Being the largest economy on earth, the USA is home to a lot of strong e-commerce giants with websites people can visit to buy anything they want. There’s Amazon, Walmart, Jet.com, and many more cropping up all the time. Not to mention, large, developed markets have tons of smaller merchants. Shopify powered 500K stores in 2017, and 70% them were based in the USA.
If you cater to the USA dropshipping market, you’ll find that you will need to spend more on ads in order to stand out from so many competitors. According to Ad Espresso, the average cost per thousand impressions (CPM) for Facebook ads in the US was $7.19 in Q3 of 2016. Meanwhile, for Google Adwords in 2016, it was $24.74 based on a report published by Statista.
How many of those 1,000 impressions convert into customers depends on your product, your store, and a number of other factors, but if these things are done correctly, you could reap double the profits just by switching to another market rather than attempting to dropship in the USA.
Before switching to another market there are several factors that should be considered in order to avoid unnecessary losses and increase the chance for higher profits. Factors that you must consider are purchasing power, competition level, percentage of English speaking population, current trends, delivery infrastructure and how big is the market.
Here can be very useful AliInsider chrome extension. It gives you insights into current trends by showing you the average daily sales volume for a specific product or whole category on Aliexpress.com and in addition you also can see in which countries product is currently selling and current number of sellers that are verified as dropshippers. (Image 1.1)
Dropshipping Case Study by Countries
One of Oberlo merchants who is also a US dropshipper agreed to share his Google Analytics stats with them for this case study on dropshipping in the USA. This information will offer some insight to help guide your decisions about which countries are worth testing. They aren’t able to disclose the personal information about the merchant including his store’s name, but we can say that he is selling a wide range of women’s and men’s clothing and accessories. Also website is in English and has never been translated into other languages.
Top Countries by Conversion Rate
Quick note: a conversion rate is the % of visitors to your site who make a purchase. E.g. if 100 people visit a site and 5 of them buy something, conversion rate will be 5%.
The chart represents the statistics of more than 2,500,000 visitors to his site and includes only countries with 100+ orders.
From the list we can see that there are six countries that have higher conversion rate than US, but US is biggest traffic source on this site because it’s the largest market. In addition to the conversion rate, we also need to take in consideration average order value, so we can calculate average revenue per 100 visitors and define which countries are most profitable to target.
Top Countries by Average Order Value
In this dropshipping case study, 8 out of 10 countries on the list are in Europe and US is not even in the top 20 countries for average order value. In fact, the average order value in the US is only US$39.29. While Argentina looks great, I’d recommend eliminating it from your testing list since the conversion rate is only 0.46%, which means higher advertising costs.
From this stats we can figure out how important is to do the research and analysis at every step of your dropshipping journey in order to make more profits. Smaller and cheaper markets don’t always mean smaller profits. These two simple graphs allow us to calculate average revenue per 100 visitors:
Conversion rate * Average Order Value = Average Revenue per 100 visitors
TOP 15 countries by Average Revenue per 100 visitors:
1. Denmark, 4.67 * $46.63 = $217.76
2. Norway, 3.54 * $51.25 = $181.42
3. Australia, 4.17 * 43.41 = $181.01
4. Switzerland, 2.80 * $57.68 = $161.50
5. Ireland, 3.48 * $46.03 = $160.18
6. Finland, 3.37 * $46.60 = $157.04
7. Canada, 3.32 * $42.55 = $141.26
8. Sweden, 2.78 * $47.47 = $131.96
9. Austria, 2.26 * $57.71 = $130.42
10. United States, 3.00 * $39.29 = $117.87
10. France, 2.66 * $43.12 = $114.69
11. United Kingdom, 2.71 * $41.97 = $113.73
13. Germany, 2.30 * $45.58 = 104.83
14. Belgium, 2.15 * $47.27 = $101.63
15. Netherlands, 2.26 * $43.77 = $98.92
If we look at numbers, we see that difference between United States and Denmark is $100 per 100 visitors. If you have 1,000 visitors per day, you’re leaving up to $1000 on the table each and every day just by not expending your business outside of US. The advertisement cost varies from country to country, so this also should be taken in count. Bellow is the simple graph published by Ad Espresso that shows average cost per click (CPC) on facebook by countries in 2017. If you want to see more about facebook and instagram Ad Cost by countries and industries click here.
While the stats will definitely differ for your store, use the above graphs and insights to create your countries-to-test list. Try them and track the results.