 What's up guys, welcome to a new video. In this one then, I wanna discuss whether you can actually make money selling cheap products, dropship and cheap products from AliExpress. So when I refer to cheap products then, I'm talking about retailing something at 20 pounds or less. Anything less than that, I would consider quite a cheap product. And today we're gonna be looking at whether you can actually make a profit doing so. Now, the reason for what gave me the idea for this video then is because I speak to quite a lot of people, especially beginners, a lot of people seem to be making the same mistake of sticking to really cheap products. Certainly when I first started dropshipping, so we're talking nearly four years ago now, as with anything or certainly in my case, when I went into something, I didn't really necessarily have the confidence or belief that people would spend their money with me and actually buy one of my products. So I personally stuck to really cheap products too. And I soon come to realize then that over time that this can actually harm your business because I guess the best way to look at it then is if you're out shopping one day and you come across a new jewelry store, a new brand you've never heard before, and then in their window, they have a brand new Rolex and they're selling it for 200 pounds. Now, if it's a brand new Rolex, it's legit and everything, then it's a great deal, but because it's a brand you've never heard of, because you know what sort of price a Rolex commands to see it for 200 pounds, then something's not gonna, the two and two don't match up basically. So you're gonna have that hesitation to spend that money, you're not gonna think it's legit and it's gonna make you question that brand and the quality of the product. And the same goes for your Shopify store too. If all you have on your Shopify store is a lot of really cheap products under 20 pounds, then people immediately, because they don't know your brand, they don't know your name, what you're all about, et cetera, they're immediately gonna question the quality of your products and the professionalism of your store. So it can harm your brand, it can harm your reputation and as a result, it can harm how much money people spend with you. So in this video then, we're gonna be looking at a couple of product examples, breaking down the numbers of just how difficult, finding out how difficult or just how easy it is to sell products in a certain price bracket. And we're also gonna be talking about the different changes over the past few years. So like I mentioned earlier, I started dropshipping three and a half years ago now and Facebook has especially, so that's what I focus on have completely changed in terms of the amount of competition and how expensive your data is now in comparison. Taking that into account as well, this should affect how you select your products and that's what we're gonna be discussing today. So before we jump into the first topic, I wanna discuss, I just wanna very quickly say, thanks very much for tuning in. I hope you do enjoy this video. If you do, please do make sure you let me know by hitting that like button. I am uploading four videos every single week now as well. So if you enjoy the content, please do make sure you subscribe so you don't miss any future videos. And that being said then guys, thanks again for tuning in and let's get into the first topic, which is gonna be Facebook ad competition. So I'll put some screenshots up on the screen now so you can see. This isn't just my opinion, this is a fact. So when I started advertising back in 2016, there were approximately three million people advertising on Facebook today. Well, not even today, this was I think Q1 of 2019. It was reported there's over seven million. So it's more than doubled and in that time, the amount of users on Facebook hasn't doubled. So what that essentially means is that there's more people competing for a smaller space. And as a result, then it just makes your data more expensive. So your CPM is more expensive and as a result, your cost per click is gonna be more expensive. Your cost per purchase, everything is gonna cost you more essentially. So what that means in return then is that the products we sell have to be a bit more expensive to essentially increase that margin so that we can afford to run Facebook ads. To give you an example then of the effect of this, I've documented this in previous videos in depth. So I won't go into too much detail now, but the first product that took off for me then was the LED dog collar. I used to sell them for 10 pounds. You can go into my ultra up if I store and see that. And I'll put screenshot up from my ad account from back then. And I could comfortably achieve purchases. Again, I'll put a screenshot up of about three, four or five pounds. And therefore I could sell those cheap products and still make a profit. Now a year later then as summer passed where there wasn't a demand for that product, the next season that come around and I tried to sell them, I just couldn't do it. It changed that much in a year that had to completely change the version of the product to make it more quality, expensive product to increase that margin. So I could afford to pay up to 10 pound cost per purchase as well. Now there are other things you can do and implement to your store to increase your profit margins to bring up your average order values which we'll be discussing at the end of the video. But my recommendation then for all new people, for all beginners getting into dropshipping is to choose products that will give you at least 15 pounds worth of margin. So if a product costs you five pound delivered that's including delivery, e-pack, et cetera, then it's a product you need to be able to sell for at least 20 pounds. And that will give you enough room then to kind of play around with and hopefully make a profit on the front end as well. And that kind of brings me on to my next point then which is the perceived value of an item. So essentially what a perceived value is is when somebody sees a particular product then it's of different value to different people. And the cheaper you go with your product range then the easier it is for people to guess how much an item like that would cost. So for example then selling the LED dog collars because there weren't a lot of technology involved that weren't particularly high quality materials people could easily look at that and think that's probably worth about five, 10 pounds I'm gonna pay no more than that. Whereas if you have a more expensive item where it might be battery powered there might be certain different functionalities involved with it or it could significantly increase the quality of somebody's life or solve a problem then if it's a valuable problem or it can make somebody's life better then it doesn't really matter about the material so much because it's about what it can do for a person and that is essentially what increases the perceived value of your product. And that is point two then. So point number one is to try and sell a product that leaves you at least 15 pounds worth of room just so you have a bit of room to play around with in terms of your marketing spend. And then point two is to choose a product that has a high perceived value because of either number one it's got really high quality materials number two it's got a really cool function that would seem expensive to manufacture. Number three it solves a really big problem for somebody or number four it makes somebody's life easier so it improves the quality of their life. So it's giving an example then of how difficult it would be essentially to sell a cheap product then I want to use the LED Doug collar as an example this is in fact the exact product I used to drop ship three and a half years ago now and we can see it's one pound 56 then per collar that is for the medium size too we have approximately two pound for delivery which is E-Packet everything our drop ship now is by E-Packet which leaves you at a total cost then of three pound 50 give or take a few pence. Now if you're selling this for 10 pounds that leaves you six pound 50 as a marketing cost and that is just to break even if you can achieve purchases for say five pounds that still only leaves you one pound 50 profit per order plus then out of that you have to take for example the cost of your apps the cost of your Shopify plan the cost of any other extras that are involved in this if whether you have a VA whatever it could be now if you get to the point where you're doing over 85 grand in revenue in a 12 month period then you have to take VAT off that too so that 10 pound per order comes down to eight pound which minus your product cost of three pound 50 that leaves you four pound 50 that you have to achieve as a cost per purchase just to break even and that is crazy cheap and you may be able to achieve that but me personally I'm operating around the 10 pound mark so for me it just isn't plausible so the key takeaways from this video then number one is to retail a product that leaves you at least 15 pounds worth of room before you take off your marketing costs so if a product costs you five pounds delivered make sure that includes delivery costs too you need to be able to sell that product at at least 20 pounds just to give you enough room to play around with for your marketing costs number two is to choose a product with the highest perceived value as possible so you either do this by a product that either looks really good because it's made out of really high quality materials number two it significantly increases the quality of somebody's life or number three it just solves a really troublesome problem that people are having because then they're willing to pay more money for something essentially and number three then is just kind of like a little side note is just make sure you always always always offer an upsell to increase your average order value the more money you can get somebody to spend on that initial encounter on your store the first time they come on then the more profitable you're gonna be and trust me any business not just so drop shipping probably more so in drop shipping to be honest because the margins are tight is you wanna try and make as much money as possible as much profit as possible sorry from the very beginning and kind of like a side tip on top of that I guess then is just make sure that the upsell you offer is from the same supplier from the trigger products from the original product that way you're still only paying one CPA one cost per acquisition you're still only paying for one delivery charge but it's gonna increase your profit margins it's gonna at least double them if the product is of same price and that being said then guys that is it for today's video I hope it helped you out I hope it kind of opened your eyes to the kind of products you wanna be choosing to put on your store and I guess the final note is just have a bit more belief have a bit more confidence in what you're doing people will buy things if it's the right product and you put it in front of the right audience and you have a professional looking Shopify store it comes down to kind of like the three core elements that you've probably heard me mention before is you need a good marketing campaign you need a good product and you need a good Shopify store with that being said then with that being said then guys thanks again for watching I hope you enjoyed it if you did please do make sure you subscribe please do make sure you hit that like button and hopefully see you in the next one too