Facebook’s Marketplace platform is relatively new, but it has shown an average growth rate of over 30% month-over-month since it was rolled out in 2016! That means that there’s plenty of room for new sellers like us to join, and the amount of free traffic will continue to increase rapidly in the future!
You may be asking yourself: how can you even sell products on Facebook Marketplace?
One of the biggest misconceptions surrounding Facebook Marketplace is that all of their products are second-hand items from people’s homes. However, that is not always the case.
Now, a growing percentage of items sold on Marketplace are brand new items. This in large part due to the fact that Facebook has recently introduced a shipping option on Marketplace items!
SELLING ON FBMP
If selling on Facebook Marketplace has already crossed your mind but you’ve been hesitant to actually get started, here is a proposal which is low-risk and won’t require any upfront inventory costs.
Online Retail Arbitrage (OA), or reselling products from an online retailer onto a marketplace (in this case Facebook Marketplace) is a very common business model which doesn’t require sellers to have an immediate cost of goods. You only have to buy the products after you’ve already been paid by your customer, therefore eliminating your personal capital investment. You may already have experience with this as an eBay seller, as this is the most common business model on the eBay platform. But, did you know that you can also do this exact same model as a Facebook Marketplace seller too?
That’s right, many Marketplace sellers use the OA model to decrease their financial risk, improve cash flow, acquire existing market data, and eliminate themselves from the fulfillment of the product. These advantages, among others, are key reasons why this business model is so enticing.
Dropshipping is the actual fulfillment method we use as OA sellers. More commonly, you will hear us referred to as dropshippers since we are leveraging a source (our retail supplier) to fulfill the shipment to our customers directly from their warehouses.
Putting it all together, we’ll see that the high income opportunity of selling on FBMP coupled with financially low-risk dropshipping, can be a highly profitable and scalable business. With this type of potential in mind, let’s now take a look at the top 5 reasons to start Facebook Marketplace dropshipping in 2020 and beyond…
5 REASONS TO START FACEBOOK MARKETPLACE DROPSHIPPING IN 2020
1. FACEBOOK’S SITE TRAFFIC IS UNMATCHED
With over 512 million monthly site visits, Facebook is the #4 most visited website in the U.S.¹ This massive amount of credibility, authority, and recognizability leads to users inherently trusting its various features (including Marketplace).
Additionally, the growth of this new shopping platform has no signs of slowing down. Marketplace is reportedly used by over 800,000 users each month in over 70 countries. Mark Zuckerberg has said that as of 2018, 1 in 3 Americans used Facebook Marketplace to shop.²
For sellers like us, this suggests that there are a lot of eyes on our listings. Additionally, the large majority of these customers make up what is known as “final step consumers”. These are people who are on the fifth and final step of the consumer decision process — ready to purchase! Just by virtue of being a Marketplace seller, you will have a built-in consumer base who are actively seeking to buy your products. This greatly simplifies marketing efforts compared to that of selling through your own independent website.
If you’ve ever attempted to sell products on your own website (e.g. Shopify, Wix, Woo Commerce, etc.), then you’ll likely have an appreciation for the high volume of inbound traffic that a marketplace like Facebook
provides. Driving site traffic is undoubtedly one of the biggest challenges that online retailers face.
The fact that Facebook Marketplace already does this at scale helps streamline our operations and lets us focus on scaling our business.
2. FACEBOOK’S ONLINE PRESENCE IS DOMINANT
Simply put, Facebook is completely dominating in the online social media space. If you’re not currently selling on the platform, then you’re likely missing out on thousands of sales.
The opportunity cost of not selling on Marketplace far outweighs the headaches involved with other platforms that have higher competition and smaller profit margins.
Even if you’re currently selling on your own website or another marketplace like eBay or Amazon, you should also be selling on Facebook Marketplace in addition to those channels. It is a great way to increase your business’s overall revenue. Also, from a diversification standpoint, selling across multiple channels is a strategy that can help hedge against risk.
3. LESS COMPETITION + HIGHER DEMAND
Surprisingly, Marketplace is still an untapped platform to do business especially when you compare it to its closest competitors, Amazon and eBay. Coming up on its 4th anniversary, Marketplace is just now catching its stride and building features to make the seller experience one that will keep them on the platform for years to come. Currently, there is a fraction of the amount of sellers on FBMP than there is on Amazon or eBay, which means that we are on the ground floor of what’s in store for selling on Marketplace.
Since we are dealing with a selling platform that is just starting to come into form, now is the time to learn the platform and capitalize on a monumental opportunity. The closest comparison to this emerging opportunity that can be made is to Amazon sellers a decade ago, before the strict regulations and tight competition. Sellers had massive freedom to operate, and profit margins were very high at the time.
Marketplace is gearing up to have a massive influx of new customers as they grow each month. Combine that with the low amount of existing competition, and the potential as a seller on the platform is unprecedented!
4. MARKETPLACE SELLERS EARN THE MOST MONEY
Most often, in a competitive market, a small percentage of people will make a disproportionately large sum of money while the rest of the people will earn a considerably smaller amount. This is what is known as income distribution and it usually behaves in a way that does not favor the majority of participants.
However, Marketplace has made it extremely advantageous for its sellers to continue using the platform. For the past six months, they have frequently extended promotions for ZERO ($0.00) seller fees. This means that on every sale made, all profit generated stays in the seller’s pocket. And, even when fees do begin to go into effect, Facebook Marketplace will only charge 5% on the final sale price of the item. Compare this to Amazon’s 15% and eBay’s 10% merchant selling fees, and you can clearly see the enormous cost savings.
Not only this, but the average profit margins are dramatically higher than other platforms. On eBay and Amazon, an average 12-15% profit margin is considered high. In our experience, we have been seeing anywhere from 30-60% profit on a regular basis! Our average margin since beginning Facebook Marketplace Dropshipping, has been right around 40%. This is insane!
My sales so far have been around $15-20,000 a month in revenue. If you calculate that out to a yearly income, it comes out to $180,000 a year in sales. At 40% profit margin, that’s an extra $72,000 a year.
Did I mention that I am only working an hour a day on this? Not too bad for a twenty-something! If I can do this, you can too.
5. DROPSHIPPERS HAVE THE UPPER HAND
While there are many people selling used goods on Facebook Marketplace, there are an increasing number of people selling brand new items on the platform. As Dropshippers, we primarily focus on selling new items in order to decrease returns and increase customer satisfaction rates. This is just one of the many competitive advantages Dropshippers have over other business models.
When you combine high quality products with not having to actually warehouse the items you sell, and you can easily scale this business! The fact that you only have to pay for an item after a sale is made, and that the supplier will handle product fulfillment on your behalf, you have a blueprint for a winning combo!. With the amount of people that go on Marketplace every day, the potential for Dropshipping on the platform is incredible.
Put simply: We are able to sell more products, more quickly than our competition, and leverage the shipping times that people are accustomed to thanks to Amazon, Walmart, etc, because we are using those very retailers to our advantage.
Consider this an invitation to begin selling on Facebook Marketplace while you’re reducing financial risk by leveraging Dropshipping!
Ready to Make a Full Time Income With Facebook Marketplace Dropshipping?
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