Dropshipping isn't dead, but it should be.

Here is my 5 step guide to transforming a dropshipping business into a 9 figure

brand:

I have had 100+ conversations with successful dropshippers.

THEY ARE MISERABLE.

Their most recent ad account has been banned.

They have a Trust Pilot score of 0.9.

Their mums can’t look them in the eye at the dinner table.

But it’s okay. There is a way out.

Spoiler: it’s not just make a pretty website and use a 3pl.

First, let’s define what I mean by ‘brand’…

If you ask a handful of branding experts, they will each have their own definition

for what a brand actually is.

It’s very similar to anything emotional and somewhat irrational - it’s hard to put

into words.

The below quotes, although trite, give us a good idea of what a brand is:

"A brand is no longer what we tell the consumer it is—it is what consumers tell

each other it is."

"If people believe they share values with a company, they will stay loyal to the

brand."

"A brand is the set of expectations, memories, stories, and relationships that,

taken together, account for a consumer's decision to choose one product or

service over another."

If we take those quotes, and put them to measurable metrics/outputs for a

business, what do we get?

• Word of mouth referral
• Repeat purchase
• Cheaper acquisition

If we reverse engineer what the great brands do to obtain the above 3 results,

we find that there are 5 steps:

1. Great products
2. Great service
3. Secondary products
4. Review management
5. Consistency in marketing

Let’s break down each one and how Dropshipping Derrick can fix it:

1. Great products

Now, before you stop reading, just make sure you read this first point because I

think it is 80% of the battle of creating a brand.

The average dropshipper will get virtually 0% WoM referral.

And should they expect any more than that?

What customer would want to admit they bought the EarScraper2000? from an

advertorial talking about why you might have ear worms. Here’s how we fix that.

When I started The Oodie, my website looked like this:

My packaging was disgusting. My social media account was purely memes.

I was an idiot.

All I cared about was acquisition. Yet we still ended up building a brand ALL

thanks to the product.

So, let’s define a good product...

A good product is something that far surpasses the users expectations for the

desired outcome. Think Tesla.

When you get in one of those cars it is so dialled in with everything considered

from the ground up for the consumer.

For The Oodie - it was so thick, warm and comfortable people became

obsessed. It didn’t matter that the website was ugly because people were

telling their friends how warm it was.

How to fix:

The truth is, not all dropshipping products are bad, especially to begin with.

But something sad happens.

As the factories in China start to all compete, they get de-speced at a really

rapid rate.

This is because customer satisfaction is not at the forefront of the decision

making process, margin is.

• Materials get changed.
• Functionality get removed.
• Factories loosen quality controls.

Dropship Derrick will then get 3 quotes from 3 factories and picks the cheapest

without even touching the product.

After all, now he can spend more on marketing than his competitors. This is

why the product breaks as soon as the customer gets it and never solves the

issue.

So what do we do if we are running a dropshipping brand?

Obviously, first seek to improve the quality of the product.

Take some time to understand your customers main pain points and what would

improve their likelihood of referral.

The truth is, if you do product development right, you can find huge

incremental changes without reducing margin.

More often than not there will be some added costs.

This can be a scary proposition as you have set up your entire businesses cost

structures at the current margin you have and you can’t make drastic changes

hoping and wishing.

Your business is setup to compete on price so changing that is a scary

proposition as there are 50 competitors in the space selling the cheaper

product.

So sometimes it’s much easier to fix it going forward than looking back through

future product development.

So how do we do this?

I always go back to the question - why does my product need to exist.

Your product doesn’t need to be completely unique. But if you want to build

something big and useful in this world, there needs to be something unique

about it and it needs to solve the customers expectations.

This uniqueness allows you to not compete on price.

That’s why the 2nd part of this answer is take your existing product positioning

(such as hygiene, wellness, comfort etc.) and solve the same issue or new issue

within the vertical with innovation.

Make it better, faster, cheaper, smaller, larger, cooler etc.

As soon as your product actually works - customers will tell their friends about

it.

Think about Eight Sleep. There are so many other brands that solve a similar

issue (I was looking at launching something in the space 4 years ago).

Yet none of these competitors are talked about naturally in conversations.

It’s not because their website is prettier than the others.

It’s because their product is the best on the market. The wires don’t dig into

your back like the others. It does improve sleep.

The app has great tracking for on trend health metrics.

Disclaimer: don’t just invent a slightly better mouse trap for your existing

product.

By introducing V2 of your product with slightly better features you aren’t going

to move the needle.

I won in a competitive niche keeping my costs low while my competitor added

stupid features that customers didn’t actually care.

His margin went away and my market share increased.

By using WoM and customer acquisition cost as the North Star metrics of

product development, beginners will make better decisions.

2. Great service

I was doing Everest base camp and was wearing a Patagonia jacket in some run

down cabin with some other hikers.

There was a small feather popping out of the jacket due to a small hole.

The lady sitting on the table next to me, completely unprovoked said “you know

they will fix that for you and replace it no matter how old it is”.

I have no idea if that’s true, but think about that for a second…

To have service so good that a defect becomes a positive word of mouth

conversation.

Your customer service is either a subtractor or attractor to your brand and

almost ALL dropshippers have terrible service due to their logistics.

How to fix:

Dropshipping involves shipping straight from China to Australia. This can take 7

to 7,435 days.

Unfortunately it also makes the returns process almost impossible (which is just

as bad imo than waiting for the order).

Lucky it’s a simple fix, get a good 3pl and import the inventory.

It’s often cheaper and you simply need to navigate the negative of cashflow

reduction and inventory management.

Disclaimer: some dropshippers rely on not importing inventory to avoid duties.

Unfortunately this point might not be solvable if that’s true for you and you are

competing on price. So do your research and solve what you can.

Ideally, you pick products where this is impossible. Unique design in clothing.

Larger products. More expensive etc.

3. Launch secondary feature products

Launching secondary products is not only the reward of having a brand, but it

also reinforces your brand.

If product is the most important factor to whether your customer emotionally

connects, remembers and then talks about your business - then releasing more

amazing products amplifies this.

Secondary products result in all 3 of our target metrics - more repeat purchase

(as we are now offering another solution in the same vertical), cheaper

acquisition (as we have a customer list which is primed) and more WoM referral

(as we have more customers).

I have seen dropshippers successfully launch secondary products on their store

but realistically they are putting the products in completely separate funnels.

The results would be similar, possibly better, if they used a completely new

brand.

Side note: for those dropshippers that aren’t using alternative funnels and

loading the store with a bunch of random winning products and are driving

straight to PDPs - your days are numbers as Facebook is about to get really

confused about what you stand for.

How to fix:

There are 2 main benefits of launching a 2nd product in your brand

1. Attract new customers

2. Attract existing customers

Dropshippers only do the first.

Eventually the trend becomes saturated and you run out of the first audience.

So before that happens, you want to be able to attract existing customers.

You can’t do this until you fix your customers perception of your brand through

improving the product and service.

Invest in product development through designers and engineers so each

additional launch you exceed expectations.

4. Good reviews

Before a provider caused huge disruptions to thousands of customers for Black

Friday last year, Oodie sat at a ~4.5 star Trust Pilot with 20,000 reviews (we will

get it back up soon).

These non manipulatable review platforms were the North Star of so many of

our internal departments as customers trust them and they are a thermometer

of product and service.

There’s a reason why every mattress brand used it as their main unique selling

proposition for so long - it works.

Customers use reviews to research what is the best brand. It forms their

opinion on the brand before they even touch the product.

It reduces CAC drastically for those who look at those platforms. It also ensures

your FB feedback score is high, improving your relationship with your main

platform.

But dropshippers avoid these platforms as they know their score will be >2 due

to all of the issues we talked about above.

How to fix:

Once you fix the obvious of long shipping times and poor quality products,

setup your email flows to prioritise these real review sites.

You can also train, track and reward your customer service team to prioritise

these metrics knowing they are a good indicator of brand.

5. Consistent messaging

I was watching a CEO being lectured the other day about how they could be so

much bigger if they stopped taking such a strong stance on something

controversial.

The interviewer said “you are frustrating the majority of Americans.”

Without hesitation the CEO said “I would rather frustrate those people if it

means I stay true to our target customer.”

Dropshippers rely on direct response. This means they are doing everything

with a trackable ROI and trying to get people to buy then and there.

Doesn’t matter if they have inconsistency in messaging, design or product

because there less need for future interaction.

Don’t get me wrong, direct response marketing is probably in the top 3 best

skillsets that any founder needs to know.

It’s the reason I am where I am today. But the argument that its gets cheaper

acquisition is a fallacy.

The proof is in the numbers. Go find me the BEST teeth whitening dropshipping

business out there.

Give me the best VSL or the highest converting advertorial...

Now compare it to HiSmile who think they will do over $1 billion in revenue this

year.

Who has cheaper acquisition and therefore can spend more on ads?

I struggled with this dilemma for a long time and its because I was asking

myself the wrong question.

I was asking myself - do I want something ‘on brand’ or something that

converts?

The answer is, it depends on how much better it converts or how much it

reinforces my brand.

We should be able to achieve both.

How to fix:

Before we can fix it, we first need some brand guidelines so that we know what

‘on brand’ even means.

So, create some basic branding guidelines by yourself, with a creative director

or cheap agency.

For those that don’t know what that is, it’s basically a deck with:

1. Brand Story: Mission, vision, and values.

2. Logo Usage: Specifications on how to use the logo.

3. Color Palette: Primary and secondary colours.

4. Typography: Fonts for different types of content.

5. Imagery: Guidelines for types of images and graphics.

6. Voice and Tone: How the brand communicates in written and spoken content.

Etc.

Now, how do we use these guidelines when making decisions going forward?

As a first time founder due to limited capital, time and lack of existing audience,

we should be making some decisions on a direct response basis.

Especially with the following touch points: Facebook ads, Google ads, landing

pages, email, packaging, product, organic social etc.

That being said, we should also be submitting A/B test options which we deem

to be more in-line with what you’d expect from your brand.

Let me give some examples:

Let’s say we are building out a landing page for a new beauty product.

You are currently using a super direct response page that has random stock

footage and tacky 3d renders of popping pimples.

There is no consistency on the page as you have just been adding stuff as you

go.

Next step?

Start adding some a/b tests that are actually on brand against the control and

pushing the overall aesthetics to the correct direction WHILE increasing

performance.

People say that ONLY direct response strategies works but they don’t even

bother submitting a branded variable.

This is exactly why I created Winning Tests Com because at least these small

facelifts push in the right direction.

Eventually you will start introducing assets that are on brand that outperform

the lazy direct response tactics.

Disclaimer: I used some trigger language in this blog. My stance on

Dropshipping is it is a really great tool for beginners to learn due to capital

constraints and risk reduction. If your goal is to build a meaningful and long

lasting businesses you should be looking to build a brand ASAP.

If you want free access to my 100% FREE Shopify course, comment

‘DROPSHIPPING’ below, like and comment this thread and my VA will send it

over.