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Is Shopify Dropshipping Still Viable in 2021? with Eugene Ravitsky - Honest Ecommerce Ep. 143

Eugene founded FactoryPure with his brother Mike in 2013. A small company that will go the extra mile to make sure our customers are happy and informed about the great benefits of our products.  

All new items are direct from the manufacturer, so you can be certain you are getting the best prices!  

FactoryPure also sells a large line of refurbished products, which opens opportunities for customers to save big on machines you need.

In This Conversation We Discuss: 

  • [00:00] Intro
  • [01:14] Why Eugene started a 2nd business
  • [03:24] The evolution of dropshipping
  • [05:42] It’s an oversaturated market
  • [06:53] How FactoryPure built their customer base
  • [08:43] Establishing trust as a dropshipper
  • [09:18] Explaining pay-per-click
  • [10:14] Reviews make you stand out
  • [10:42] Organic marketing is a long-term play
  • [12:33] Google favors quality over quantity
  • [13:31] Don’t focus on just content marketing
  • [14:35] Sponsor: Electric Eye electriceye.io
  • [14:56] Sponsor: Mesa apps.shopify.com/mesa
  • [15:37] Sponsor: Rewind rewind.io/honest
  • [16:36] Sponsor: Gorgias gorgias.grsm.io/honest
  • [17:55] Sponsor: Klaviyo klaviyo.com/honest
  • [18:42] Finding success with .edu websites
  • [19:14] Leading with value
  • [20:19] FactoryPure’s marketing landscape
  • [22:16] Exploring other automation ideas
  • [23:11] VIP emails for multiple purchasers
  • [24:22] How does FactoryPure email their customers?
  • [25:26] Where to find FactoryPure

Resources:

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 Transcript:

Eugene Ravitsky  

One of the most important things to grow Ecommerce business is reviews and just the history of sales.

Chase Clymer  

Welcome to Honest Ecommerce, a podcast dedicated to cutting through the BS and finding actionable advice for online store owners. I'm your host, Chase Clymer. And I believe running a direct-to-consumer brand does not have to be complicated or a guessing game. 

On this podcast, we interview founders and experts who are putting in the work and creating real results. 

I also share my own insights from running our top Shopify consultancy, Electric Eye. We cut the fluff in favor of facts to help you grow your Ecommerce business.

Let's get on with the show. 

Hey everybody, welcome back to another episode of honest ecommerce. Today, I'm welcoming to the show Eugene

Eugene is the co-founder and CEO of FactoryPure. They're an online retailer specializing in generators, pressure washers, and more. 

And actually, today we're recording it a day after Hurricane Ida so he's being... [There's] just so much customer service outreaches but he's giving us a minute of his time and talking to us about his business. 

Welcome to the show today, Eugene, how are you doing? 

Eugene Ravitsky  

Doing great, Chase. How are you? I'm doing well. 

Chase Clymer  

So before we talk about what's going on now, take me back because this is actually... This isn't your first Ecommerce business. This is actually your second business. 

So take us back to when you decided to not necessarily pivot, but I'll let you tell the story. 

Eugene Ravitsky  

Yeah, we had a business prior to this one where we had the same concept. But we sold more electronics, cell phones, those kinds of items, and started selling on eBay

We would buy and sell. And we realized quickly that there was some arbitrage there to be had at that time. It was when cell phones had the [option] where you can have the subsidized price when you get a plan. And so a lot of people were reselling there. 

So there was a pretty big third party market forum, which is not so much the case anymore. 

And so at some point, we decided we don't really feel like paying 12% to 15% to eBay, on all their fees. It's getting very expensive. So we threw up a very generic basic website and started promoting it and went on from there. 

So that business ended around late 2012 or 2013. So it had some... We had some legal issues that surrounded it. It was a good lesson. We had a lawsuit that was filed against us. And we quickly found out, you don't have to necessarily do something wrong to be sued. So it was a good learning experience. 

You need to get all your ducks in a row before you start something. And so once that business went down, we wanted to stick with the Ecommerce thing. 

Since we've done it, we figured out a lot of things. We kind of understand it. And so we pivoted to air purifiers just because it was easy to do. There's an easy dropship model. 

The manufacturers, they weren't requiring a whole lot of sales history track record. 

You just had to have a generic website that you threw up, which at that time we did with Shopify, so it's much easier than the first site. Times were different. And so that's how we got started with FactoryPure.

Chase Clymer  

Awesome. So yeah, let's kind of... So this was back in 2013-2014, that you launched FactoryPure on Shopify. 

Eugene Ravitsky  

It was early 2013. Yep. 

Chase Clymer  

Alright. And so the one thing I do want to highlight here is something that we don't really talk about much on the show is dropshipping. 

And obviously, we can go down that rabbit hole a little bit. I feel like back in 2013 just the concept of dropshipping and using a direct consumer store and just Shopify in general.... It was before... 

It was, I guess, "popularized by the guru's". So I guess what can you tell us about how it worked back then versus how it evolved over the years?

Eugene Ravitsky  

It was a fairly new concept at the time. And it seemed very easy. Everybody was drawn to it, because it's... You don't have to have any... Well, not no capital, but you have to have very little capital to get started. 

Because essentially, until you get paid for the item, you don't have to pay for it. So a lot of people started doing it, and a lot of manufacturers opened up their doors to allow dropshipping. And so... And it was built very easily. 

We threw up a website by ourselves. We don't have any development knowledge. We didn't hire a developer. We just threw up a generic site. And we got accounts for maybe 5 or 6 different manufacturers for air purifiers. 

And the issue we ran into was... The reason why it's so easy to get in is also why it's so difficult to succeed because essentially you're just one of many. They have 50+ dealers all selling the same thing at the same price. 

They generally have map pricing which is a minimum advertised price. So you can't list below a certain amount. So all the dealers had it at the same price. 

And so I would say now, a lot of manufacturers are a little bit more hesitant to bring on new dropshippers, just because it's already so saturated. 

So it's a lot harder to do now. You really have to dig and do some research and find a niche that's valuable or maybe hasn't been exploited. And so at some point, we went a little bit away from dropshipping. So we still do it. We have a mixed model. 

But a lot of manufacturers now, they want you to at least stock a certain percentage of your overall sales. So if all you're doing is dropshipping, at some point, they'll kick you out.

Chase Clymer  

When you highlighted that it's more difficult now... And I think it goes again with what you're saying with the oversaturation. 

It is more difficult to succeed, because it is honestly so easy to build a store and inject products that you are competing against with, I would say, almost millions of other stores. 

There's so many people that are standing these things up because they get hooked by that easy money. It's the tale of the time. If it seems too good to be true, it probably is.

Eugene Ravitsky  

Yeah, I agree. There are really no barriers to entry. That's the issue. So anybody can do it and everybody does. And so what you start to see is the big box stores --that usually are also you're competing with-- they tend to creep up to the top in that model. 

And so it makes it very hard to compete, because you can have all the best SEO and pay-per-click and everything on your staff but you're not going to compete with their advertising and their marketing. 

So it just puts you in this hole where you think, "Okay, I need to find something. I need to pivot. I need to do something else."

Chase Clymer  

Well, how did you guys kind of find that initial success? What worked for you to start to find that initial success and really build a customer base?

Eugene Ravitsky  

So initially we started doing air conditioners, and that was our first habit. So we went to some brands that did air conditioners and for some reason there was less saturation there. 

And so we researched some brands, maybe not the best brands, maybe not the Honeywells or the Frigidaires or that some of the top guys and some of the lower brands that people that research this stuff know about but maybe aren't mainstream. And so we started with those brands. 

We also had brands that didn't have that pricing so you can set whatever price you want. And there is an issue there where you're... Everyone's undercutting everyone. And so the margins are very small doing that but it still gives you some proof of concept. 

And one of the most important things to grow an Ecommerce business is reviews and just history of sales. And Google, they're very smart. They pick up on that date. They factor in your reviews. 

They factor in your revenue because they can see all that if items are coming from or if orders are coming from ads. And so you'll find that it'll [succeed] over time. 

And it takes years. It's not something quick. But you'll naturally show higher in search rankings, you'll naturally show higher for relevant content. 

And so once you're at that stage --which takes a while and you have to-- you'll have a long period of time where you're selling stuff either at cost or at a loss just to get to that point. 

But once you get there, you'll start seeing more favorable responses even to your map priced items or ones where you're maybe competing with some with a lot of other retailers.

Chase Clymer  

Gotcha. So it was really slow and steady wins the race. And it was just trying to acquire customers and try to get sales to build that. I think one thing that goes with dropshipping stores in general is to build that trust a lot of the... 

You could probably go and stand up a Shopify store with a free theme and inject a bunch of products in 15 minutes if you really know what you're doing. 

But that store is not going to have the level of trust, especially the trust signals that Google sees as someone that's been putting in the work for 6 months to a year.

Eugene Ravitsky  

Yeah. And with pay-per-click, you set a cost. But let's say you set 50 cents as your max cost per click, it doesn't mean that you're necessarily paying 50 cents for every click. It's like a bidding system between you and all the other sellers. 

And so when you have success, when they see that people are... What Google's trying to do is show relevant content, right? 

So if they see that when people are getting on your site and buying that affirms to them that your website is relative content, which is what they always want to show, that's what gives them credibility. 

And so that'll naturally get you to a point where you're paying less per click because Google is, I want to say, artificially... 

Not really artificially, but they're putting you above people that might be bidding higher than you just because they know that your content might be more relative than theirs. 

And you have Google Shopping where somebody types in a certain kind of air purifier, and then you have all the sellers. 

So you'll have 20, sellers, 30, sellers, 50 sellers, and they'll have the reviews right there. So you'll see which sellers actually have reviews and which are just fly-by-night companies. And so once you start getting those reviews, it's much easier to compete. 

So now, even though there's 50-60 sellers, you might now be competing with 5 to 8 sellers that are in your review range that have the trust level that you have.

Chase Clymer  

Absolutely. Now, is there something that you wish that you would have known when you got started? Or if you go... If you had a time machine, go back and tell Eugene a few years ago and be like, "Hey, don't do this. Or you should focus on this."

Eugene Ravitsky  

I do have something that comes to mind. So we... At some point, when we were just doing air purifiers,we were spending all our time on backlinking, SEO, writing guest posts on other people's blogs just for a link to our site. 

And that may or may not ever amount to anything, because like I said before, it's very difficult to supersede some of these big box stores or Amazon, naturally. 

And so at some point we changed to focusing our efforts on bringing on more brands, and in going more of the paid route for ads. 

And we started seeing a lot more traction doing that, rather than having a small assortment of brands and spending all our time guest posting and doing the link building the natural way. 

I remember when we started our previous business with cell phones, that was back when you could put a certain keyword on your site a bunch of times and you rank very highly for it just because it's on your website so many times.

And so we were actually ranked like top 3 or 4 for the keywords, brand new phones, just by accident, just because we had that on our main page a few times. And so now it's difficult. 

Google's very smart, you can't even really do link exchanges, because it's all about one way links and relative/relevant content. 

So it's very time consuming to go that organic route. And the other difficult part is it may or may not ever work out. You can do it for 2 years and see little to no results. 

And sometimes it takes much longer than that. 

Chase Clymer  

Yeah. I think that's true with just going to the content route with any type of business. It is definitely a long term play. And I believe that it does. It will eventually work out for you. 

Google likes to see that your website's being constantly updated. Because again, it sends a trust signal to them that it's something that's being worked on. It wasn't just set up once and then never touched again. So they do like that. 

But it is, I think with content, it's definitely quality over quantity now. And that shifted slowly over the last half a dozen years or so. And I'm no SEO expert by any means. But that's just what I've learned from others in the industry that it's definitely more quality.

And somehow the Google robots can tell what's quality and what's not. And that's what helps them with the search and all that jazz. 

Eugene Ravitsky  

Yeah, I agree. It's definitely helpful. It's just a much slower pace. And just in my experience... Not that you wouldn't do it at all. You should still do it. But to focus all your efforts on that and nothing else just for Ecommerce... 

But what we do specifically is very tough so it's something that should definitely be done in the background in conjunction with something else. And for us that was paid ads.

And also at the time, all the podcasts and blogs and all that... Those weren't so big at the time. Blogs were just coming out. 

And so it wasn't so much your own content that you put out which now is super useful and that's a lot of people's only advertising source and it does very well. 

So it's more so taking the time doing what you need to do just to get one of your links on this website now. 

And then you go on and you do the same thing and you're ready to do a guest post or guest appearance and now you have another one on their website. 

So it's very time consuming because you're essentially writing articles in exchange for one link here, one link there.

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Eugene Ravitsky  

We did have some good success with a lot of .edu websites. So for organic search .edu has very high authority and a lot of them have. 

For example, employee discount promotion where you can reach out to them, you'll give them a little code to put on their website. And in exchange, they'll put a link to your site. 

So there are certain things like that which are even a little more scalable, where you don't have to write a whole article. 

You can reach out to a bunch of university schools and offer them a promotion in exchange for the link.

Chase Clymer  

Yeah. That's a fantastic little strategy there. I think that a link building as a whole is definitely a... It can be done very well or it can be done terribly. 

And I'm assuming if you're an entrepreneur, your inbox has been inundated with very terrible outreach. And so those are the things not to do. But I'm quite certain on the flip side of it is you've been... 

You probably got some outreach before that you didn't realize was outreach just because it was done in the right way. And that's... 

Basically it comes down to this. And I think this is with anything you're trying to do in business. It's just got to lead with value. 

You have to provide something valuable to the person that you're making a request from. You don't know these people. In business, you got to be nice and you got to lead with value or you're... 

If you're always taking, you're never gonna ever grow from there.

Eugene Ravitsky  

Yeah. 100% [agree] there. And Google sees when something is valuable and when it's not. They're very advanced. 

So when you're putting forth content that people want to consume, it'll do well for you.

Chase Clymer  

Absolutely. So let's fast forward to these days. What does the marketing landscape look like for FactoryPure? Are you guys still all in on paid? Is it mostly Google? Are you doing anything like retention marketing or owned marketing?

Eugene Ravitsky  

We still do mostly paid. We do email marketing. We just started doing Facebook [ads]. So we've always done Facebook retargeting and those things, but never strictly ad campaigns

So we're starting to do that. Email Marketing. So for example, we were trying to automate as many things as we can, which from marketing is kind of hard. But there's definitely some tools out there that can help. 

And so for example, we sell a lot of power equipment. We sell generators and a lot of our recurring buyers are electricians, home builders, just various installers of generators. 

And so we've used some software: Airtable and Parabola. Those are the 2 software that we use. So it'll pull... It'll scan all of our orders that we've had in the past. But it'll also scan orders as they come in, and see if they have any keywords in them. 

That would show us "This is probably an installer or a home builder." It'll pull it out into a separate campaign. And so we've created a lot of very good contacts. 

And so if we get a shipment of generators, we can email everybody and let them know. Those kinds of things, when you can automate it, are much better. 

For us, a lot of our customers are just one-time customers. We don't sell products that you need every 2 or 3 months. It's something that you need maybe once in a lifetime. 

And so we're able to really pinpoint the type of customers that are repeat buyers because they're in essence reselling or distributing them. 

And so this is our way to, to be able to target them in an automated way.

Chase Clymer  

Yeah. And to even double down on that, other ideas that come to my mind is setting up a filter to say where the frequency is above one. 

So if the majority of people aren't buying products more than once, anyone that does buy more than once. Maybe it's worth investigating if they're a tradesman or what have you. And then another one would be setting up a price point threshold. 

So for a lifetime value of a customer being above x,that's a useful filter that I've seen a lot of people do, especially in industries that aren't as related to you. 

But setting up a VIP threshold for a clothing industry, if you know where... There's an inflection point where someone hits a certain thing, they're gonna keep buying from you if you keep selling them stuff and you should treat them like a VIP. 

Those perform really, really well.

Eugene Ravitsky  

Yeah. Those are good points. We actually do have the filter for, if they've ordered more than one. 

Because yeah, since it's something that generally one person buys one time that even just 2 orders usually signifies that it could be somebody that's a multiple [purchaser]. 

And the stock situation on them now, it's so... They're very depleted. So a lot of these things are 6 month-8 month lead time. So you have to really order them in advance. 

And so by the time we get them, a lot of people are in-demand because they haven't been out in who knows how long. And so emails like this are very useful. 

We can get a lot of recurring revenue that way. But yeah, there's certainly a lot of email marketing tactics that I'm not familiar with. 

We just started exploring that just because it's hard to market to people that probably aren't going to need your product again after you buy. So you really have to find unique ways to reach them. 

And you don't want to bombard them where they're going to get turned off and not use you. So this is one demographic that we found that has a very good chance of buying again.

Chase Clymer 

Absolutely. I think that's a fantastic, fantastic idea. I would guess that it's not even that much of a larger lift on the team to just treat these multiple purchasers as VIPs. 

What does the email read that you're sending out to them? Is it just something as simple as:"Hey, are you in the XYZ trade? Here's a direct line to a salesperson that can help you better? 

Is it that simple?

Eugene Ravitsky  

So we haven't done any to where it's just like a general "Let us know what you need." It's been more so for when we get inventory. 

So if we're getting a big shipment, then we'll email them and say "We have this coming in." 

So we're trying to create that value first before we go a step beyond and see if we can handle their needs in the future. 

So because these items are so rare now that it almost certainly would be good value to them to be informed before everybody else when stuff comes back in. 

And then once we garner some trust that way, then we can have more of a VIP setup with them. And we do have sales reps that will have clients essentially. So they'll... Somebody will call and they'll order from them. 

And so they have an incentive to take down their information and they'll reach out on their own when new products come in.

Chase Clymer  

Absolutely. Now, is there anything that I forgot to ask you about today that you'd like to share with our audience?

Eugene Ravitsky  

Nothing that happened top of my head.

Chase Clymer  

Absolutely. Let people know what's the website. What should they do? What should they check out?

Eugene Ravitsky  

Yeah, the website is FactoryPure.com. We sell generators, power equipment... We sell a lot of other items so we're trying to expand beyond just one category. 

So we sell anything from drones, to electric skateboards, to strollers... So we sell a little bit of everything. 

Generators are certainly our focus, but we're trying to add new categories each week. 

Chase Clymer  

Absolutely. Eugene, thank you so much for coming on the show. 

Eugene Ravitsky  

Thanks for having me, Chase. Appreciate it.

Chase Clymer  

Alright. I can't thank our guests enough for coming on the show and sharing their knowledge and journey with us. 

We've got a lot to think about and potentially add into our own business. You can find all the links in the show notes. 

Make sure you head over to honestecommerce.co to check out all the other amazing content that we have. Make sure you subscribe, leave a review. And obviously if you're thinking about growing your business, check out our agency at electriceye.io. Until next time.