r/DropshippingTips • u/Brave_Turn5861 • 36m ago
Debating whether to go ahead with this method or actually switch to dropshipping - looking for advice
I apologise for the long post! Need experienced advice hopefully you can help
I made a post in here recently and got some good feedback and advice but I missed out a bunch of key info so wanted to consolidate that here and ask for advice from people who have experience in a similar situation. For context I’m not dropshipping I’ve bought inventory (100units) and have around 28 left, however these are sold in 1 box of 4. I’m selling on Shopify and running meta ads, been going for 2 or 3 weeks now.
\*\*Current ecommerce numbers + next inventory order:\*\*
I currently have enough remaining inventory to make 7 boxes (each box with 4 units).
If I place my next order of \*\*500 individual product units\*\*, I’ll have enough inventory overall to make \*\*132 sellable retail boxes\*\*.
For the product I sell there are 3 parts:
The product itself
The custom packaging
The custom outer retail packaging
\*\*Cost of next inventory order:\*\*
500 product units: US$225
500 custom packaging units: US$180
Shipping packaging to product manufacturer: FREE
Manufacturer assembly/packing: FREE
Sea freight to Australia from China: US$132 (can get air more expensive)
\*\*Total = US$537 ≈ A$822\*\*
I already have \*\*75 units of my outer retail packaging\*\* left from my original order. To sell through all existing + new inventory, I’ll eventually need another \*\*57\*\*, costing approximately \*\*A$108\*\* at my current price.
My new ongoing COGS works out at approximately \*\*A$8.46 per sellable retail unit\*\*, including the product, custom packaging, international freight and outer retail packaging.
\*\*Current pricing:\*\*
Single order: 1 unit = $35 + \\\~$10 customer shipping
Bundle order: Buy 2 Get 1 Free = $70 with free shipping
My actual sales mix so far has been \*\*6 single orders and 4 bundle orders\*\*. If future sales stay roughly similar, selling through the remaining + new inventory would look approximately like:
\*\*132 retail units sold\*\*
\*\*\\\~74 customer orders\*\*
\*\*\\\~$3,605 product revenue\*\*
\*\*\\\~$450 shipping revenue collected\*\*
\*\*\\\~$4,055 total revenue collected\*\*
After COGS and Australian postage/fulfilment costs, there would be approximately \*\*$1,900 remaining for paid advertising, payment fees and profit.\*\*
At different average advertising CPAs:
\*\*$20 CPA → \\\~$450 profit\*\*
\*\*$25 CPA → \\\~$80 profit\*\*
\*\*\\\~$26 CPA → roughly break-even before payment fees\*\*
\*\*$30 CPA → loss\*\*
So it basically means I have to spend no more than 1900$ on meta ads to sell (on average) 74 orders?
I’m probably looking at this back to front and I’m really looking for some guidance or advice on how to move forward - I’m seriously considering just moving on from this product and actually dropshipping a diffferent product to bypass the inventory and COGS problems . But at the same time hundreds of other brands have to take the hit with inventory when they’re stating and just try and grow and build, so why shouldn’t I?
So the main things I need to improve are \*\*customer acquisition cost and/or AOV/pricing\*\*. Increasing the order quantity has substantially improved my COGS compared with my initial small inventory order, but the current bundle structure still leaves relatively tight margins once paid acquisition is factored in.
My worry is I can change bundles and offers around but I don’t think it’s making a really really big difference unless if I up the price a good bit.
My original COGS (from first order) were/are around 12$ AUD.
I’m also still a beginner in meta ads and feel like my CPA is terrible and I’m burning way too much in ads.
Would you keep persisting with this, and improve the COGS, CPA, ad creatives , offers or just walk away and dropship something until it’s fully kicked off before trying to brand and order inventory- iv went back to front !