Dropshipping: how to start in 3 steps

Interview with Melvin Chee:

— Hi everyone. I'm Jessica from Oberlo.

— I'm Melvin Chee.

— Melvin’s dropshipping store made $15 million in two years. Melvin doesn’t have a Lamborghini yet. But he does own an e-commerce company that employs 17 people. It’s safe to say that Melvin knows his stuff. And today, he’s going to share five dropshipping products you should start selling right now. Let’s get started.

[Music plays]

— So, Melvin, I know our audience wants to jump straight to the products you recommend selling. But I can’t get over the fact that, having made $15 million in two years, you are the highest-earning merchant I’ve ever sat next to. That’s amazing. How did you even get started in dropshipping?

— Exactly. My journey in e-commerce started in 2012-2013 when I was introduced to digital marketing, Facebook advertising. Selling things online was just unthinkable to me back then. Back then, I grew up in Malaysia in a small town where they didn’t know anything about online sales. But I knew about e-commerce. And selling things online just makes me feel… so fascinated by the process of being able to sell something from your hands into the hands of someone else, it’s just crazy.

— And what was your motivation for getting into e-commerce?

— It's so corny and funny at the same time, because I started doing e-commerce just because I wanted to make more pocket money. Because, my parents... I was still in college, and my parents gave me a minimum amount of money, enough to live on, but not enough to go on vacation and buy all these gadgets that I liked. So, I started doing e-commerce just to make more money.

— Did you think it would be great if you had $100, $200 a month or something like that?

— Yes. At that moment, I was just trying to make $200 a month.

— Was that your goal?

- Yeah, that was my goal. And just $200 was enough for me to eat whatever I wanted. And at that point, I was just, you know, a kid in college with a lot of money.

— And I know the last product we're going to talk about today is the one that actually made you, what, $4 million?

— Yes. Close to 5 million dollars.

— Oh my god. Close to $5 million. But could you share the dropshipping niche you worked in?

— I'm just an Asian dude who doesn't know anything about women's markets. And all the products that I sold were actually always in the women's market - beauty products, fashion products, which were... which were 18-24 year old girls. So, yeah.

— You are definitely not an 18-24 year old girl. But that is exactly the market in which you have found success.

— Yes. Exactly. I mean, I didn't know anything about women's fashion, women's beauty products, but that was the kind of market where I really had the most success in the e-commerce industry.

— Why do you think you were able to achieve such success in this particular market?

— Because I started it all on Instagram. I started interacting on Instagram, which, you know, most of the pages are really connected to 18- to 24-year-old girls. And from there, I was able to figure out what products resonated with those girls. And from there, I kind of figured out what products to sell to you.

— Cool. So you found this marketing platform that was growing. You figured out the type of people that were hanging out there. And then from there, you started figuring out what products they wanted. How did you go from someone who wanted to make $200 a month in pocket money to a 17-person business?

— Honestly, it just came - something that I couldn't have thought of. Because it started by accident. And it just started growing. And of course, we Asians live with this mindset that money makes money. And we just keep throwing it at everything that worked. It just worked for a while. And everything that works, we just scale it. We just double everything that works. And it just scaled from that point in time until now.

— What stage are you at now? You’re still doing dropshipping, right? Or have you kind of grown out of that business?

— Exactly. We’re still doing some, I would call it hybrid dropshipping, so in a way, we’re still a dropshipping business. But at the same time, we sell our own products. We produce our own packaging. We have our own 3PLs that handle all of our processes. So, in a way, we’re still doing dropshipping. But at the same time, we’ve… we’ve improvised the way we used to do dropshipping.

— Without further ado, let’s move on to your product recommendations in the women’s fashion and accessories niche.

— Okay, let's do it.

— Wow. "I speak the language of sarcasm fluently." Wait. Is that one of the products you would recommend selling?

- Yes. In fact, this is one of the products that made a couple hundred thousand dollars back in 2016.

— Did you make a couple thousand dollars selling this T-shirt?

— This T-shirt. That's it.

— I feel like I have money on me right now. So tell me, why will this shirt sell?

— Exactly. I think that girls aged 18 to 24 who read this will be able to relate it to everyday conversations with their friends.

— So this is something your client might actually say to someone.

— Exactly so.

— Okay. How do you know that?

— I interact a lot on Instagram pages, like humor pages, meme pages, and pages like that. And I think they were using a lot of those similar phrases back then. So if you put that on a shirt, it would really resonate.

— Some people might look at this shirt. And because it's just text on a shirt, they'll think, "Well, they could just do that with print on demand." Why did you choose dropshipping over print on demand in this case?

— Honestly, I didn’t know what print on demand was back then. Because I was just… I was just starting out in dropshipping. And I found this product on Ali Express that had the exact same phrase… the text that I wanted. And I just created one of my pages on Shopify. And at that point, I only had one product. Honestly, just one product with four different sizes, four SKUs, and I just started selling it the next day.

— Really? So, that was the only product you had in your store at the time. Really?

— It was the only product I had in my store.

— Was this the first hot sale you had?

— Yes. Actually, yes.

— Oh, wow. Does it make you feel nostalgic just looking at it?

— Actually, yes.

— One of the reasons I brought up print on demand is because I know a lot of people who are trying to decide between dropshipping and print on demand are thinking about price and margins. And dropshipping generally allows you to have better margins.

— Exactly so.

— But talk about how you price something like this to make sure you get that margin.

— Sure. In most cases, I think, especially in dropshipping, where pricing is really important because of the bottom line, we always price it at five times the price of the product. Four to five times, at a minimum. So at least you control the cost of the product by about 20%, to make sure that you're spending... like, if you're spending 50% on marketing and 20% on buying the product, then you're leaving yourself with, like, 20% to 30% margin. And that's where... every dropshipper is looking to have 20% to 30% margin.

— From 20% to 30% of profit margin. Net profit.

— Right.

— Okay. So, 20% to 30% net profit is the goal.

— Exactly.

— Okay. You just left out a lot of expenses. So, could you pull up a spreadsheet to show us what you're talking about?

— Right now. For example, if a shirt costs about $4, then I think we’ll sell it for about $20. And plus shipping, which will take $2 or $3. And in the end it’ll be about $25.

— Okay, so you charge a shipping fee for your products?

— Yes.

— Okay. So your total retail price is $25. And that's including shipping and other possible costs.

— Exactly. We’ll also factor in Shopify’s processing fee. If there are any returns, exchanges, or lost packages, at least you have some margin to play with.

— Okay. You just, like, rounded. You didn't use a fraction or a percentage to calculate the returns.

— Yes.

— Well, it's actually pretty simple math when you type it into a laptop like this. Tell me about the channels you're using to market this shirt.

— So we started by selling these products on Instagram with three influencers. So we found a bunch of influencers on Instagram who have millions of followers. And we actually reached out to these influencers and asked them if they were available for advertising and what their rates were. And we just sent all this content to our influencers. And we basically just pitched the products to the audience.

— Can we take a look at these ads? Of course.

— Okay. This is a screenshot. Because I know this business was... it was a couple of years ago. I'd really like you to break down this ad for me. Why did it work for you?

— I think the most important part of the ad is the call to action in the ad itself. So we wrote "tag friends you know." It's a way to encourage people who saw the ad to share it with their friends. Some of them even tag up to 4-5-10 friends in the ad. And imagine the amount of... the amount of organic traffic that we get. So, it creates virality for the product.

— Okay. Now we'll look at another ad of yours. But the profile name "sarcasm_only" doesn't look like an influencer profile name. Is that... is that someone's name? What account is that?

— Yeah. So it’s not an individual. It’s a meme page. Someone just posts funny content all the time. And this is one of the accounts that we reached out to to promote our content. And they actually had like 10 million followers at one point in time. So we reached out to them, negotiated a price for them to host the content for a couple of hours for X amount of dollars. And we were able to get that kind of engagement with the ad.

— What engagement? You mean 74,000 likes and over 5,000 comments? That’s incredible. Yeah. That ad ran for three hours. Yeah, it was only three hours from the time the ad went live. In three hours, I think we sold at least $20,000 worth of stuff.

— Wow. One of the things I like is I think that comment really illustrates what you were talking about. When this person tags their friend and says, "haha, I need this as a way to start a conversation or connect with my friends through your shirt."

— Yeah. Exactly. I mean, we get tons of content... tons of comments, really, just from people tagging their friends and just telling them that they really need this product. And, you know, I think the product itself speaks for itself. If people feel so strongly about the product that they start tagging their friends, their classmates, and everyone in their network to see the product.

— Okay. I think viewers can put the pieces of the puzzle together. If you started dropshipping back in 2012, you were really one of the first to do it on Instagram. If a viewer started dropshipping in 2019, what marketing channels might they start exploring that maybe haven’t been as utilized yet as Instagram?

— I think today, Facebook and Instagram are still the main platforms for promoting all of these products. But we have to look at new platforms like Snapchat, Pinterest, TikTok, especially when all of these platforms are so new and there aren't that many advertisers on them. And that's where you can get cheaper impressions, you can get cheaper clicks and cheaper... well, just lower ad costs on those platforms.

— Okay. So, you still use Instagram for your business, right?

— Yes, sure.

— So there are still many opportunities there?

— Exactly so.

— And maybe a good strategy would be to be on both platforms, do higher-cost advertising on Facebook, and then lower-cost acquisition of some traffic and brand awareness on the other platform.

— Exactly. Especially on new platforms where the cost and the cost per click are linked. For example, it’s much easier to build brand awareness there. So, we can actually find a lot of first-tier audiences from all these cheaper platforms and then target them. Target warm audiences on Facebook and Instagram.

— Yeah. Very cool. Okay. Great strategy. Well, I'm going to change out of your best-selling T-shirt. And let's move on to product number two.

— Of course. Let's do it.

— Okay. Maybe you do speak the language of female shoppers, because I am obsessed with these sparkly, glittery unicorn slippers. They are incredible. But how the hell did you find this product?

— I think this product is cute. I think every girl between 18 and 24 has a fantasy about unicorns.

— Or older than 24.

— Certainly.

— But okay, how do you even discover something like that?

— I came across this product on Twitter.

— On Twitter?

— On Twitter, yeah. Someone actually just randomly tweeted about a product that they bought on Amazon, and they just showed it… showed it on Twitter. So I thought, this is a product that would work on Instagram. And so we copied the product and created a Shopify store within the next day and just started selling it on Instagram.

— Okay. I have a question about Amazon versus dropshipping. Let me get that out of the way first. This is getting serious. What I want to know is: You saw this product because someone else said they bought it on Amazon. Why didn't you immediately say, "Well, if you can find it on Amazon, I'm not going to resell it"?

— At that point, I think I was looking for it on Amazon. And there weren't... there weren't a lot of... there weren't a lot of ratings on Amazon for that product. So, that actually tells me that the product wasn't a winning product at the time. So, no one was really, at that point in time, no one was really pushing the product at that scale, so that everybody would have unicorn slippers. And then I realized that there was an opportunity. That's why we took advantage of it.

— Oh, that's really interesting. So just because someone bought something on Amazon and talks about it, that wasn't the only proof for you that the market was completely saturated.

— Exactly so.

— You did your research and you saw, "Okay, there aren't a lot of reviews here. So there's still opportunity here."

— Exactly so.

— Okay. And of course, with dropshipping, we can test any product overnight. So literally just looking for content on Facebook, Instagram, or Twitter, and then just putting it all together and just putting it on Instagram like we put every product out there. And then we started seeing all these signs of success and realized that this was a really winning product.

— Yes. Good. So if you have a suspicion that something is not yet saturated, you can always check it yourself.

— Exactly so.

— Cool. But one more thing about looking at a product on Amazon is that if it’s on Amazon, there’s probably more than one supplier for that product. Dropshippers always ask us about how to find a reliable supplier? What’s your methodology?

— Definitely, I think, to be honest, even to this day, I think finding a reliable supplier is a big challenge for… I think any dropshipper in the world is not entirely sure who the supplier is that is actually reliable and honest. So I think one of the ways… one of the metrics that I look at is I go on Ali Express and I search for, say, unicorn slippers. And then I sort the products by number of orders and I just look at… the more reviews, the more orders these suppliers are getting… and all these badges that they earn on Ali Express gives you an idea of ​​that. But at the same time, we split our orders up across different suppliers to figure out who has the best product quality, who has the most reliable fulfillment processes, or who has the best shipping processes. So that tells us which supplier we’re going to work with to look into them further.

— Wow. This is an advanced approach to work. Do you really test suppliers with different segments of your customers?

— Exactly. I think a lot of our viewers are still just hoping for a few clients of their own, let alone to use as test subjects. But I want to go into some of the things you just said. When we look at... this... what do you mean by... badges?

— Exactly. So, these are the badges that these suppliers have earned on Ali Express, they are the recognition that they are the best sellers on Ali Express. So, in most cases, it lets you know that these sellers are okay. It makes it clear to me that they are not here to scam you, and they are not here to give you shitty products. Because, they have these reviews, these badges that they have earned as well.

— So does the number of orders mean that the product is too saturated and cannot be sold by a dropshipper?

— Not really. Because the number of orders actually gives you confirmation that the product is actually selling quite well. But at the same time, yes, other sellers may already be selling these products. But the market is so huge, so big, that it doesn't mean that you can't sell these products just as well if 10 other sellers are selling them.

— Okay. If you want to learn more about researching the best suppliers on Ali Express, we just created a video on that. And you can watch it right here. While we’re on Ali Express and looking at price, let’s go over your pricing math again. So if it’s about $10 for a pair of slippers with free shipping, I would maybe… I would multiply that by 4. Wait. That would be about $45?

— Exactly. How do you find an audience that will pay $45 for these slippers?

— Because I think... let's not talk about price point. I think it's all about presentation. Marketing is about creating a perception of what a product is worth. If the content that you create doesn't match the $45 price point, then of course the perceived value from the user's side is definitely not going to match $45. But if you create a perception that this product is worth $45 because of your packaging, because of the fast shipping time, because of other things that are in the product itself, then I think... At the end of the day, it's all about how do you make it feel like a $45 product versus a $20 product.

— Okay. And that probably starts with advertising. Advertising that actually shows the value of this product.

— Exactly. But not only advertising, but also the landing page, the product page, the entire checkout funnel, all these guarantees, all these exchange and return pages that you have and that build consumer trust.

— It's interesting. Because many dropshippers are afraid to write about delivery times or return policies on their websites. But you say: "Put everything out there."

— Exactly. I think it’s better to put it all out there than just pretend. Because at the end of the day, if, for example, your customers dispute a transaction, then in most cases you’re probably going to lose if you put out false information. But if you actually put out real information and educate consumers all the way from purchase to shipping, to getting feedback, then I think that in itself will improve the whole dropshipping experience.

— But to sell it at $45, I think you'd have to hire an agency to do a really fancy ad with lots of close-ups. Is that what you did?

— No. Actually, we didn’t. I just ordered the product. And I had my sister-in-law, who is my business partner, wear them. And she just danced on our porch. And I just videotaped her dancing. And the video was mind-blowing because of the product itself. The slippers light up when you start jumping in them. So, people were really enamored with the product. And it just blew our sales overnight.

— Wow. So, basically, you have a relative who would wear this. You took your iPhone and said, "Dance"? And then you had an ad that made you a lot of money?

— Yeah. And it's even more hilarious when you see a video where... I made the video using a free video maker in the app store. And we still have this logo at the bottom that says, "Made with some app"? It's just crazy.

— Holy cow. Oh yeah. So what do you think is more important to dropshipping success: having the right product or the right advertising?

— I think it’s a combination of everything, to be honest. It doesn’t mean… it doesn’t mean that your ads have to be good and everything else will work itself out. So it has to be from the ads to the landing pages to the product page, everything together. Everything has to work hand in hand. It doesn’t mean that only one of them works. It all works together.

— Okay. So, you set the price at $45, you had a great ad. How much did you make selling those unicorn slippers?

— I think we made about $90,000, somewhere under $100,000, selling these products.

- And you say that in a disappointed voice because you're a $15 million dropshipper. So, for you, that's not enough.

— Yeah, it is. Yeah. And of course, we use that product as a traffic driver product. Because those products attract a lot of high click-through rates. And a lot of consumers, a lot of traffic, actually come just to look at the product. And then we sell them lower priced products or products that actually revolve around fantasy, like a unicorn or a mermaid or whatever it is. And a bunch of other related categories around it to increase our AOV and increase our value in the eyes of the visitor.

— That's really interesting. So maybe if a dropshipper is testing products and they find that one product is getting a lot of traffic but not a lot of purchases, that could be an argument to say, "keep driving that traffic, but add more products to your store."

— Exactly. It's still okay if you're actually breaking even on your traffic driver product, but improve your funnels, improve your upsell, cross-sell. And all of those funnels are actually going to increase your average order value. And that's when you're actually going to make money on it.

— Okay. I think we're ready for the third product. I'm not sure what it is. But let's just open it up and we'll see how it unfolds. And it's just a disc. What is it?

— It's actually a travel cosmetic bag. You can put all your cosmetics in it, then just fold it up and close it.

— Oh. I see. Okay. So, you can just put stuff in there. And then you pull the strings, and it actually... Okay. It becomes a bag. Wow. Okay. And then, it's a great way to do it, because no woman is really organized with her makeup. She just dumps everything on the table. I get it. It's genius.

— Just like my girlfriend.

— Does she do the same?

— She does the same.

— Is that how you came up with the idea for this particular product?

— I came across these products on Instagram, too. And I think I was just browsing through Instagram. And I saw... I saw someone post this product as their own purchase, just showing off what a great product it was. And I showed it to my girlfriend. And she was like, "I totally need this." And then I realized that I could probably make this a new winner in the market.

— Yeah. Okay. I need to know about how you research product markets. Let’s talk about that a little bit. You’ve been browsing Instagram. But how do you find these Instagram accounts or these blogs that give you all these product ideas?

— It’s ironic, but I follow a lot of female bloggers, a lot of makeup artists, a lot of female influencers who are constantly talking about products. And I think most of them are talking about beauty products, fashion products. And then I started looking at products that would sell to that group of women, 18 to 25 years old. So that’s where my target audience is. And I always start from not only the product itself, but also the audience that I know best. So I read and read and read about products to sell them. But I learn about products from the audience themselves - what they need, what products are trending. And I present the product to them, instead of them discovering it somewhere else.

— Okay. So, would you advise dropshippers to first find a niche and really get to know it, and then look for a product to sell? Because, we sometimes talk about doing it the other way around.

— Yes, exactly. I think both ways work. I wouldn’t say one way or the other works better. It really depends on how well you know the product or how well you know the audience. Like, I know… I know the audience better than I know the product. So I figure out which audience I really know well. And then I only pitch them products that they’re going to relate to. And that makes my sales process a lot shorter and a lot easier for them.

— Okay. So you really know the women's fashion and accessories market. But you probably have product ideas all the time. How do you decide to try one product versus another?

— I think that testing what products are worth selling is actually really important to finding winning products. So I use Google… Google Trends to figure out how trendy a product is, how many people are tweeting about it, how many people are Googling it. Let’s say, “travel makeup bag.” So that’s the surface level information. So we can see that there was a buzz around the product back in November of 2018. That was during Black Friday week. So people were actually… and that’s the time period when people start traveling for Christmas. And that’s when you could see that spike. And the trend tapers off after that. And the forecast for the next few months is showing an upward trend. So I think that we use… I use Google… Google Trends to figure out whether these are winners from previous years, or whether this product is going to sell, whether it’s going to make me money.

— Do you use any filters? For example, would you only look at trends in the US and only for the last 12 months? Or would you look deeper?

— I look at... of course, the last 12 months gives me the most information about whether someone has already scaled this product to millions of dollars or not. And of course, I'll look at more indicators like what cities are people searching for these products, what keywords or related topics are people searching for. And that actually gives you a lot of clues about where to look for that audience.

— And that actually connects you to a lot of different websites and blogs and all these influencers who are talking about our products. Okay. I look at that and I'm like, "Okay." It probably makes sense that it's trending upward because we're heading into spring break and summer vacations in the warmer months." What else would tell you that this makeup bag is a winning product?

— Actually, I think there are a few… there are a few metrics that we really look at, especially in Google Analytics. Things like bounce rate in Google Analytics, average duration, retention, add to cart rate, page views. All of those metrics actually tell you whether the user is engaged with the product. So, for example, add to cart rate on Shopify itself, it actually tells you whether people are actually adding the product to their cart. So, anything that I see above 10%, I would say that’s a potential winner that has the potential to… to scale these products. And especially on Facebook, we look at click-through rate. That’s a really, really important metric that we look at. So if you have a high click-through rate, that means that people are actually engaging with the ads that you’re pushing. And that gives you an indication, an early indication, that you can scale those ads.

— Okay. I'm going to pause because you mentioned three different platforms and analytics.

— Fine.

— And I think they're all great. I just want to touch on a couple of things. So first, you talked about Google Analytics. And for people watching who don't know, you can very easily paste a Google Analytics snippet into Shopify, and then you have access to a lot of Google Analytics data.

— Exactly so.

— The Shopify Help Center has all the information you need for that. It's free. And then you have all the metrics you just talked about. Google Analytics bounce rate, what is that?

— Right. So, bounce rate is when someone comes to your landing page and immediately leaves. What that means is that if, say, you have a 50% bounce rate, then every other person that comes to your site, without actually viewing your site, goes to another... to some other site. That tells you that you need to work on your landing pages to lower your bounce rate. The lower your bounce rate, the better for your site.

— Okay. And you also talked about add-to-cart rates in Shopify. You said anything over 10% is good. You're saying if 10% of your visitors are adding to cart, you're on the right track.

— Exactly. So, that's the minimum. But, of course, if you have 20%, 30%, that's the most ideal situation. You know. That's when you know you've actually found a winning product. But if you see anything above 10%, that's already a good option. So, you just need to fix your product page. You need to... you can put marketing content on your product page to increase the add to cart percentage.

— And the last thing you mentioned is the click-through rate on Facebook. Is there a ballpark figure that you look at when it comes to click-through rates?

— Exactly. I think the industry average is about 1%. And if you see anything between 3% and 4%, which is three to four times the industry average, that tells you that people are really interested or engaged with your ad.

— Yes. So your ad is definitely working.

— Exactly.

— But I think for dropshippers, the whole problem is that you can have an ad that has 4% clicks and then 50% bounces and a low add-to-cart rate. So it’s all about what problem is there to solve? Is it the landing page, is it the ad, is it something else, right?

— Exactly. So I think finding a winning product is not easy and not hard at the same time. But I think figuring out what funnel to focus on, what niches to focus on, is really important. Let's say you're not having problems with Facebook ads, but you're having problems with Shopify funnels. Then you need to figure out where the problem is and fix it.

— Okay. This is really cool. I'm definitely taking this makeup bag with me. I'm dying to know what this $4 million product is. But before we do that, let's move on to product number four.

— Sure. So the next product is the LED makeup mirror. And this is a product that we have talked about on our blog and in some of our videos as a trending product. But tell me why you think this is a great product for dropshipping?

— Exactly. I think any woman who looks at this product will think that this is a huge problem solver. Especially if you are in a room with dim lighting or a room where there is no sunlight even for makeup. So, this product actually improves your entire makeup experience to look better. So, of course, these products solve big problems for them.

— It’s interesting because the products we’ve talked about so far, they’re not all problem solvers. The makeup bag, yes. But the unicorn slippers, they’re not problem solvers. So what’s your philosophy? Some dropshippers only want problem solvers. But you’re kind of mixing things up.

— Right. Like I said, I literally sell any product that will work for my audience. So, I realized that I know my audience so well that any products that we can offer will work. I will sell those products. So, this is one of our products that really sells to the audience that I know. That’s why we have a mix of products. We have products that solve problems, we have products that are new, and we also have a combination of both.

— So, one thing that is clear to me and what sets you apart from other dropshippers is that you are not so focused on the product, but you are very focused on your target market. And you just study women between the ages of 18 and 24, their buying habits and what they want. And then based on that, you start deciding what products to sell.

— Exactly so.

— But I want to know, how do you then get to know this target market really well? What pages do you look at?

— Exactly. For example, one of them is Beauty Insider. That page actually recommends a lot of beauty products for women. I imagine their audience is anywhere from 18 to 24, even 18 to 30. So, all these products that you see that they post every day… you can get some ideas about them. But you may not sell the exact same products, but products that are in their orbit. So, it gives you more… a broader… brainstorming of ideas about what kind of products… what should go with them… what our products could be, what… what problems they actually solve. And it’s a way to really get to know the products.

— And if we subscribe to them, we will see many other recommended accounts.

— Right. Would you follow these accounts to go deeper down the rabbit hole with this audience?

— Yeah. This Instagram feature is actually really, really useful. It tells you all these pages that are relevant to the main page. And you can... if you have time, go through each of the recommended pages, you can see other recommended accounts. And that gives you an even larger group of pages that you can follow and get inspiration from.

— Let's go back to Beauty Insider. Let's say if I was looking at Beauty Insider, I would think it might be about a lip gloss or something like that. "Transformative lip gloss." Okay. Well, the lipstick is really rich. Okay. This lipstick gets shinier when people purse their lips.

— Exactly.

— So what next? Do you just start selling it because you saw it on Beauty Insider? Or do you do any additional research?

— I look at the comments. Of course, I look at the engagement, I look at the views, I look at the... I'm sure that if these products are being posted on Instagram, they're going to be posted on Facebook, they're going to be posted on YouTube. Look at all the comments, see what people are talking about. And I'm sure there will be people who will post some brands or products that are similar to these products. And then you can do some more research on other products that are similar to this product.

— Okay. Looking at the comments, I see... I see some people saying, "This is a terrible product." So, we've already had some feedback. And we see an ongoing dialogue.

— Exactly.

— But we also have comments on "how can I buy it", "where do they sell it". So if you were a brand, would you jump in there and comment? Or would you just use it as intelligence?

— Oh, I would use it as intelligence. I don't usually give out a lot of information about us on all the posts that I see. But I actually use all this information that all these users put out to put together a puzzle and figure out what products people will love or want to use in the end.

— Okay. You can look at an account like this and notice that this post has 74,000 views. And then you compare the views to another post and start narrowing down ideas for finding a product that might work?

— Exactly.

— Do you use any sites for this besides Instagram or is this your main portal?

— Instagram will always be the channel through which all these ideas flow. After Instagram, I look at YouTube, I look at Facebook, I look at Twitter and I see what people are talking about. If you have a product in mind, it’s much easier for you to just go and find out if people are actually talking about the product on all of these platforms and see what kind of feedback they’re giving about the products.

— Fine.

— Before we get to your $4 million product, let's talk about the price of this product. So the price... there's quite a range of prices, it depends on how many you buy. But let's say it's about $5 with free shipping to the US via USPS. That's actually great because it looks like they have a US factory. Could you price it at, say, $25?

— Exactly so.

— Okay. I'd bet between $25 and $30.

— And you would never offer free shipping on something like this?

— Yeah, exactly. Because I think a lot of suppliers offer free shipping. And I try to counteract free shipping. Because I think it creates a whole perception that we’re using a more reliable service. And of course, it gives us the opportunity to use alternatives to the shipping methods that all the other dropshippers are using. Because for an extra $3 or $5, you can choose from a lot of different special shipping services in China, not just the one that Ali Express offers.

— Okay. So there is a possibility to go beyond ePacket. I think the main thing is to check it yourself, order the goods using different delivery options and see what happens.

— Exactly. And if you establish relationships with suppliers, I am sure that they will offer various alternative delivery methods. And this creates a competitive advantage over any other dropshippers.

— Yes. Definitely. Very cool. Okay. I think we've waited long enough. Let's talk about your multi-million dollar product.

— Certainly.

— Well, Melvin, you turned me into a mermaid for $4 million. Is that the product that made you $4 million?

— Exactly.

— Wow. I'll give it a try. So, I put on a product that brought you not six, but seven figures in sales.

— Exactly so.

— Let's look at this product on Ali Express because I want to talk about the price of this product.

— Certainly.

— I see that this is not really the cheapest product. Tell me how you set the price?

— Sure. We have two versions, an adult version and a kid's version. So for the adult version, it costs about, let's see, it's about 12-13 US dollars. I would assume that we sold them for about 60$.

— $60! That's a high price.

— That’s right. And of course, at first we didn’t customize our mermaid blankets in any way. But when we found out that it was a winning product, the first thing we did was the packaging. So it incorporated our branding and the whole mermaid experience that we created around the packaging. And that added value to the product.

— Okay. I understand that packaging would help with brand perception. But when someone sees the product for the first time, how do you convince them that it's worth $60?

— As for our website, the prices of the products on our website are also related to their size. And this product is not... it's not a small, tiny product. It's actually quite large. An adult can wear it. So that in itself says a lot. And it also says something about the value of the product itself. So that creates even more value for the product.

— Did you just make a joke about e-commerce that the product itself speaks volumes about its value? Because you're talking about the price of a product being determined by its size.

— Yes. Because... yeah, I mean, at the end of the day, it all comes down to creating perception, right? Marketing is perception.

— And tell me about the ads you used. Was it something you made a video ad for? Or how did you get that product to "fly off the shelves"?

— So we started reaching out to a lot of small, little influencers on Instagram, basically just sending them products. And in return, we got all this content from all these influencers with small audiences. And we turn that content into videos or slideshows that we then put up on Instagram or Facebook.

— So this time you weren’t working with big memes, but rather with micro-influencers?

— We worked with micro-influencers to produce content, and then based on the content, we actually used all these big meme accounts to scale it on a larger scale.

— Okay. So you didn’t care whether the micro-influencer brought you a couple of sales or not? You were doing it for the photos?

— Exactly. Content was what was actually more valuable to us. Because we know that the scale of online influencers or meme pages is much bigger than all these micro-influencers.

— I see. How much did you pay, or, more precisely, how much would you pay for it today?

— We don’t pay anything to all these micro-influencers. Only to those meme pages where we advertise the product.

— Okay. Because I guess you send them the product for free. And then you just ask for pictures.

— Exactly. And we tell them what kind of content we want, how we want them to pose it, and all those kinds of instructions that go with it.

— Okay. Can I see some of the ads you used for this?

— Certainly.

— Let's go to the computer.

— So, this is one of our best commercials. We actually shot it in a studio. So these two are actually our models.

— Okay. And we found that a lot of our consumers are buying them for their best friends during the Christmas season, birthdays, and other holidays. And that's where... that's why we have a call to action: "Tag your bestie" on Instagram. And it just... it just went viral.

— Wait. How did you find out that your users were buying this product for their girlfriends?

— Because we have emails from our consumers, customers, where they say they want two different colors or even the same color. And that tells us that they're actually buying it for their significant other or whatever it is. And we have people emailing us and saying... telling us that they're actually buying it for their other friend who's crazy about mermaids. So that gives us a lot of information about who we're targeting.

— Have you ever tried discounts, like buy 2 and get 50% off?

— Yes, we have. That’s why we often use tiered pricing or volume discounts. That is, the more you buy, the cheaper each item is for you.

— Okay. And another ad you created. It's on that meme account again, right?

— Exactly.

— So you were still working with some meme accounts. But you weren’t working with those accounts to get the content. You had already gotten the photos you wanted, I assume, from a micro-influencer?

— Yes. So, all these photos are from clients or micro-influencers.

— Okay. So you actually work with two groups of people on Instagram. You work with micro-influencers to get original content. And then when you have really original, great photos, you turn to memes and pay to promote those great photos?

— Exactly so.

— This is a really cool advertising model. And it's not a model I've heard of before.

— I think it’s one of the ways to create as much content as possible in the shortest amount of time. I think we were missing people who could go and instruct all these videographers or photographers to create all the content that we needed. And we thought, why don’t we do everything online? Connecting with all these micro-influencers and all these meme pages, it’s all done online. So, it was the easiest way to do it.

— Okay. And when you start running Facebook ads, who do you target for something like that?

— So, we... so, especially girls who are already interested in mermaids or even just... even unicorns, they're quite related in the sense that we were targeting people who are interested in Ariel, the mermaid.

— Ariel, Disney's Little Mermaid.

— Exactly so.

— Oh, of course. Yes.

— From there we get the opportunity to expand our reach on Facebook. And of course, Facebook provides a lot of information about who to target, what audience, and it connects to Google Analytics. And that tells us what age group or people are buying our products. And from there we get quite a lot of information about how we can target those products.

— Okay. Melvin, those product recommendations were absolutely incredible. Before you go, I wanted to ask you for one piece of advice you would give to new dropshippers starting out in 2019.

— Just do it. I think dropshipping is about finding the right product to sell. There is never a right product to sell… it’s all about how you sell it, how you present it. At the end of the day, you just have to know how to make money from it.

— This is amazing. Thank you so much for joining us today.

— I was very pleased.

— And for those of you who have questions for Melvin, be sure to leave them in the comments. And he will share his thoughts. Thanks so much for watching. And until next time. Learn more, promote better.

— And sell more.