Today we are sharing with you a case study from Harry Coleman, an eCommerce entrepreneur who was able to make over $1 200 000 in 2 months by dropshipping with his Shopify store.
In this case study, we are taking you through how he was able to start and scale this store using Facebook ads. We’ll be breaking down his Facebook ads testing strategy, scaling strategy, the product fulfillment methods he used at scale, and finally the profits he made in those 60 days.
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Let's dive into this article...
Proof of Earnings
The image above is from his Shopify store which made $1 278 743 in revenue between 1st September and 31st October. On his biggest day, he made $37 000 and there were days when the revenue dipped down. This was due to common Facebook ad account issues which we are going to address in this article.
Ad account 1
Ad account 2
The images above show the 2 Facebook ad accounts which he used for running ads. Both are from 1st September to 31st October. Ad account 1 spent close to $398 723 and generated $886 682 with a 2.2 ROAS and ad account 2 spent $124 755 and generated $247 909 with a 1.99 ROAS.
The rest of the revenue came from email marketing abandoned cart flows. His Facebook ROAS was not high because he was spending at a scale between $10 000 - $20 000/ day while targeting broad audiences.
Testing Strategy
Harry's testing strategy is summarised as:
- Website conversion campaign — Purchases (Ad Set Budget)
- 8-10 audiences (50% targeting USA and 50% targeting Non-US countries)
- 2-3 creatives
- $8-15 budget per ad set
- Exclude out purchases from the previous 180 days
- Facebook&Instagram feed placement
The goal of his testing strategy is to make sure that he finds winning audiences and creatives that can be scaled and tested further.
Harry's testing campaigns usually contain 8 ad sets that have 4 similar interests that are duplicated twice. The only difference is that 4 ad sets target the USA and the other 4 target non-US countries like the UK. He usually tests with a $10 budget per ad set as you can see on this screenshot of his first day of testing this campaign.
He spent $84 and got 7 sales and a 3.29 ROAS on the first day, which was a bit lucky. However, this luck came after a proper product choosing analysis.
Other key metrics he focused on while testing with this strategy includes:
- The ads CTR which he ensures that is higher than 1% and
- The CPM which he makes sure it’s less than $10
- The ad to cart percentage which he makes sure its more than 10%
- The number of sales
These are the metrics that can show you if you’re having a winning product or not.
Scaling Strategy
When it comes to scaling, Harry uses CBOs. These are the steps he takes to form and scale the CBOs:
- Identifying winning audiences with 5+ sales and at least $50 in profitable ad spend.
- Moving the audiences with over 10 million users to a single CBO.
- Moving the audiences with less than 10 million users to a single ad set and placing this ad set in another CBO.
- Using the winning creatives from the initial test. If it's 1 then he duplicates it 2 or 3 times.
- Using all ad placements.
- The budget varies depending on the performance of each ad set. But as a rule, it can be 1-3x CPA per creative. Eg $25x2 = $50x6 = $300.
- Increasing profitable CBOs by 20% every 4-5 days.
- Duplicating the campaign to other ad accounts or business managers.
Retargeting Funnels
Harry sets up his retargeting in the following ways:
- TOF (Top of the funnel) is a completely cold look-alike audience. In this campaign, the TOF audiences were converting at 2.16x ROAS.
- MOF (Middle of the funnel) is the audience that has viewed the product but didn't purchase. His MOF was at 3.26x ROAS.
- BOF (Bottom of the funnel) is the audience that added to the cart but didn't purchase. His BOF was at 5x ROAS.
Upselling Strategy
Harry uses the one-click upsell strategy. Upselling is important because it helps to improve the AOV (Average Order Value).
He sets up his upsells in 3 ways:
- Post-purchase upsell offer
This is when someone buys the product and after they've paid for it, they get an offer. The offer is generally the same product but at a discounted price.
If the customer says no to the post-purchase offer, he/ she is then shown a down-sell which is the same product but at a much bigger discount.
In this store, Harry was split testing two products for the down-sell. The original product and a substitute product. Most of the customers went for the substitute product.
- The second Post-purchase upsell offer
For the customers that would say yes to the down-sell offer, he’d show them another upsell. Which was a complimentary.
Handling Product Fulfillment
Handling product sourcing and fulfillment can be a challenge for drop shippers especially when running ads on a scale. Harry uses the following steps to handle the sourcing and fulfillment for this store:
- Sourcing from Aliexpress during the testing period (Never scale with it).
- Looking for an agent, once he gets 20-30 orders.
- Selecting a suitable shipping company.
Note: The best ways to find an agent are by asking your first Ali express supplier if they used DianXiami or by asking in Facebook groups for referrals.
For shipment he uses:
- USPS Fast line to USA (8-15 days)
- Royal Mail to the UK (7-14 days)
- 4PX and Yunexpress to other EU countries(10-17 days)
- DHL for high ticket orders (3-5 days)
Harry suggests that the earlier you move away from Aliexpress, the better. Working with agents can help you to do more in terms of branding the product, and getting custom-made packages under your brand name.
The Numbers
- Revenue: $1 278 743.47
- Adspend: $523 478
- Marketing ROAS: 2.44x
Expenses
- Adspend: $523 478
- Cost of goods: $418 445.50
- Fees: $49 870.99
- Virtual assistants: $8 368.50
- Total expenditure: $1 000 163.96
Net Profit: $278 579
Margin: 21.7%
Conclusion
Harry was able to take home a profit of $278 579 in two months by running high-scale campaigns on Facebook.
To scale at this level, Harry suggests that it's important to use 2 or more ad accounts that are in separate Business Managers. This will help you to have a backup in case one account is taken down.
Also before you scale massively, ensure that your supplier sends you the product so that you make custom content like videos and pictures. You need to be in a position where you can create your content to separate yourself from the marketers who will try to copy your product when they notice your ads in spy tools.
