How to do Dropshipping on Facebook | The Growth Booth #34

Welcome to Episode number 34 of TheGrowthBooth. Now, last week we started talking about dropshipping and how I believe it is one of the best, if not the best way for someone to get started online, especially in the world of e-commerce, because you can start selling products without needing to buy any inventory upfront. You don't have to worry about any of the logistics, shipping, or any of that stuff, and you can really hit the ground running. Now, I want to build on that a little bit this week by diving into what is arguably the best organic traffic platform out there. And by that, I mean a place where you can get boatloads of free traffic coming into your store.

There's a real beauty in not needing to pay for your traffic because it does mean that your profit margins can be significantly higher. There are a lot of misconceptions about Facebook Marketplace. I want to dive into some of those and also share with you a little bit about how you can get started selling on Facebook Marketplace yourself. And just like last week, I have invited the CEO of Cartzy to join me today, Mark Chaney. Mark is an expert in Facebook Marketplace and knows it inside and out as someone who has personally sold a lot of his own products on there through his own stores, but also as someone who has really been the leader in building integrations that facilitate seamless and streamline selling on Facebook Marketplace possible through leveraging technology.

AIDAN

Mark, thank you for joining us again here for the second part of our chat here about dropshipping and selling our physical products online.

MARK

Yeah, absolutely glad to be here. Thanks.

AIDAN

Let's dive straight into the Facebook Marketplace. What is the Facebook Marketplace specifically? I know there are a lot of misconceptions out there. I used to think that Facebook Marketplace was like Craigslist or something or a place where you could sell your second-hand golf clubs, but clearly, it's not the case. What is the Facebook marketplace?

MARK

Well, it's a marketplace. Facebook has gone through a lot of iterations in its growth to become a prominent marketplace where sellers can post their listings for sale and make it easy for buyers to find those listings in a number of ways and ultimately do commerce Facebook kind of did. In the early days of the Marketplace, Facebook was kind of viewed as a garage sale type of place to put your listings or your products and use products originally. Absolutely. It predominantly started out as a second-hand marketplace, and over the course of probably the last five years, they have made extreme strides in kind of changing the way that is viewed. I think they're really trying to put a dent into some of the other major marketplaces like Amazon and Walmart and eBay, etc. They're definitely a legitimate player in the space.

AIDAN

I think they've already made a pretty impressive dent in those others because the Facebook Marketplace is exploding, I mean, it's a place that does billions of dollars in sales every single year and you can find everything.

MARK

When you start with billions of users built right in, then you kind of have an advantage right out of the gate.

AIDAN

Yeah. Why should people consider selling on the Facebook marketplace? Any reasons that jump out at you there?

MARK

Yeah, I think just like what I said, there are just billions of people that are on the marketplace. If you look at just the United States, just the sheer volume of active users that are on Facebook's platform every single day, those numbers are astonishing just in themselves. Being able to just be right there in front of that group of people is insane.

AIDAN

I was talking to one of our students and someone who uses Cartzy as well the other day, and he's not based in the United States, he's based in Australia. And he's already done $250,000 in sales this year. In six months, the first six months of this year, he did a quarter of a million dollars in sales on the Australian Facebook Marketplace. Not even the USA Facebook Marketplace – he's selling there as well, but on his own local Australian Facebook Marketplace. It doesn't really matter where you are. And by the way, I should really stress here that if you are in Australia or New Zealand or the UK or some other place that's not the United States, you can still sell on the Facebook Marketplace in the USA. Slightly different, but you can still do it. There was one of the first things you said there were some billions of users. Why else is the Facebook marketplace such an interesting place to sell right now?

MARK

I think a big one really is a benefit to sellers is that it’s inherently very similar to Amazon. Facebook is a very well-known name, and so there's kind of a built-in trust factor that comes along with that. Even though it's independent sellers on their selling, I think that the trust factor goes a really long way.

AIDAN

Yeah, for sure. What else?

MARK

Another huge one is it doesn't cost any money to list your products for sale on the Facebook Marketplace. Now, they do have a fee when you sell through the marketplace, and that fee is today only 5%, which is half to a third of what other traditional marketplaces charge for fees. The pricing is great from the seller's point of view. And like we said, the traffic is crazy and the trust factor is very strong.

AIDAN

How is it that people can get free traffic? Can you just explain that process when we talk about free organic traffic on Facebook? How does that happen?

MARK

Yeah, so many people are on Facebook every single day, and so many people have translated over, really, to the marketplace to do some of their browsing based on kind of where you're at. It depends on how if you've assigned shipping for your products or local pickup and things. Geographic and keyword types of searches are very prominent in the marketplace. If you live near one of the major markets, there are just millions of people that will have eyeballs on your product if you've listed it for shipping. It's really very much like you'd want to take advantage of keywords in your title and in your listing, and your product will just organically show up in front of those people that are searching for, again, kayaks or camping equipment or train horns, whatever it is. People are out there looking for all these types of products.

AIDAN

Essentially, and I just really want to hammer home a couple of things here. One is that people are used to seeing a lot of ads on Facebook. They go to Facebook, they're going through the newsfeed, and they see an ad pop up and it's going by this product. That's not the Facebook Marketplace. Facebook Marketplace is another area of Facebook where anyone with a Facebook account can list products that they want to sell. It could be your second-hand golf clubs, or it could be a brand-new kayak that is ultimately going to be sent to a customer from someone else, from somewhere else. You don't have to store that product. That's why it works as a great place to make sales but can slot in nicely to a drop-ship business.

The way that people find products is by searching for them. They go to the Facebook Marketplace and they're like, “Hey, I need to buy a new computer desk for my office.” They search for a computer desk. And if you've got something in the Facebook Marketplace and the title of the product is a computer desk, you're selling a computer desk, then your product is going to show up in front of them.  Maybe there are lots and lots of computer desks, so maybe you won't show up at the very top, or maybe you will, but that's how it works. It's almost like it's similar to Amazon in that regard.

The way the products are listed is different, but ultimately people find the products by searching or by browsing, and there is that geographic element. If you live in a big city, then you're likely to get many more people searching for your product. But you don't have to be in a big city. We've seen this over and over again where you could be in a tiny little town, which is a couple of hundred miles from a big city. And most people, by the way, at least fall into that category if they don't live in the city. There's a city relatively close, a few hours’ drive away or something, and that's enough to be able to really tap into this enormous traffic of people that are searching for products. Hopefully, that clears up a little bit about what the Facebook Marketplace is and how people actually go to find a product. 

Hopefully, we really sort of hammered home how the Facebook Marketplace works and how people go about finding products to buy. What tips would you give for people who want to succeed with the Facebook Marketplace and use it as part of their e-commerce strategy?

MARK

Yeah, I'd say there are probably three main tips that I have to keep in mind, and this is relevant to commerce in general but very relevant to Facebook. You want to have great photographs, right? Photographs are what grab people's attention. If you're doing dropshipping, you'll get a lot of photographs or images from suppliers and things. One of the things that we do in our dropshipping business on Facebook is we try to actually get our hands on a product and take our own unique photographs because so many people that are trying to do this, they're just using stock imagery and things. If you can take a good set of photographs that really makes your products stand out from your competition, that's going to give you just miles of benefit on that.

Another one is to really do a little bit of keyword research because they have what they call tags in there. Use the right tags for what people are searching for, you don't want to use a tag that somebody's not searching for. Searches on keywords on Amazon are different than keywords on YouTube are different from Google keywords. If you just do some searches in the marketplace, it'll start to do the auto-suggestion kind of dropdown, and those starting with the ones at the top, those are the actual keyword searches that by popularity people are looking for and actually typing in. Be sure and use some of those keywords as tags in your listing.

Another one is really trying to be competitive on your price. I know we're all here to make a dollar and we have to make a profit, but you definitely want to keep your eye on your competition's price and make sure that your kind of in line with what other sellers are selling at. I see a lot of people just try to force margin out of it and that doesn't always work.

So that's three tips. But I have a bonus tip and that is really to go in and renew your listings. That's kind of something that's unique to Facebook Marketplace is that listings go up for X number of days. And what Facebook does is your listing, if it doesn't get some of that organic Facebook traffic love, then the listing will start to kind of fall off. And what's great about it is you can just go in and there's a Renew Listing Now button, and you can renew that listing and it just refreshes, breathes new life into it, and pushes it right back up to the top. You definitely want to be sure and keep your eye on that.

AIDAN

Good stuff, lots of good stuff for people to take away there. One of the most common questions that we get all the time is around tax. Anything you can add here about the way that Facebook Marketplace works with a tax or the IRS or anything like that?

MARK

Yeah, so there's certainly, at least in the United States, there's been some new kind of regulations with that, and how much you can sell on just about any marketplace, Facebook included, is when you exceed a certain threshold, they're going to report earnings or revenue, and that threshold is $600. I mean, you're running a business, right? This is a real business that you're doing. And you're going to be susceptible to real business things like tax. Be sure to keep your records straight.

AIDAN

When you pass this threshold. What does that mean? You just start selling on the Facebook Marketplace, and you accumulate a bunch of sales. If you pass that threshold, what happens?

MARK

What that's going to do is that’s going to trigger Facebook to send you a 1099 [tax form] at the end of the year so that you can use it in your reporting. That means that they're going to send this to the IRS on your behalf this report, and they're going to send you a 1099 that you can use in your tax records,

AIDAN

A 1099 is just a tax form for those of you that are not in the United States.  If someone's not in the United States, I wonder if it triggers something similar. We do sell, we deal with that in the United States, but probably my understanding is that each different jurisdiction is going to be treated a little bit differently. Like if you're selling down in Australia and you're registered in Australia, then it makes no sense that you'd be selling and that you'd be reporting sales to the United States. But maybe it does make sense if you are selling a lot of your products in the United States. I think my big takeaway from this, and the thing that I always say to people is when you've got a successful business, you're going to have to pay taxes. It's just a fact of life, and it's a good problem to have. And it's just an extra item in the admin column, and you're going to have to do many kinds of business. Definitely, in my mind, it's not something you need to worry about, something that you could dig into a bit more for your individual tax jurisdiction in the United States, though we do know that there's that $600 threshold beyond which the IRS will be informed, and then you'll be able to file your tax return accordingly when the time comes.

Another question that we get a lot is around Facebook Marketplace and messages. Like, are they private? Are they public? How does that side of it work?

MARK

Yeah, that's actually kind of a benefit to Facebook is just the ease of messaging, right? It’s actually one of the benefits to Facebook is they have their Messenger baked right in. And the billions of users that Facebook has, people are very accustomed to using this Messenger system. What's nice about it is it really is a one-on-one private communication between you as a buyer and somebody as a seller. Nobody is privy to the conversation. It remains private. And that's whether you're posting as an individual or posting and selling as a business. Those are private conversations.

AIDAN

Another one of the top questions we've got is about the number of products that you can list. Can someone just go out there and list thousands and thousands of products? Or are there some limitations around that?

MARK

Yeah, they really don't have a ceiling on the number of products that you can list. We certainly have in Cartzy, I know because we see some of the data, we have people that have listed thousands and thousands and thousands of products on the marketplace. And the way that they've built their connections with tools like ours is one that allows for that. Yeah, I haven't seen anybody stop yet for listing too many products.

AIDAN

Yes, I think the Facebook Marketplace really does remind me a little bit of the good old days of Google when you could create a website and you get rankings for that website and you could sell things. In fact, that's what it was like when I started my e-commerce journey over a decade ago. I could get ranked for all kinds of different keywords at the top of Google. It had this sort of built-in traffic source, and it's still like that in the Facebook Marketplace today. It's certainly much easier to get ranked on the Facebook Marketplace than on Google or Amazon or most other marketplaces and platforms.

I think a big takeaway for me is that with the Facebook Marketplace, it is a numbers game, and you're going to make more money, generally speaking, if you've got 1000 products listed versus if you gotten products listed or 100 products listed and because you can list basically as many products as you want, I mean, we've never ever seen any limitation.

A good way to scale is just to keep listing more products and make sure you're using the keyword tags. And again, this is dropshipping. You're not buying any inventory upfront. You're only going to buy that inventory and send it off once you've received the money yourself.  I think if you're someone who just wants to get in there and really move the needle, then applying this numbers game approach and just listing, listing, listing thousands of products is a pretty simple way to go about it and very viable to make this work in 2022 and beyond.

Something else that I think people might be wondering about, because especially if you're used to selling and places like Amazon, types of metrics that get served up. Are there any special types of metrics that Facebook gives its sellers that people could potentially use their advantage to get results?

MARK

Yeah, so Facebook uses something called an e-commerce profile. And if you look, you can literally go to just about any listing on the marketplace and scroll down and see what that seller's profile looks like. They use that kind of on the back-end to measure you as a seller. Just like any other platform, the better your metrics are, the better that they reward you with your listing placements and things if you've gotten positive star reviews as a seller. That's certainly an important metric.

It comes down to your shipping times. If you're shipping on time when you've promised that you would, you can set up how many days to ship post-sale. They're really just kind of looking to see that you are fulfilling the promise that you've made because at the end of the day, they want a good experience for buyers on their network and they're going to measure these metrics and reward you for good outcomes.

One little trick that we've done is if we have products that we sell in the marketplace locally, especially locally, because you have a face-to-face interaction with somebody and they may come to pick up a product that you've sold. Maybe it's a used product, maybe it's something more like the olden days of the kind of garage sale mentality, used products. But when people show up and you're able to strike up a rapport and have a chat with somebody for a minute, I always ask them to leave a review. I might not do it to the kayak buyer that's across the country and there's no personal touch or anything, but anybody that comes here that I can smile at, shake a hand, give a good deal to, etc. for and ask for a review, those little reviews start to bolster and benefit your commerce profile. That's just one little tip and you get that for just being human as well.

AIDAN

I think in selling an e-commerce in general, and especially when you're leveraging other people's platforms or other businesses, platforms like Amazon, Facebook Marketplace, and so on, if you ask yourself the question, what would Facebook Marketplace ideally want for its customer, then you start to think of things like they would want a nice customer experience.

If you're a seller and you're selling products but you never deliver on time, what do you think Facebook is going to do? They're not really going to boost you as a seller. They're probably going to push you down so no one can find you. Or if someone sends you a message, are you prompt at replying? And right away that's something that you can always hire a virtual assistant to help you with. It's not something you have to do yourself. In fact, I would absolutely recommend that it's one of the first things that you want to outsource. Just common-sense business things, best practices, things that are going to keep customers happy and give them a good user experience, because that's ultimately what Facebook wants from its platform. Facebook doesn't want these cowboys on there who are just overpromising and under delivering and giving people a bad experience because ultimately, that will lead to people not wanting to buy on Facebook Marketplace. Being a good seller and really over-delivering on what you're promising, I think is a good rule to live by if you're selling on Facebook Marketplace.

MARK

Yeah, absolutely. It's just those common-sense things. If you're going to sell a product, then be a good seller. It's as simple as that.

AIDAN

Good. Well look, I think we've given folks a good overview here of selling on Facebook Marketplace. If this is something that you want to do or another sales channel that you want to add to an existing business that you might have, then we can certainly help you with that through Cartzy.

Cartzy is designed to integrate and make things streamlined and seamless when selling through different channels on Facebook and other Marketplaces as well. You can find out by going thegrowthbooth.com/cartzy. You can find out how you can get a free Cartzy account and start playing around with that. And as always, you can head over to The Growth Booth and navigate to Episode number 34 to see show notes and get links to other useful bits and pieces here for this episode. Mark, thanks for taking the time out to be with us here today and to share some insights into what the Facebook Marketplace is and how people can start selling on. It's been a pleasure to catch up with you again.

MARK

Yeah, absolutely. Always a pleasure. Thank you.

AIDAN

All right, guys, we will see you on the next episode of The Growth Booth. Thanks!