When it comes to Dropshipping profitably, your ads are as important as what you’re selling.
In this article, I talk about how you can avoid losing money advertising on Facebook.
Frequently Asked Questions
- Should I target worldwide for my products? or
- Should I target specific countries?
Firstly, most people who use Facebook for advertising don’t really understand the profit structure to staying profitable with Facebook.
So let’s do the math.
PC – Product Cost
SP – Selling Price
PM – Profit Margin
CPA – Cost Per Customer Acquisition
CPC – Cost Per Click
SP (+margin) – PC= PM. Now this is elementary profit formula.
However, when it comes to Facebook, it’s important the PM = the maximum CPA
This is because your CPC and CPA should be determined by your PM.
And your PM guarantees wether you break-even, make profit or loss.
To stay profitable you need low CPC.
This is straightforward but most people don’t understand this and that’s why people lose money on Facebook.
So if you’re getting $1 CPC and your PM is $50, then you have 50 chances for someone to buy that product.
The average conversion rate on shopify stores are 3%. So 3% of 50 chances converting is 1.5 – 2.
Meaning that every $50 you spend, you get 2 sales totaling $100 profit.
From this we are already seeing the numbers that won’t convert and what you should be focusing on is how to convert those numbers.
So don’t throw money on Facebook ads and hope for the best because it’s not effective.
CPC is important for profit, so one of the variables to high CPC is the product and niche itself.
If you sell a chandelier or high ticket product, you’re going to attract high CPCs but it’s affordable as high ticket products have high PM to play with.
So what countries should you target? because these countries also impact your CPC and profit.
CPC in some countries: statista.com/statistics/279…
Keep in mind that choosing countries to target, you have to look at:
- purchase power
- consumer purchase behavior
So focus on 1 country, when you become profitable, move to another country and spread slowly but steady.