Why Most Dropshippers Face Inconsistency – And How Anyone Can Scale Fast, Consistently, And Profitably This 2021
Create Date: 2021-06-09 07:21:31 Last Edited: 2021-06-09 07:29:09
It’s no secret that dropshipping is becoming more and more inconsistent.
One month you’re generating upwards of 6 figures with healthy profits feeling like a baller….
Other months you’re generating 5 figures barely breaking even.
In my previous post, (part one of this series), I revealed the reason why most dropshippers face inconsistencies in their revenue and profits…
To give you a quick recap,
Most dropshippers face inconsistencies in their profits and revenue because most of them are making the mistake of scaling BEFORE ensuring that their business operations are scale ready.
This was something that I saw after spending the past couple of years working with 6-8 figure dropshippers and eCommerce brands.
But what is “scale ready”? Let me explain.
“Scale ready” refers to how optimized your business operations are for scaling.
It’s often impacted by how optimized your day to day operations (team, systems, and processes) are for scaling.
The easiest way to visualize if your operations are scale ready is to ask yourself this question.
If you were to 5x your ad budget now, what’s going to happen?
Sure, it might get you sold sales at the start, but it’s not long before you start facing scaling operational bottlenecks such as:
- Not preparing enough creatives before scaling, leading to creative burnout and ultimately, a drop in ROAS and profitability.
- Running out of products to test before your winning product dies as the team doesn’t have enough time to find more high quality products, leading to lesser product launch which results in drop in revenue.
- Higher unresolved tickets from customer service as the team cannot handle the sudden influx which ultimately leads to higher complaint rate and PayPal/FB banning your accounts.
- Having more orders that are missed out daily, leading to a higher refund rate.
- Team members getting burnt out because they’re overwhelmed with last minute urgent tasks.
- Team members leaving because they can’t take the stress, leaving you to scramble to find a new hire and re-train them from scratch
And many more, all leading you to crash and burn if your business operations are not scale ready.
This is why it doesn’t matter if you are the best media buyer, or if you have the best product.
Without scale ready operations in your business, it’s simply impossible to scale.
Whereas the more scale ready your business operations are, the easier it is for you to scale quickly, consistently, and profitably.
With operations that are scale ready, you’ll be able to:
- Test more products consistently, which leads to quicker and more consistent growth
- Conduct more split tests to increase your conversion rate & ROAS
- Have your team members will be performing at peak performance and become much more productive
- Because your team members are performing at peak performance, you don’t have to hire too many people and incur more costs… leading to higher profit margins
- Have your team to be more in-sync, leading to them becoming more effective
- Spend much lesser time firefighting and solving problems
- Able to identify your profit/loss for the month down to the cent
>> So how can you ensure that your ecom business’ day to day operations are scale ready? <<
There are 3 key areas when it comes to optimizing your business operations to be scale ready.
And to keep these posts shorter, I separated the 3 key areas into 3 different parts
Part 1: How To Scale Your Business FAST By Accelerating Your Critical Scaling Factors (CSF)
Part 2: How To Automate Your Key Business Pillars So That You Can Scale Consistently And Profitably
Part 3: How To Multiply The Productivity And Effectiveness Of Your Team To Produce Consistent Results
In my previous post, I talked about “How To Scale Your Business FAST By Accelerating Your Critical Scaling Factors (CSFs)”.
To give you a brief recap, we help our clients to accelerate their critical scaling factors with 4 steps:
Step 1: Identify your business goals
Step 2: Identify your Critical Scaling Factors (CSFs)
Step 3: List Down The Strategy, Steps & Metrics Needed To Achieve Your CSF
Step 4: Execute
Even though accelerating your critical scaling factors is one of the best ways to scale quickly, consistently and profitably…
Many business owners are still not doing it because of ONE main reason.
>> “I don’t have the time to focus on accelerating my critical scaling factors” <<
If you are currently feeling this way, I have good news.
Because in this post, I’ll be sharing:
How To Automate Your Key Business Pillars So That You Can Scale Consistently And Profitably
(And how our clients were able to free up 90% of their time, to focus on accelerating their Critical Scaling Factors.)
So how did we do it?
Before we get into it, you might be wondering what’s “Key Business Pillars”?
To give you a simple definition…
Key business pillars are operations that are crucial to help your business to survive and thrive, but don’t necessarily need you to be involved.
Some of these operations are:
- Your customer service
As you can see, these operations are extremely important, but they are filled with tasks that are repeatable and can be delegated out.
For example, fulfillment.
Even though it’s extremely important, most of the time all you need to do is to export the orders into a CSV, send it to your supplier, and wait for your supplier to send you back the tracking codes for you to upload into shopify again or paypal.
Pretty straight forward, but super important.
Another example, customer service.
Where you basically answer customer service emails when it comes in.
Again, pretty straight forward, but still extremely important.
However, a common mistake that most dropshippers make is that they often work on these key business pillars themselves.
For example, they can spend hours a day answering the customer service tickets themselves, or that they try to create video ads themselves, or they try to hire new team members themselves.
All these take a ton of time and energy, and most importantly, focus away from accelerating your critical scaling factors.
This is why many of them say that they don’t have time to focus on accelerating their critical scaling factors.
And if you want to scale quickly, consistently and profitably, you must focus on accelerating your critical scaling factors.
In our agency, we help our clients to automate their key business pillars so that they can spend more time to accelerate their critical scaling factors.
Here’s how we do it:
In our agency, we automate our client’s key business pillars by creating 4 systems.
- Operational Systems
- Organizational Systems
- Observational Systems
- Optimization Systems
(If it sounds confusing to you, don’t worry, I’ll explain with more details.)
1. Operational Systems
Operational systems are all of your processes in your business, documented down into standard operating procedures (SOPs).
For example, customer service, you’ll have operational systems like:
- SOPs on how to use the CRM software
- Templates on how to reply to a customer if they ask a very typical question like where’s their product.
- SOPs on how quickly they should reply to a customer.
- SOPs and flowcharts on how to de-escalate a customer argument.
For video creation, you’ll have operational systems like:
- Template on how to write engaging video scripts
- SOPs on how long the video should be and what it must contain
- SOPs on what type of video clips should be used
- SOPs on how to keep the video compliant to run on Facebook
The goal for this is to document every single process into SOPs in step by step instructions that are so clear, where each and every team member, old or new, can successfully carry out the task without the need for you to babysit them.
A common mistake that most people make is that they create processes without documenting them.
They hop on a call with their team member to explain the process. And if they hire someone new, they just simply hop on a call with them again, and explain the process to them.
No proper documentation anywhere.
And right after the call, they just continue to bombard you with questions.
This is why having operational systems is the first part to automating your key business pillars.
Because without any operational systems in place, it’s impossible to properly delegate and automate them.
In our agency, we also help our clients to build delegation systems to ensure that the team can run on auto-pilot.
To prevent this post from becoming too long, I’ll leave a link to a post that I wrote a while back on how we build delegation systems for our clients using our 3PDS framework. (Link is in the comments).
2. Organizational Systems
Organizational systems are systems and structures for how your entire organization works together effectively.
Examples of organizational systems are:
How your team communicates
Project management tools
And many more.
If you ever find that things get messy, chaotic, not sure what’s going on, having communication gaps, things are not being done on time, a lot of fire fighting…
It’s because of the lack of good organizational systems.
If you want me to write a post on how to create organizational systems, do let me know in the comments below!
3. Observational Systems (Information)
Just like the name says, these are systems made to observe what’s going on in your business.
We use them to gather data (because data is gold in our age) and to figure out how to use that data in the best way possible to improve performance so our clients can scale faster and easier.
These usually come in the form of reports, sheets, and statements… and trust me when I tell you that everything will change in your business once you know exactly how you’re doing on a daily, weekly and monthly basis.
It’s a game changer because you can go right to the source when there’s a problem, you know where to put extra energy, from where to cut resources, etc.
Examples of Observational Systems we created for our clients:
- Daily/Weekly marketing and store performance
- ROAS, CPA, Revenue, Adspend, Profits
- Performance from different traffic sources
- Ad campaign metrics and dashboard.
- Inventory control
- Stock management and projection
- Profit & Loss sheet that calculates down to the cent
- Product success rate for each product researcher
- Scorecard metrics
- P.A.C.E. Ratio to calculate how much time are they spending on important tasks and not so important tasks
And many many more.
Important note: Organizational systems are not systems built to micro-manage your team, but instead it’s quite the opposite.
Organizational systems are built to give you an aerial view on what’s happening in your business without you getting involved.
Ever felt that you are not sure what’s going on in your business after taking a 3 – 4 days break?
That’s a sign that you’re lacking proper organizational systems.
Which is why it’s extremely important to have organizational systems built as you automate your key business pillars.
4. Optimization Systems
Optimization Systems are systems that can help you optimize and improve your team’s performance, results and operations.
Optimization Systems are probably the most important but often neglected systems that every business owner needs.
When done right, it can help you to automatically create exponential growth.
Let me show you why…
As mentioned earlier, optimization systems help your team to improve your team’s performance.
Imagine if your team’s performance improves by 1% every day. This means that the results double every 72 days.
A great example of an optimization system is a built-in feedback loop or a metrics tracker to show how well your team or department is performing.
Customer Service – We track the customer service response rate: How fast are we replying to each ticket?
With the data, we’ll be able to come out with potential solutions to optimize and further improve the system.
Can we reply to each and every customer in a span of 30 minutes?
Can we then automate this by creating a system?
How will that help the company to achieve its goal
Creatives: How many creatives, both videos and images, are we producing on a daily basis?
How many of them ended up being re-edited after going through the approval process
How many re-edits and approval was needed before launching the creatives?
Can we streamline the entire process and turn it from a 5 step process to a 3 step process so that we can launch more creates per product?
How will that help the company to achieve its goal?
Product Research – How many products are we finding each day?
How many products submitted into the product google sheet were duplicates?
What’s the maximum number of high quality products each team member can find in an 8 hour shift?
What’s causing them to take a long time to find products?
Can we streamline the entire process?
How will that help the company achieve its goal?
From the results collected, we analyze and see which processes should be axed completely, require a major revamp or simply a few minor bottlenecks that need to be tweaked and removed.
We then set in place a system that allows us to consistently repeat this process of test running a process > collecting data > analyzing the results > making changes one by one > seeing if the changes made helped (or not).
We do this over and over until the process is hitting optimal results for the business.
While this process may sound very tedious and time-consuming, the end results will always pay itself many times over.
There are many tests we’ve done for our clients that enable them to launch new products 20-30% faster each day.
Just imagine how many more product tests they are able to do each day when we stack these improvements on top of each other.