the kinks and leveraging small successes, they finally found what worked for them and took their sales from an average of $140,000 per month to $500,000 per month in just nine months. Scaling a business to this size is no easy feat, but by using their tips based on what they learned along the way, you may be able to grow your business too.
Test your suppliers before committing to large orders
When launching a new product, Andreas and Alexander recommend using a proven supplier or to start with a small amount of orders if you’re using a new supplier. With proven suppliers, you have trust and know what you’re getting so problems are less likely to occur. With a new supplier, however, there is no track record so a myriad of problems can pop up, as did for them with the launch of one new product.
Andreas and Alexander needed this new product to be custom made and at large quantities. They found what seemed to be the perfect supplier, so they put in an order and then aggressively launched the new product in their store. Lo and behold, this new supplier couldn’t keep up with the orders and was making mistakes in hundreds of orders, not to mention they were slow to ship. Andreas and Alexander had to spend countless hours correcting orders, putting out fires and appeasing customers.
This could have been potentially damaging to their store, but luckily for them it wasn’t. They restrategized, found another supplier and started small with them to test their abilities, ordering just a few pieces at a time instead of hundreds. The new supplier was able to fulfill the orders and is now able to handle the 400+ orders per day for the product.
Take it from Alexander and Andeas and give your new supplier small, manageable orders to see how they do. Once they’ve proven themselves, then you can go big.
Notify PayPal before you scale
Having had their funds frozen four times in nine months by PayPal, Andreas and Alexander recommend that businesses notify PayPal ahead of time of any projected big increases in transactions or dollar amounts coming in and out of their accounts. They learned this the hard way.
With the success of one product under their belt, Andreas and Alexander had the confidence and means to scale. They upped their advertising game and started spending $7,000 per day on ads, using PayPal for the payments. Not having previously notified PayPal that their were going to be some massive changes in their spending patterns, PayPal’s fraud detection system was triggered and Andreas and Alexander’s account was frozen. They had no access to their funds and PayPal needed proof that the business Andreas and Alexander was doing was legit before they’d release their money. They had to submit documentation verifying their business; this took time…and time is money.
Knowing they were potentially losing out on sales, Andreas and Alexander worked through this hurdle, supplied PayPay with sufficient proof and got their account released. They were back on track and continued to spend large amounts of money on advertising and also receive large amounts of money from the increased sales. Unfortunately, the PayPal fraud system was triggered four more times and so Andreas and Alexander had to go through the verification process four more times.
Learn from this mistake that Andreas and Alexander made. Work with PayPal ahead of time to verify your accounts and notify them of any substantial changes you foresee in your balance and spending routines.
Set up a customer service team before you scale
You may think you can handle every role in the business, and, as a new, small business, maybe you can. But Andreas and Alexander learned the hard way that hiring help ahead of an aggressive growth attempt is imperative.
Alexander was playing the sole customer service agent and was missing out on sleep so that he could be responsive to customers on any day and at any time. In doing so, he was being taken away from focusing on growth and strategic planning. They realized they needed help. So, Andreas and Alexander hired several customer service agents and delegated duties. They were now able to shift their focus back on growing the business.
Andreas and Alexander say there is nothing more important than your customers. If you grow too quickly and don’t have support in place, your customers may feel frustrated if they call in with an issue and can’t talk to anyone immediately. Having a customer service team in place ahead of time will ensure your customers are being taken care of in a timely manner.
Include video advertising in your advertising strategy
Some businesses shy away from including video advertising later in the customer’s shopping experience, but Andreas and Alexander have found it successful and encourage other businesses to use it throughout the customer life cycle.
Videos are engaging and far reaching. They may be difficult to produce, but you don’t need a lot of different videos. Andreas and Alexander have used the same video throughout the funnel with a few minor tweaks.
Follow Andreas and Alexander’s lead and include video advertising in your advertising strategy.
Use Campaign Budget Optimization
In September 2019, Facebook launched Campaign Budget Optimization (CBO). It’s exactly what it sounds like: it will optimize your audience and ads to allocate more ad money to where it determines the best performance to be. Andreas and Alexander have been using it since its launch and have found it to be successful. They advise other business to include it in their advertising campaigns. However, having a strong Facebook pixel is important. These pieces of audience information are necessary to scale. You can either “buy” the data or find a free traffic software to drive traffic to your store.
Andreas and Alexander say that CBO worked great for them because they had a strong pixel and lots of data on their customers before moving forward with it. If you follow their lead and have this information then you too can be successful using CBO.
Learn from others
Learning along the way, working through the problems and remaining confident in success kept Andreas and Alexander on track for big growth in a short amount of time. Taking what they learned and applying it to your own business and not repeating their mistakes may soon have you on your way to $500,000 month too.