20 Lessons from Building My First High-Ticket Drop Shipping Business

Building a six-figure e-commerce business isn’t easy, but I’ve done it many times now, in different ways, so I wanted to share the lessons I learned along the way.

To make my current e-commerce store work, I use Google Adwords and Facebook ads to drive targeted traffic and use specific selling techniques to optimize my site for conversions. This allows me to start getting sales within days of launching instead of months.

The first time I setup an online store, I didn’t know a thing about paid ads, but I got lucky. The platform I used, eCrater, drives Google shopping ads to your product listings as long as you supply the UPC codes. I was able to make sales quickly using their platform, but I eventually learned about Wordpress and content marketing and how I could create my own website that I owned.

It took me a few years because I was new to e-commerce and marketing, but I hit the six-figure sales mark almost exactly 3 years after I started and grew to 5X that very next year, all without doing any paid ads. I used a lot of free traffic methods and social media marketing to get it done. It wasn’t all easy, but it was fun.

When I started my first e-commerce business back in 2010, I didn’t have any idea what I was doing. If I had to go it alone, I would have been lost or just never got started in the first place. Luckily, I met a guy named Scott.

Scott on the right, I’m on the left.

Lesson #1: Business partnerships are a great way to get started

He taught me what the drop shipping business model was. Our partnership also allowed me to take advantage of his good credit score to get access to capital to buy the items we sold. Without his credit, the business would have never started because I was young and didn’t have any established credit. He was a business owner, a locksmith, who had decades of established credit and he was very financially responsible.

Lesson #2: You can get wholesale accounts with manufacturers that only sell to retail shops by investing in a minimum order or just asking.

He secured our first wholesale account with an LA-based manufacturer. He had to invest in 10 units of the widgets to get started, but they only cost $10 each.

Lesson #3: You can use marketplace websites to get sales fast because they spend money to drive traffic to your listings

With this account, I started with listing the products on an eBay alternative called eCrater. At the time, this website didn’t charge any fees. Now, it’s 3% of the total order amount. Both platforms pay to drive traffic to the product listings, so they charge a fee when you make a sale.

Lesson #4: Having your own website is way more profitable and lucrative in the long run

I knew that I wanted to grow a business on my own website after a year in business because not only would I be able to keep more profit, but I would be able to re-market to customers through email and social media, and I would also be building an asset that I would be able to sell years down the road if I wanted to.

Lesson #5: See if you qualify for financial aid, then take business classes at your local community college (if you’re still young enough)

At the time, I was working a full-time job and had just started going back to college taking business classes. My previous experience at college was a failure. I took classes that I thought I would have an interest in but turned out to be a flop. This time around, I had all the reason in the world to learn how businesses work. I poured every waking moment outside of work into my education. I was fortunate enough to be a resident of California and qualify for their board of governor’s fee waiver program. All my classes were free. I basically got an MBA for free. I took business, marketing, accounting, sales, business law, management, advertising, speech, and many other classes that helped me form a strong foundation for my understanding of business.

Lesson #6: Working to learn can help you get ahead

I was also fortunate to have a job at a distribution warehouse which stocked products that were often sold online, so I got some priceless business experience. Being on the “other side of the counter”, I got to learn how the business model of e-commerce drop shipping works from the supplier’s perspective. This gave me a huge advantage when I began to build my online-only e-commerce business.

Lesson #7: Wordpress is the best platform for SEO and content marketing (aka Inbound Marketing)

I started doing a lot of research to figure out which e-commerce platform would suit my needs. I needed something that was easy to use, cheap, and based on the WordPress platform. I knew WordPress was the best platform for content marketing and SEO, so by using WordPress to build an e-commerce site I was maximizing my chances of getting organic traffic quickly. There are a lot of e-commerce plugins for WordPress, but one in particular stuck out to me as the best solution. It was brand new and their welcome video made the setup process seem so easy. It was called Woocommerce.

Lesson #8: Woo-commerce is the best free plugin for adding e-commerce functionality to a Wordpress site

Woo commerce was created by a UK-based company with a virtual team all over the world. Their plugin is free, which was my favorite part in the beginning. I installed it, added a free theme by their company Woo Themes, and got to work adding product listings. The setup process was fairly straightforward and after a couple of weeks of learning how the platform works, I had a fully-fledged e-commerce site up and running using Paypal and Stripe as my payment processors.

Lesson #9: Nothing is completely free.

The freemium model is very popular online and you will end up paying for anything that is good enough to be worth keeping. There are some unique nuances about using Woocommerce that I had to get used to, like the fact that many of the advanced e-commerce settings were only available as paid extensions. Things like adding tracking information to the order cost me another $39 to add to the site (a one-time fee).

Some things take more time than they do money, negating the fact that they are completely free. These include tons of great free traffic methods.

Lesson #10: Don’t be stingy.

When you have a cash flowing business, pay extra to make your website the best it can be for your customers. You want them to have a good experience and you’ll also be making your life a lot easier.

I did away with anything that wasn’t critical to me providing a professional experience for my customers in the beginning. I regret that. I should have bought those plugins right away and made the experience for my early customers as professional as possible. If I had started doing email marketing up front and worked on our branding by providing an amazing customer experience, our business could have grown much faster than it did.

Lesson #11: If you worked at your job for long enough, you should qualify for unemployment benefits.

I quit my job around January of 2013 (actually, I got laid off) but my online business wasn’t profitable enough yet to provide me with a full-time income. I was lucky to get unemployment benefits for the entire first year after I quit my job, so this gave me the ability to spend half my time educating myself and working on my internet business, but it was still just a side-hustle. I needed more business experience, so I began looking at other “business opportunities” and stumbled upon an MLM called world financial group. A skateboard buddy of mine was a part of it and he basically recruited new agents to work for the company, under his team, and sold them life insurance, then taught them to do the same thing (recruit, sell, train, repeat). I learned some basics of the financial markets and how money works, but it just wasn’t for me. I left it in the spring of 2013 and the biggest lesson I learned is that I never wanted to be a part of any sort of MLM again.

Lesson #12: Don’t join an MLM if you are a real entrepreneur.

You’re not creating a real business, you’re simply becoming an independent contractor and you’ll have to pay huge amounts of money up front to “learn” their business plan, which is basically to recruit, sell, train, repeat. You’re not working to build an asset that is worth something, like a business. In fact, you’re really just creating another job for yourself. Also, the worst part of a pyramid scheme is that only the people at the top win. The rest lose. Simple as that.

Lesson #13: Keep your website theme simple.

In May of 2013, I set up our first Godaddy hosted and 100% owner-operated e-commerce site. That same month we began seeing sales come in from postings we made on Craigslist, our social media posts, and links back to our website from our eBay and eCrater stores. These were the only channels we knew how to get traffic from in the beginning, and luckily, the traffic converted fairly consistently. After some sales, I invested in a paid premium Wordpress theme from ThemeForest. This theme looked nice but performed terribly slow. After a week or two of use, I started getting emails and phone calls that the site was loading really slow and our customers were going elsewhere to buy. I decided to switch back to the basic free theme from Woothemes and everything was good again.

By adding complicated plugins and a robust theme, you may be slowing your website down so much that people don’t want to buy from you. Wordpress is especially susceptible to this. Shopify, the platform I use now, is less susceptible, but it can still be slowed down by big images, complicated javascript, and lots of add-on apps.

I had been reading a lot of business books and one in particular stuck out to me. It’s called Permission Marketing by Seth Godin. In this book, Seth talks about how to do marketing right. Providing something valuable like an ebook, then asking permission to send them more valuable information. Once the customer is smothered in value and loves you, you can begin marketing relevant affiliate offers or your own products and services.

I began doing more research on this idea and found the Hubspot blog. Hubspot brands themselves as the Inbound Marketing Agency. They help businesses create valuable resources for their customers and show them how to capture those leads so they can sell products and services that those customers actually need. This is the basis behind direct selling and solution selling. I took these concepts and created my own content plan and email follow-up strategy. It was very disorganized at first, but it worked. I started by hiring a writer to create 3 blog articles for my e-commerce site every week. I paid them $10-$15 per article. This writer was a professional copywriter and understood keyword optimization and SEO. The articles were clean, clear, precise, and very valuable for my target market.

I also began writing review articles for the products I sold that I had personally used. Since this was my first e-commerce business and we were only doing drop shipping, I wanted to own and use some of the products I sold so that I could tell our customers what I liked and disliked about them. This gave us a huge advantage over our competition because people often look up reviews of the products they want to buy online. When the same company that sells the product also writes an unbiased review article about that product, it gives them a huge advantage over the competition. For us, it got our review articles ranking on the first page of Google within 30–60 days for some of our long-tail keywords (example: product names).

Lesson #14: Hire a really good writer for $10-$15 per article, and produce 3 articles per week.

These should be how-to articles because they are very useful for your readers and have the best chance of getting shares and backlinks from other blogs in your niche. They can also include list articles that talk about people, places, or things. You can and should do press releases about your company and about recent happenings in your industry as well. Be consistent with timing and quality.

Tip 1: Set up automation with IFTTT to automatically publish your new articles to all your social media accounts.

Tip 2: Create a cover photo with Canva and use that as the featured image and at the top of your blog article. Also, share this photo on your Pinterest account.

Tip 3: Add an email signup form to the bottom on every blog post so readers can sign up to receive your buyer’s guide and you can follow up with them later to ask them to make a purchase.

We began setting up our e-mail marketing list shortly after hiring the writer to make the content and setting up our publishing plan. This included an email pop-up, a sidebar form, a footer form, and a form at the bottom of every blog post. Every form was offering a buyer’s guide and a coupon. After a couple months of posting content and sharing it, Google started ranking our content and sending us organic traffic. We started getting 5–10 subscribers every day to our email list. I set up an automated email series that sent them our buyer’s guide and coupon, an introduction to our company (about us page), the foundational articles that explained our products more (blog posts), and then a weekly email for 3 months that included our best selling products with various sized discounts and free offers. When we added new products to our site, we would create a blog article about it, send an email, and write a press release that was posted to lots of major news sites announcing our partnership. We did weekly press releases at first, then, after all our suppliers were announced, we tapered off to once a month or once a quarter, whenever we got new suppliers.

Lesson #15: Set up email marketing as early as possible. This process includes having an offer like a buyer’s guide, a signup form that offers the free guide and a coupon in exchange for first name and email address, and creating an automated email series that sends them a snippet of your about us page as an introduction, the free guide and coupon, and follows up with them with your foundational blog articles to teach them more about your products, and then asks them to make a purchase on one of your best sellers. Setting up this invisible selling machine gave us the ability to make the most out of every person who found our website through social media or Google.

Tip: Always Be Giving.

Focus on giving them value first, then they’ll want to hear from you about your offers. If you send them offers first, they won’t take it as nicely and might not read your emails.

By the end of 2013, we had hit the six-figure sales mark for the year. At a 15% net profit margin (after the cost of goods sold and expenses) this meant we were keeping around $15,000 per year. I knew that this business had the potential to grow a lot because I could see how many products were being sold by my suppliers just by looking at their order numbers and seeing how many products were sold between when I last sold a product and when my most recent order went through. Being an online middleman of sorts, I knew that I had the ability to put my marketing in front of willing buyers to gain more of those sales and the profits that would come as a result.

Starting in January of 2014, I began working feverishly to list our products on Amazon and eBay. These two platforms spend millions every month to get people coming to their website to buy things and to keep loyal customers coming back. I didn’t realize how much money I was leaving on the table until I listed my products on these platforms. We started making sales immediately due to low competition and high demand. Our sales the first quarter of 2014 hit the $100,000 mark, matching that of the entire last year. I was hooked. We now had a full-time income from our online business. Our website sales were growing too. We had to be careful to update stock on our eBay and Amazon stores, but our sales were solid. We achieved $100,000 in sales the first quarter of 2014. This business was now a full-time income for at least one person, maybe two.

Lesson #16: Use eBay and Amazon to boost your e-commerce sales by selling the same drop shipped products through their platforms.

Come quarter 2 of 2014, our sales blew up. We had $50,000 revenue months followed by an $80,000 sales month in July. It was insane to see our rapid growth. At times, I was processing over 10 orders a day from our website, eBay, and Amazon combined. I was feverishly working to continue our growth with content marketing, social media, and email marketing while maintaining our family life and still finding time to go to the beach and go skateboarding. My business partner and I thought that since we were banking so much cash that it would be a good idea to open up a retail storefront near a local college. 50–70% of our market at that time were college students and recent graduates, so we figured it would be the next best step for us. However, I didn’t realize how much of a mess it would be.

Lesson #17: Don’t open a brick and mortar retail storefront unless you know what you’re in for.

The most profitable way to do this is to source your own products from China for really cheap and make your own brand. If you’re trying to run a lifestyle business with lots of traveling, it’s probably not a business model for you because it’s very time intensive.

Long story short, we opened up shop on the wrong side of town, it was a total mess and we got out of our lease early barely breaking even. Moving forward we had to make the choice to keep running our business and try to grow it again or sell it. I decided to sell it and ended up getting $50,000 for it. The website made $300,000 in sales in 2014, with the other $200,000+ coming from eBay and Amazon. Our net profits were around $25,000-$30,000 for the year for our own website, so we got a roughly 2x yearly net profit multiple which is an industry standard for e-commerce drop ship only sites.

Lesson #18: Get organized to sell your e-commerce site

Get all your business stuff organized and make sure you can sell it as a turn-key investment. Train a virtual employee to manage the day-to-day tasks of your business so the buyer doesn’t have to and you’ll be making your company way more valuable. You can ask for 3x yearly net profits the more passive your e-commerce business is.

With this incredible experience, my wife and I took a year off and enjoyed our life. We got lucky a year and a half later when the new owner of our website sold it to someone else, voiding out the non-compete agreement, so we opened up a site selling the same products again. We immediately started making $50,000 in sales again and 6 months later we hit the $300,000 sales mark, half of that being on our website and the other half on Amazon. We plan to grow the content, social media, and email marketing of our website for many years to come and work more to outsource and automate this business so it will fuel our lust for travel and adventure for years to come.

Lesson #19: Make time to travel, be with your family, and enjoy your life.

Especially if you’re young. It’s easy to get caught up in the day-to-day of your online business, especially if you’re coming from a 9–5 job where your attention is constantly demanded. You need to be focused on a few very important things: working on your business (Growing it) instead of working in it, creating content on a blog in a niche that is in high demand and is monetizable with affiliate marketing programs, and working on creating information products to sell online (by far the highest margin business model that exists.) This might sound like a lot to do, but if you manage your time wisely, you’ll be able to get all this work done and have lots of time to travel, be with family, and enjoy your life without constantly worrying about money.

Lesson #20: Always be growing.

Focus on training yourself on a daily basis to grow into the next best thing in life. If that means creating your own product, learn it and do it. If that means creating information products online to teach others what you do, don’t wait, do it now. Learn, launch, fail forward, get feedback, improve, reiterate, and relaunch. People will buy your product.

Focus on training yourself on a daily basis to grow into the next best thing in life. If that means creating your own product, learn it and do it. If that means creating information products online to teach others what you do, don’t wait, do it now. Learn, launch, fail forward, get feedback, improve, reiterate, and relaunch. People will buy your product.

I hope this guide was helpful to teach you what I did to create a successful e-commerce business and what I’m still doing today to grow. It’s all the same stuff, just with the improved technology available that makes it easier to create. Get out there, figure it out, and do it yourself. A year from now, you’ll be glad you didn’t wait to get started.


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