The Dropship Arbitrage

Originally Published Summer 2020

The Cettire & Figs IPO prospecti make for intelligent reading for anybody investigating the economics of DTC dropshipping

To help you understand the dropship arbitrage here are the Cettire & Figs numbers applied to our Social eCommerce arbitrage model

ASOS & BooHoo have been added to the mix as eCommerce performance benchmarks

The currency is USD

Note: Method 1 is a multi channel campaign methodology involving the retargeting of the Click Through Traffic generated in the first round with 3 more ad impression cycles

Each ad requiring new creative content to refresh the message

Note: The CPM, CTR and Conversion Rate are indicative of the 2020 Industry Averages for Facebook Advertising Campaigns targeting Designer Apparel

Method 2 is a standard Pay Per Click Campaign without retargeting

Changing the values of the RRP of the Goods sold and the Cost of the Goods Sold will allow you to understand the supply side of the Dropship Arbitrage

Changing the values of the CPM and the PPC Methods demonstrates the demand side challenge of the dropship equation



Method 1

CPM Method

CPM Rate
$

Cost of Creative per Ad
$

CTR
%

CPC
$

Conversion Rate
%

Target Pool (Uniques)


Customer Retention Rate
%

Customer Churn Rate
%




Product/Basket Metrics

RRP of Goods/Ave. Order Value
$

Cost of Goods as % of RRP
%

Shipping & Handling Costs
%



Campaign Forecast

Total Impressions Served


Creative Costs
$


Campaign Cost
$


Units Sold



Sales Forecast

CoCA per Sale
$


Total Sales
$

Profit/Loss
$

CoCA/Revenue
%

Method 2

PPC Campaign Method

CPC
$

Units Sold


Relative Efficiency


COCA per Sale
$

Total Sales
$

Profit/Loss
$

COCA/Revenue
%

















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