Steve Tan Interview – Dropshipping Scaling Strategy with Facebook Ads

Steven Tan:

… just use dropshipping to kind of earn cash flow. I mean if it’s good, keep doing it. Milk it until it’s really hard, then use that money to do something like white labeling, kind of some things that you could probably go longer.

Alex Fedetoff:

Hey guys, we have the legend Steve Tan here. So if you’re familiar with his community on Facebook, how many members do you have now?

Steven Tan:

Probably around 77000. Yeah.

Alex Fedetoff:

70000 people. So very impressive. And Steve and his brother Evan, they do very big numbers. So they are definitely people that you want to look up to and basically learn as much as possible from. So very excited to have Steve here. And we had actually interviewed several months ago, and people loved it, man.

Steven Tan:

Thank you.

Alex Fedetoff:

People loved it. So yeah, very excited. So Steve, what changed since our last conversation? So obviously, we’ve chatted with your brother, Evan. So Facebook’s definitely getting more aggressive. You guys are diversifying. So in terms of our team structure and team building, do you see any changes in that perspective in terms of … So for example, on my side we see something similar to what Savannah was saying on the stage, that machine learning now kind of we simplified the structure. In terms of structure on Facebook, do you still have the same structure or are you simplifying it as well?

Steven Tan:

I think for us we didn’t change a lot of things for us. I mean, because the nature of dropshipping is kind of not very similar to running brands. So I was just telling Evan the same thing. It’s actually, it seems so much easier to run brand’s campaigns, because it’s more long …

Alex Fedetoff:

With high budget and just-

Steven Tan:

Yeah, I think, I mean, we did run brands before, but it’s not a super big skill. So next year we’re going to focus more in terms of team, we’re going to probably put more effort in terms of creativity. Creativity and probably more in terms of creatives and everything. So for us, so that we could churn out more original content, better creatives, more different angles and all this kind of stuff.

Steven Tan:

So we’re planning for building some brands that we could potentially sell in the next three, five years. So dropshipping is still great, but it’s just that we want to explore more. I mean, we did have some brands but it’s not … it’s small brands compared to brands that probably could sell for really good numbers in the next three, five years.

Alex Fedetoff:

In terms of content creation, do you want to build it in-house, or are you outsourcing this part of …

Steven Tan:

I think it’s good to have in-house capability as well. So whatever … I mean, it’s not necessarily that we always can do the best jobs, but I do believe that we could probably work with some great agencies like [Make 00:03:10], or have Savanna or everything someone. So all these agencies that has proven content. Content creation, content marketing. I mean, probably we could learn from them and probably generate some self-efficiency inside our own company as well.

Steven Tan:

So we do have creative people in our team, but probably if we want to be really serious about brands, then probably we would want to tap on some help, agencies that has done that before, and crushed it for some brands, then probably it will be very helpful in learning for our own teams as well.

Alex Fedetoff:

Cool. In terms of the testing of the products, so when you test the products, do you typically test worldwide, or are you focusing on big four? How is it?

Steven Tan:

I think for us it’s usually the English speaking countries for our testing. I mean, it has the highest buying intent. English speaking countries. Then from there, if it’s a winner then we’ll scale it up worldwide.

Alex Fedetoff:

But you don’t start worldwide right away?

Steven Tan:

No, not really. I think we tried a few times. It sometimes works, sometimes it doesn’t. I mean, it’s Facebook. If there’s a guarantee everyone will be super multi kind of billionaires or something. But in a sense I think it’s good to test, but I think for us, after all this testing we still kind of prefer just focusing on the big four, the English speaking countries. Then from there on you could scale it up to different international markets. Yeah.

Alex Fedetoff:

And you do like any POD, or this is just …

Steven Tan:

No, just a dropship. We don’t do much POD. I do have partners that do some POD stuff, so pretty much they run all these kinds of things for us. But we’re definitely no expert when it comes to POD.

Alex Fedetoff:

So, and then the same thing you’re telling me like last, it’s kind of like you finding something and then you just stick to it, and you just focus on it, right? You don’t go somewhere just like make a learning curve? Then you just find someone who can help you to do …

Steven Tan:

I think I believe in working with smart people, and talents, and great partners. It’s kind of like reducing the … it’s kind of like a shortcut, right? Instead of learning it yourself, you could either joint venture, invest, or probably partner up in some way in adding value to the company. So I recently invested into Amazon businesses. They’re really small, but they have huge potential.

Steven Tan:

So probably in the next three, five years, we could have something that we’re really proud of, like a brand that like Amazon, that sells very well and we could scale it up with Shopify, and build up the brand there.

Alex Fedetoff:

But general, building Amazon stores, that’s … You didn’t go there?

Steven Tan:

I don’t do it myself. I have people that’s good at Amazon. I have partners who specialize in Amazon, and we’ll just partner up and have him come up with something, and will add value in terms of marketing outside of Amazon. But because there’s a lot of things that overlap. For example, how you drive traffic from Amazon to your landing page. How you use that and funnel them to messenger, marketing and all those kinds of things. It’s not everything’s new.

Steven Tan:

So some of the things, it overlaps and we could add a lot of value, and scale the Amazon brand way faster than someone who’s only just Amazon. Yeah.

Alex Fedetoff:

Definitely. So with your advance in your masterminds, you’re planning any masterminds this year? Or is this your … probably not because it’s the end of the year.

Steven Tan:

Yeah. This year we kind of finish all our masterminds, so we’re going to be doing more masterminds next year. But probably more like workshops, smaller workshops in Singapore, across Southeast Asia. Probably in Europe. Some, if we do have time and we’re also looking forward to launching our ecommerce won’t submit, an event that we did. We did one in 2017. So, we did … had about 800 pecs for our first event.

Steven Tan:

So it’s kind of like one of the bigger events for e-commerce in Asia and Singapore. So we’re looking forward to bringing it up again in 2020 once we have our new team of people setting up everything for us and yeah, it will be exciting.

Alex Fedetoff:

Awesome. So where are your teams mostly located right now? Is that in Singapore? Or-

Steven Tan:

We have like … I mean we have offices pretty much across all Asia. So most of our staff are in China and also in the Philippines, that’s kind of the majority of our workforce. But we do have some people in Singapore. Singapore is really expensive, but I mean for events it’s mostly in Singapore, but for the back office customer support, it’s probably more in the Philippines and the rest of fulfillment, procurement and everything’s all in China.

Alex Fedetoff:

Okay, cool. Awesome. So what trends do you see are coming overall? So obviously Facebook is getting more kind of stronger, right? So you want to eventually, do you want to go into with one brand, just focusing all in or you prefer having this kind of diversified portfolio?

Steven Tan:

I still prefer having a range of different businesses. So just in case shit happens, you still have a lot of other businesses that’re generating an income and cash flow for a business, right? Dropshipping is great, brands are great. It will be even better if you have a combination of all. So the trends that I kind of see is, I mean Facebook is getting strict with all this kind of non legit kind of dropshipping.

Steven Tan:

But dropshipping is kind of a very white topic, right? So there’s people that’s doing white labeled dropshipping, it’s still dropshipping, right? So there’s a lot of different ways. It’s kind of like, it really boils down to the entrepreneur themselves, how they want to innovate and how to provide better customer service. Better quality products, better customer experience and everything, right? And all this, you still can do dropshipping but just in a different way. Faster shipping times also make a difference to your dropshipping game as well.

Steven Tan:

So not necessarily changing a lot but it’s probably some small points in terms of innovating and how you do business will make a huge difference. Yeah.

Alex Fedetoff:

So what would be your main advice for dropshippers that, for example their … let’s say, they stock at a certain level or they just cannot scale, what would be your main kind of …

Steven Tan:

I would definitely say just use dropshipping to kind of earn cash flow. I mean if it’s good keep doing it, milk it until it’s really hard, then use that money and do some white labeling, kind of like some things that you could probably go longer, more long term. I’ll probably use that cashflow to invest in some other businesses that you have kind of experience or kind of have good experience in terms of marketing and Facebook ads and how you can add value to those brands that will make kind of improvements as well. Yeah.

Alex Fedetoff:

We use Instacart. Man, it’s unbelievable.

Steven Tan:

Thank you.

Alex Fedetoff:

Is that something that you want to go and dedicate more resources? Kind of like …

Steven Tan:

Yeah. I was just joking with some of my friends yesterday Intercart till now we don’t have a website. It’s like, the website’s ugly as hell, right? It’s really ugly. No promotion. So we finally got ourselves to kind of design the website. So we’re going to relaunch it and we’re going to partner up with athletes as well to kind of let more people know about how important conversion, bumping up their AOV makes a huge difference.

Steven Tan:

So we have some people that do very traditional dropshipping. They don’t innovate too much. They just drive traffic directly to the website, right? So a lot of people are just breaking even because …

Alex Fedetoff:

That’s typically, that’s-

Steven Tan:

Facebook smart, CPMs expensive-

Alex Fedetoff:

Or up to five, 10% profit margin.

Steven Tan:

Probably. So, for example, just to give you an example, a lot of people don’t see the power in post-purchase upsells, right? Because, for example, if, let’s say the margins are thin, it’s probably five, 10%. So if you’re doing $100000, let’s say 10%, so your profit is 10K, right? But if you’re able to bump your AOV or post-purchase upsells by an extra 20%, that’s like $20000 and $20000, there’s no ad spend at all.

Steven Tan:

So that pretty much doubles or triples your profit margins from there. So a lot of people don’t see the power. So a lot of people are just focusing on Facebook ads, Facebook ads, Facebook ads. But there’s, I mean you’re spending so much money on Facebook ads, so you should be putting time in making small tweaks to your conversion rate, right? I mean one, even half a percent increase is going to make a huge difference to your profitability, right? So I mean we’re going to put in more resources, we’re going to spread the word, do more content marketing.

Steven Tan:

Probably more interviews with success stories as well so people see the power in Intercart. And now we’re probably running about 15 million per month off our transactions for all our clients and we’re not even pushing it yet. It’s pretty … A lot of big players are using us because it makes a huge difference to their bottom line.

Alex Fedetoff:

Yeah, with big volumes, right?

Steven Tan:

Yeah. I mean especially a big volume, you really need to be profitable and can’t be just breaking even and everything.

Alex Fedetoff:

That’s … I see some people they do few million and sometimes few million some months then, just like-

Steven Tan:

No point, right? I mean, what’s the point of doing so much volume and not making money, right?

Alex Fedetoff:

Yeah. That’s the point.

Steven Tan:

Unless he’s probably using it for a different thing. But I mean if you want to be in business you have to be profitable.

Alex Fedetoff:

Correct.

Steven Tan:

Because it’s not like we have raised funds from VCs, it’s not like we’re going after IPO and all those kinds of things. So I think it’s very critical that every company has the ability to kind of generate cash flow or income for their business all the way until they want to do something big.

Alex Fedetoff:

Awesome. Steven, thank you for sharing. By the way guys, if you want to try it, definitely try, if you haven’t tried Intercart, if you do drop shipping or e-commerce it’s, that could be game changer for you because it was definitely a game changer, when people come to me and they say, we are not very profitable or we don’t … basically want to improve the conversion rates or the average order value, that’s the first suggestion and gives them, do this. So Intercart, SMS bump, and email marketing probably.

Steven Tan:

All that. All that will easily bring you from not making money to making money.

Alex Fedetoff:

Yeah, definitely. So thank you for bringing that product to the market.

Steven Tan:

Thanks.

Alex Fedetoff:

Thank you for sharing this with me. And yeah, thank you guys for watching. So follow Steve on where do people-

Steven Tan:

Facebook, Instagram.

Alex Fedetoff:

Yeah, just find him. It’s easy. Like he’s … And so, yeah. And just join his group as well. So thank you for watching guys.