From Failed Businesses to Making Over Half a Million in Sales per Month

We recently sat down with Andreas and Alexander to discuss their stories for building a successful dropshipping niche business that scaled into a $20k a day success on Shopify.

In this story, we will explore their beginnings including trial and error of which business to run, the challenges they faced along the way, and ultimately, share the keys to success as a professional dropshipper.

Profile

Niche: Pet accessories 

Location: Europe (ships worldwide for free)

Sales: $20k per day

Background and challenges

After the crypto-currency bubble burst, Andreas and Alexander were looking for their next venture. They saw huge long-term opportunities and growth within the e-commerce space and the challenge became finding the right products to sell in the right industry. Through multiple trial and errors that were ultimately learning lessons, they decided on a niche within the pet product sector to drop ship, and build it wisely with the help of a few good mentors. 

Each mentor brought a different skill set ranging from Facebook advertising (lookalike audience set-up, remarketing, etc.), competitive and profitable pricing, tools to use such as Loox for product reviews, and how to upsell and cross-sell within their product lines. From those learnings, they were able to optimize every single aspect of their profit margins and figured out that every small change can lead to big results if done correctly.

Now, looking back at the experience gathered from hundreds of hours combining failures and success, they shared with us the keys for running a successful dropshipping business.

1. Dedicate yourself to the process of finding a “winning” product

Andreas and Alexander describe a winning product as a product with a high-profit margin. The profit margin is calculated by deducting payouts to suppliers, ad spend and additional fixed costs such as apps and transaction fees from the turnover. A good profit margin is around 30%-40% of the turnover.

To get to a decent profit margin, you must reduce the payout to suppliers.

Find trusted suppliers who are willing to provide you with a good payout rate. The payout rate is the portion of the payout that is paid to suppliers out of your selling price.

Most dropshippers will start with an online retail service like AliExpress because you can buy in smaller quantities, and it will provide you with a safe start to learn from. Eventually, once you grow and to improve profit margins, it would be wise to find a local wholesale supplier in China and negotiate the payout rate. This works especially well when your quantities of supplies are higher. Once you can guarantee a certain volume, you will have more leverage to negotiate a lower percentage per unit.

2. Customer Support

Without strong customer service, e-commerce businesses are dead in the water. Being very responsive to customer needs and ensuring that the customer journey is more than satisfactory is what sets a successful store apart, and allows it to continue to grow. 

How do you create a smart investment in customer support?

“Pay people in foreign countries a good salary and they will be really motivated to work for you.”

Don’t pay the minimum. Establish a company culture. Motivate them with little gifts or bonuses, and measure your performance with Zendesk stats.

3. Plan Time and Capital

Another big key factor in their success was making sure they could dedicate the necessary time and capital for the business. They were treading capital with no return for several months before they saw a return on their investment. The time needed to make a successful e-commerce business is what separates people that “burn” out before they see success and the ones that achieve it

A lot of entrepreneurs in this position lose motivation and the strength to push through the hardships. Their protip for other’s starting out is to have a concrete goal set for when you expect to see a return at a certain time and drive that success through actionable steps throughout that period.

4. Find Good Mentorship

In this day and age, the amount of available videos, blogs, Facebook groups, and meetups is overwhelming. If you have the time to invest in watching or reading all of the free content you can find online, that’s great.

However, if you want to save time, choose one influencer that inspires you and learn from them. Investing in a mastermind course or a 1-on-1 mentorship plan might be an additional investment to grow your business, but it might be the difference between failure and success. Having someone that already made all of your future mistakes to guide you, can save you a lot of money and time in the long run. 

5. Find the Right Apps to Run Your Business Optimally

Two of the most valuable apps for running their business has been Zendesk for customer service and Loox for collecting photo reviews. 

Both apps are highly ranked on Shopify and recommended by many influencers online.    

Loox has been great for collecting reviews, and a game-changer on the retention side. 

They use discount coupon codes in their review requests which drives repeat purchases within their existing customer base. 

For customer service management, they rely on Zendesk, which helps in managing support by optimizing the data and dramatically reducing the response rate per ticket opened. 

Conclusion

While many merchants hold on to the fantasy of working 2 hours per day and spending the rest of the time at the beach, the reality is that a successful dropshipping business must be treated as a business. The beginning isn’t a walk in the park, but equipping yourself with an entrepreneur’s mindset, patience, and good planning can be the difference between the life you want for yourself and closing your store within 3 months. 

We love hearing success stories from our clients! 

Make sure to follow Andreas König and Alexander Pecka on Instagram to continue to watch their journey. 

Are you a merchant, looking to grow your business? Try Loox 14 days for free
Yoni Elbaz- CEO at Loox Yoni Elbaz, CEO YONI ELBAZ IS THE CO-FOUNDER AND CEO AT LOOX, A TOP RATED PHOTO REVIEWS APP FOR SHOPIFY THAT IS LOVED BY OVER 50,000 STORES WORLDWIDE. BY MAKING IT EASY AND REWARDING FOR YOUR CUSTOMERS TO SUBMIT PHOTOS, LOOX GENERATES TONS OF PHOTO REVIEWS AND DISPLAYS THEM IN STUNNING REVIEW GALLERIES BOOSTING CREDIBILITY, TRUST, CONVERSIONS, AND SALES.
Yoni Elbaz- CEO at Loox
Yoni Elbaz, CEO

YONI ELBAZ IS THE CO-FOUNDER AND CEO AT LOOX, A TOP RATED PHOTO REVIEWS APP FOR SHOPIFY THAT IS LOVED BY OVER 50,000 STORES WORLDWIDE. BY MAKING IT EASY AND REWARDING FOR YOUR CUSTOMERS TO SUBMIT PHOTOS, LOOX GENERATES TONS OF PHOTO REVIEWS AND DISPLAYS THEM IN STUNNING REVIEW GALLERIES BOOSTING CREDIBILITY, TRUST, CONVERSIONS, AND SALES.