Exposing The TRUTH About Facebook Ads & Dropshipping!

0:00hi guys it's ben heath from lead guru and in this video i'm going to talk about facebook ads and drop shipping the two are often paired with each other there are tons of so-called experts recommending that you run facebook ads to a drop shipping business that's a great way to have success a great way to make money i have quite different views on that and i want to explain why and talk about where i think drop shipping does actually have a place and where you can use it which is quite different to what's usually recommended okay but regular attachment very quickly ask you to smash that like button and of

0:30course subscribe to my channel if you and you haven't done so already and you're interested in facebook advertising related content which is what i regularly release okay and so i've got some sort of stuff to show you on the on the screen in front you'll find that interesting hopefully later on but i want to provide a bit of an overview first i'm not a fan for the most part of drop shipping in general and actually particularly when it's combined with facebook advertising the fir there are a number of reasons why i'm going to go through them because i think it's important to address it the first

1:00is that most drop shippers provide a terrible customer experience you may well have had the experience i certainly have where you order something through a facebook or instagram ad product looks great nice little video click through by and it was hidden somewhere in the t's and sees that it takes three to four weeks for it to arrive which in the day of next day delivery and amazon prime and things is just so not what you expect then when it does arrive it's really poor quality you try and check out the company and realize it's not really a legit company um there's not really a customer support

1:29team you can't get in touch you can't get a refund you can't send it back you just have to live with it and move on that is a terrible terrible customer experience now i'm sure there are dropshippers that don't do that that do provide a good customer experience um but from what i've seen they're the exception not the rule i think most dropshippers and if you're you've been involved in dropshipping yourself or you know dropshippers you may well appreciate the fact that most dropshippers are just trying to make a quick sale make their money move on never want to hear from the customer again and they don't even really care about

1:59the quality of the product because they're not interested in repeat business all that sort of stuff delivering a terrible customer experience is always going to hurt you in the long run it is not a sustainable business model ever so that's the first big reason is a poor customer experience and by the way i should quickly mention that i've not sort of had one bad experience with a drop shipper and that's where this is coming from i've spoken to literally thousands of business owners uh advertising products and services on facebook and instagram many dozens hundreds probably have been drop shippers so i've i've seen enough to recognize the trends

2:34here okay now providing a terrible customer experience really hurts you in combination with facebook ads for for a couple of reasons the first is actually outside of facebook so if you are using facebook ads to reach a really large audience which you can absolutely do one of the fantastic things about the platform you can generate a lot of sales very quickly so you can very quickly go from nothing to a drop shipping store that is spending quite a lot of money generating thousands maybe tens of thousands of customers very very quickly like within a month to three months or that sort of time frame but those chickens can come home to

3:10roost because if you're providing a terrible customer experience all of a sudden you've got customers that aren't happy they're asking for refunds you think you've made this money and you haven't you're having to now uh dole that out or if you don't provide the refunds and you're saying to people look the parcel hasn't arrived yet um it does say in our t's and c's it's three to four weeks delivery customers aren't gonna be happy with that they're gonna be contacting their bank they're going to be requesting chargebacks when they request chargebacks stripe paypal the payment process they hate that it's bad for their business it's you're

3:39seen as a bad business to provide their services to you get enough chargebacks and strike paypal we'll be looking to show you down so like drop shippers they they none of the platforms like that business model other than maybe aliexpress and things like that right that are set up for it but none of the big platforms that you're using like shopify um paypal stripe and facebook which i'm gonna get onto a minute none of them really like it so they're trying to shut you down because they know you provide a you know not used specifically but drop shippers in general provide a poor customer experience and that negatively impacts everyone

4:13who's involved in that process if you provide a poor customer experience okay so there you go enough chargebacks you like to get shut down and what i see happen this so often is because dropshipping stores can go from naught to 100 miles an hour so quickly it then kicks in month three month four and you're in big trouble and you having to do tons of refunds you can end up losing money very easily seen that happen a number of times okay so that's that's one of the main reasons why providing a poor customer experience is terrible another one is what facebook do so i want to quickly bring up

4:43i'm gonna go back to what i had in a second but you can see down here we've got um a page on facebook's business help center and the title here and you can read through this if you want is how page feedback of purchase experiences impact your ad and commerce performance basically facebook cottoned on that a lot of this was going on a lot of dropshippers were providing terrible customer experience based off of and they were generating their customers through facebook and instagram ads again part of the reason why i don't like drop ship is using facebook and instagram even though i recognize because the platform's so

5:13strong it's the best place for them to advertise because it gives facebook and instagram ads a bad name if someone goes on and buys something through a facebook ad and they get a terrible customer experience like i've described they might not just think oh that's a bad business i won't buy from then again they might think oh don't buy anything from facebook from a facebook ad you get these you know rubbish mickey mouse businesses that aren't serious and and yeah so i'll never do that again that really negatively impacts the facebook and instagram platform so facebook's solution was to start surveying um users and they would say like how was

5:48your customer experience and if you get too lower feedback score facebook will quite they'll first give you a warning or two and then they will just completely stop you advertising and i've seen this happen with a ton of drop shippers where they get a feedback score facebook change the metrics but out of five let's say if you average below a two which is a pretty low score out of a five average below a two if you average below a two for um even a reasonably small length of time like a few weeks consecutively facebook's like no you can't advertise we cannot have you damaging our platform which i completely

6:21agree with very glad that face would do that but there's another reason why if you're providing a bad customer experience which a lot of dropshippers do stripes trying to shut you down paypal's trying to shut you down facebook's trying to shut you down good chance shopify if you're using shopify is gonna try excuse me it's gonna try and shut you down like people are really not wanting you to use that business model and of course you can find out more information about this on this page and the specifics of the feedback score if it's not something that you've encountered and and experienced before i won't delve into too much of

6:51the detail there but just to know that that is a thing if you don't treat your customers that are acquired through facebook and instagram well facebook will at some point go nah you're done okay the other big issue with drop shipping is that the barriers to entry are so low which is why look people love it because they can get involved as well a lot of experts um recommend it because it's so easy for the people that they talk to to get started but that means it's so easy for other businesses to copy you so i'm right now i've brought up the facebook ad library in the facebook ad

7:22library you can see any ads that's being run from any page instagram account etc um i've got videos specifically on the facebook ad library so if you want more detail in that link will be in the video description below you can check that out how to use it all that sort of stuff but if you find a product let's say that works really well in a drop shipping store and you look to scale that campaign up you've got your ads everywhere other people are going to see it and if it looks like you're doing really well they're going to work that out and they're going to copy you this happens

7:54all the time so i said a lot of drop shippers will go from naught to a hundred in a couple of months but they might be done they might have lost their competitive advantage by six months in this happens i've seen this happen so many times and the reason why is because let's say they're selling a product for thirty dollars okay and they're generating a cost per purchase of ten dollars and from the manufacturer it costs them seven dollars okay so total cost is seventeen dollars per sale they're making 13 profit they think this is fantastic they start a campaign fairly small and they scale the budgets fast they

8:30possibly can well what happens when other entrepreneurs other people interested in drop shipping spot this they can access almost certainly the exact same product or something very similar because you don't have any ip around that product you don't have any um stock okay they can go and sell the exact same product often and perhaps someone comes in they offer it for 25 well immediately your campaign is going to be much less effective so you have to drop your price and then they drop their price and then other people drop their price you end up competing down and you compete away all your profits and you could easily end up with a drop

9:05shipping store that has had competitors come into the marketplace advertising the same people you are i mean you know you shouldn't kid yourself that you found this tiny segment of people that no one else advertises to that doesn't exist um you're advertising the same people they've undercut you on price or even if they haven't undercut you on price and they're offering the same price and instead of just seeing your ads and then ads for all the other things people are interested in someone's interested in they're seeing five or six people advertising the exact same thing well that's going to massively impact your results and you can see drop shippers that

9:36started out profitable for the first few months scaled it up other competitors came in the market they have to scale back down they often end up in a situation where they can generate sales but there's no profit in it so they still got a um let's say a 30 product that they're selling their cost of purchase gone from ten dollars to twenty dollars twenty three twenty five dollars twenty twenty five dollars their cost of goods is still seven dollars they're just about break even maybe not break even and because they're not building a brand and not delivering customers good customer experience that's not a good strategy because

10:09you're not gonna get repeat business and all that sort of stuff like you would if you were building a proper brand okay um so there's rarely any longevity in drop shipping in combination with facebook ads often and this is something to really watch out for when you see you know so-called experts and particularly people on youtube recommending drop shipping business models and using facebook ads to make products they will often give examples of their results there's two things they will all nearly always do firstly they won't show you their profit they'll just show you the revenue numbers and there's no advantages to generating 100 a month in sales if it's costing you

10:46a hundred grand a month in advertising um which again happens all the time they won't tell you their profit they just tell you their revenue which doesn't mean anything you could easily generate 100 sales and give all of it over to facebook and the manufacturer not make any profit for yourself that's the first thing to do the second thing they nearly always do is they'll show you really short time horizons so they'll show you i started a store and within 30 days i got it to this point or within three months i had these fantastic results they'd almost never say i started a dropshipping store and i've had great results for three

11:17years and the reason why is because of what i've just talked about other people competitors will come in and they'll compete away your margins and they'll offer the same thing and they'll take some of your market share happens all the time so when if a drop if someone recommending a drop shipping model can show me evidence that they've succeeded over even a three year time horizon which is not that long then i might start to to listen and have a look until then very very skeptical um so that's another thing to really uh really keep in mind so let me jump back to this page here and i've called this

11:54campaign for just a bit of fun dropping shipping campaign with unrealistically large budget because i think there's just so much stuff i see online you know i'm very much in the facebook ads world i offer technical advice and and things that we do based on what we do as an agency and i see so many of this like very um quite ugly to be perfectly honest drop shipping stuff out there that's that's quite disingenuous and things like that so often i just thought it'd be a bit fun to call the campaign then but often you have you scroll down you see someone doing a demonstration they'll have something

12:25crazy like a hundred thousand pound a day uh daily budget like i've just popped in there and it's just so unrealistic as i said especially for any any length of time now the point i want to make here and i'm just reading to make sure i've got all the aspects is don't obviously go for the full package that's often sold to you particularly again if that person is trying to sell something to you piss the back of it so if you see all this sort of stuff the crazy daily budgets only the short-termism um they're not showing you their profit numbers just their revenue numbers that's that's not if you want to use

13:04drop shipping and there are there is a scenario in which i think drop shipping can work that's not it the scenario which i think dropshipping of facebook ads works well together is not this it's testing the barriers to entry on drop shipping are so low it's so easy and the risks are so low financially that i think it can be a great way to test but i do want to limit it to test so let's say for example that you want to start advertising a new product range okay instead of taking on all the costs you know teaming up with manufacturing manufacturer and getting a load of stuff imported

13:44having to sell all of it to even see half of your money back instead of doing all that it can make a lot of sense to test with a drop shipping model and of course test with facebook ads now what you're looking for there is not something that can make a profit because as we said even if you do make a profit it's not going to be sustainable if you just stick to that drop shipping model instead what you need to do is identify okay this can sell to the target market it looks like there's a lot of demand take that knowledge and then do it

14:14properly and then build a proper brand of proper business okay okay great we know that this product whatever does resonate with our target market fantastic we ran that campaign for a month we found out that it worked we're gonna move away from drop shipping now and and i wouldn't scale up massive budgets in the meantime you know it wouldn't have the oh we got up to 100 grand a day in in 30 days kind of stuff i would instead then be like right we're going to work with a manufacturer we're going to have branded product with our own brand delivered we're going to make sure that

14:44product is as good quality as it could possibly be or really good quality for the price point let's say we're going to take inventory of it or maybe you don't necessarily take inventory you could work with like amazon fulfillment or something like that there are high quality fulfillment centers that will do a probably a better job than you would taking delivery of your product but someone is going to have a hold of your stuff that then gets sent out to your customers that matters that people care about you're going to take you know take those steps and tick those boxes and you're going to work on delivering a

15:15fantastic customer experience and delivering a brand because if you can deliver if you can build a brand around a product in you know well in six months time there won't be tons of competitors selling the same thing as you because yours will your thing will be differentiated and in three years time people your customers may well be willing to spend twice as much on your product as opposed to the equivalence that drop shippers are selling because yours is better quality because there's some brand recognition because et cetera et cetera i found and this is something that i you know massively a journey i've been through personally over the last few years

15:55that whenever i'm now making purchasing decisions as my time got more and more constrained like i have a young family i have a business i just go straight like if i'm trying to buy something i'd be like who's the big brand or who's the recognizers delivering quality brand in that space i'm just gonna go buy their thing i'm not gonna do research they have time for that and so i may be paying much much more to buy a product that's of similar quality maybe a bit better from a brand that i know well because i know they're gonna it's gonna be shipped correctly it's if there's any issues i'm gonna be able to

16:32get it sorted i know that it's gonna be of a certain quality like i don't know if i buy anything from apple it's gonna be good quality it's not gonna break on it i just know it is simple as that um and i think that there are enough people that maybe don't do it to the extent that i do but are along those lines you know you go and eat in restaurants that you know because you know it's going to be good more easily than new ones people try new stuff of course they do but if you want that longevity and that business is going to be successful in

17:03ten years time you deliver a fantastic customer experience you build a brand you make it unique you put your messaging and voice behind it and those are the companies that work really well there are not a lot of these so-called drop shipping experts you need to be really careful with what they say as i said they don't show you long-term horizons they never show you their profit number and to be quite honest if they found a secret product or setup that worked really well i very much doubt they'd be sharing it okay you always got to think why are people sharing content now i share my content because

17:37it's applicable to tons of different businesses and we get a lot of our clients through the content that i share i educate them they get some results they think we want to take it next level they come and work with us so my motivation for sharing stuff is very obvious very transparent i'm not giving away my you know trade secrets as it were um i'm not you know i share tons with you guys but but what we do the value add that we provide is the day in day out detailed stuff it's the it's based on the experience and hopefully you understand what i'm what i'm saying here

18:14if there was one little trick that determined all the success of my business you wouldn't share it my business isn't like that there's not one little trick but if there was as a lot of these dropshipping experts claim you wouldn't go and share that information so just be very very careful i'm not a big fan of drop shipping and facebook ads in fact if if if nearly all drop shippers and i said there are exceptions in fact we've had some we've had clients that are drop shippers and have done done it well with next day delivery and things like that there are exceptions but for the most part not a big fan

18:47those are the issues and and that's the truth of the matter there are there's a lot the amount of dropshippers genuinely making a substantial profit for any sustainable length of time is tiny that's the truth about facebook ads and drop shipping that that combination the people who are like really doing well and succeeding very small percentage far less than one percent guarantee okay hopefully that has been useful a couple of things before you go then i'll quickly mention the first is a free webinar i've created called three killer facebook ad strategies to double or more your revenue and if you're serious about facebook advertising you want to build a proper

19:25business build a brand i would absolutely recommend you go to that webinar completely free link is in the video description below um yeah 60 70 minutes long and it will show you exactly how to build a sales funnel that's appropriate for your products and services which is very important strongly recommend you check that out other free thing i want to mention is my facebook ads mastermind group so we've just gone past 115 000 members in my group fantastic community if you want to be a part of that it's full of facebook advertisers just like you asking questions getting them answered i do free live trainings you wanna be part of

19:54that go ahead and join if you enjoyed this video please comment below to let me know uh comment if you've got any questions um subscribe if you haven't already don't forget to hit the thumbs up and i'll talk to you soon thanks a lot guys bye for now