Breaking Into E-Commerce: Key Strategies and Lessons Learned with Ehsan Razaq

How did you get into e-commerce? I know you mentioned earlier, before we started recording, that you used to do some videography and editing, but what led you to start in e-commerce?

I started by doing videography and photography for a small cafeteria while creating content on TikTok. As my followers grew, small brands began reaching out, and I’d charge around 250 to 500 dirhams per video.

During one shoot, I got a promotion offer from an e-commerce brand for a jawline product. I agreed without negotiating because I liked the product. After completing the job, I received 800 dirhams—the most I’d ever made in one go. Curious about how he managed his business, I offered to do another video for free in exchange for learning about e-commerce. He agreed to mentor me for 500 dirhams a week. Although I stopped after the second week due to costs, I learned the essentials: setting up a payment gateway and managing shipping.

Six months later, I had 700 dirhams saved and noticed a trending product, the Sunset Lamp. Without any test ads, I ordered 30 pieces from Alibaba but realised I had no marketing budget. I reached out to Emirati influencers I knew, offering them a percentage to promote the product while keeping my brand hidden.

One of them posted a video, and overnight we sold out, with over 70 orders. I even had to retrieve pieces I’d given to friends to fulfil the orders. From there, I kept scaling and growing, moving on to new brands and ventures.

You mentioned e-commerce and dropshipping together—can you explain the key difference? Is e-commerce the broader industry, and dropshipping specifically where you sell products without actually holding inventory?

Exactly. E-commerce is like the tree, and dropshipping is just one branch of it. In e-commerce, you’re really building brands and can make the most money. Dropshipping, on the other hand, is more about testing products to see if they’re successful. With dropshipping, you don’t need to keep inventory or even have your logo on the product, as you’re often just fulfilling small, scattered orders.

In contrast, with e-commerce, you have your own stock, branding, and control over the customer experience, including faster shipping times. While some prefer dropshipping, most successful businesses lean towards e-commerce because it allows for better branding, quicker delivery, and higher customer satisfaction.

Doesn’t the choice between e-commerce and dropshipping depend on the products you’re selling, especially if you’re dealing with diverse or short-lived items?

Absolutely. Building a brand offers significant advantages. For example, we once turned a hair removal eraser into a branded product. It’s a simple tool that collects hair effectively, and it performed exceptionally well.

While it wasn’t a long-term product, being the first to introduce it in the UAE gave us a big edge. A friend showed me the product, and after trying it, we received a lot of orders.

Dropshipping each order individually led to long shipping times—up to 15 days—which caused issues like chargebacks and payment gateway problems. To address this, we branded the product and bought it in bulk. Instead of just 500 units, we ordered 1,500. When sales slowed, we offered promotions like “2 for 1” or discounts to clear out stock. This strategy allowed us to manage inventory better and maintain brand control.

Do you handle all the products and orders yourself, or do you use a third-party dropshipping warehouse?

In the past, I used to handle everything myself—unpacking shipments, preparing orders, and labelling them from 3 a.m. to 5 a.m. However, now we have a warehouse in the UAE that manages all of this for us.

Additionally, building a brand adds perceived value and makes the product more appealing compared to dropshipping. For instance, if a product is available on Amazon and also on a well-branded website, customers are more likely to choose the branded site. They perceive the branded product as higher quality due to its professional presentation, including a strong logo, high-quality photos, and detailed descriptions. This creates a greater value in the customer’s eyes compared to the lower-cost, generic options often associated with dropshipping.

Currently, how many different products are you offering?

We have four different stores: two in Saudi Arabia, one here, and one in Qatar, which helps us serve both regions. While we generally offer the same products across all locations, their popularity can vary. For instance, products tend to sell out faster in the UAE compared to Saudi Arabia. This is because the UAE has a smaller population, so advertising reaches a larger percentage of potential buyers. We monitor each product’s performance and adjust our offerings based on their success.

Why do you need four separate websites instead of just one that covers all these countries?

We use this approach because it’s very effective. By tailoring each store to its specific country, we give the impression of faster shipping and locally based products, which benefits each country. Most of our warehouses are located in Saudi Arabia and the UAE, so when customers place an order, the process is quick and seamless. This strategy helps us enhance our value and build a strong reputation.

Do you create your own websites, or do you hire external professionals to handle it?

We have a dedicated team of 40 people who handle everything, from building and managing the websites to developing the brands, overseeing suppliers, and managing stock. They cover all aspects of the operation.

I recently advised my girlfriend’s brothers, who are new to e-commerce and starting with sunglasses. I told them not to get too attached to their first product. Instead, they should research market trends and competitors to choose their next product. If something like dual jumpers is selling well, they might want to consider that instead. What do you think? 

You’re absolutely right. Investing in a product without proper research can lead to failure. It’s crucial to reverse engineer the process first—like running ads for a sample product from Amazon to gauge interest. Based on those results, you can then order enough stock for the next few weeks. Sunglasses, for example, can be a long-term product rather than something with quick turnover. I’m actually working on a sunglasses brand called Iris and would be happy to show you if you’re interested in exploring further.

Here’s a key point I made: Marketing will likely be your biggest expense. So, it’s crucial that your product has a significant margin. For example, if you buy an item for $1, you should aim to sell it for $10, not just $3, because marketing costs can be around $4 to $5 per sale. How do you ensure that your product margins are high enough to cover substantial marketing expenses?

Absolutely, it’s crucial not to sell products that are too cheap because the margins will be minimal or nearly nonexistent after accounting for hidden costs, such as those associated with dropshipping.

We generally advise that products should not be too small or inexpensive—ideally, they should be priced above $10. This way, even after covering product costs, advertising, and shipping, you’ll still maintain a healthy margin. Higher-priced products also tend to generate more revenue as sales increase.

What is the typical price range for your products, and what gross margin do you aim for?

Here’s a general overview of our pricing model using dollars for clarity: If we buy a product for $50, we typically sell it for four times that amount, which would be $200. However, the final selling price might vary slightly, often around $150 or $120. To calculate the profit margin, start with the selling price of $200 and subtract the cost of the product, which is $50, leaving $150. Next, deduct the shipping and delivery costs, which we usually cover ourselves to offer “free shipping” and are around 25 dirhams (approximately $7) in the UAE. Additionally, factor in marketing expenses, averaging about 25 dirhams (roughly $7) per sale. After accounting for these costs, you’re left with approximately $100 in profit, which represents the profit margin on a $200 sale.

What channels do you use? 

TikTok mainly. TikTok ads have traditionally been video-based, but now TikTok is introducing photo ads, which is a game-changer. Previously, creating a high-quality video ad for a great product took a lot of time, often requiring agency assistance or extensive in-house production. With photo ads, we can use product images from the supplier to test the product almost instantly, rather than waiting 3 to 4 days. This shift is likely to significantly impact TikTok’s algorithm and streamline the testing process for dropshippers, making it much easier to determine if a product is a winner.

Why do you prefer Tik Tok to Instagram or to Facebook?

We’ve found that platforms like Snapchat and TikTok generally offer better advertising options compared to Facebook. This is largely because Facebook has significantly raised its cost-per-click (CPC) and frequently bans advertising accounts, forcing you to create new ones and new pixels. They do this to prevent their platform from becoming overly scammy, as they prioritise big advertisers who spend $100,000 a day over smaller budgets. In contrast, TikTok’s ad setup is much quicker and simpler—connecting the pixel takes just a couple of minutes, and the entire process can be completed in under an hour.

How much do you typically spend per day on TikTok?

It depends on the product. During the testing phase, we usually spend around 300 to 500 AED per day on product photos. However, if the product is part of an established brand, the budget can increase significantly, potentially reaching 8,000 to 10,000 AED per day.

What advertising strategies do you recommend for dropshipping, and how should one handle a product that isn’t performing well despite substantial ad spend?

I suggest reconsidering the product choice. If the product isn’t strong, even a substantial ad spend won’t yield good returns. Unlike major brands that can succeed despite product quality due to their name, smaller brands need a compelling product to attract buyers.

If the sunglasses are not generating sales quickly—say less than five sales with a $300 ad budget—it’s a sign the product might not be successful. Advertising a product that doesn’t perform well can lead to losses in both stock and marketing spend.

Instead of continuing to invest in a potentially failing product, consider selling the stock in bulk locally to recoup some losses. If you don’t see positive results quickly, it’s better to cut losses and avoid wasting further funds on ineffective ads.

If someone wants to start in e-commerce and you had to recommend one of three products for them to test, what would be a good starter product to begin with?

For the podcast, I’ll share a highly successful product that’s generating around $100K every two to three days across various stores—it’s called the Fitness Board. This product is performing exceptionally well, especially in the UAE, where it’s become a top seller. The Fitness Board is designed for exercises like UPS and running, and it’s quite affordable, offering a great value for customers. It’s typically blue in colour, and with a quick search, you should be able to find it easily.

Reflecting on the fitness board, it reminds me of the infomercials from 30 years ago—those late-night ads for bizarre fitness gadgets promising incredible results. For younger audiences, infomercials might be like the old-fashioned version of swiping through TikTok or Instagram.

Considering this, are there certain sectors that consistently perform well, such as health, wealth, or fitness? It seems people are always interested in improving their lives, whether it’s getting in better shape or finding new ways to make money. Do you think focusing on these broad sectors, rather than specific products, might be a more reliable strategy for success?

You’re absolutely right. While the core principles haven’t changed much, advancements have made things cheaper and more organised, from production to shipping.

The most profitable niches we see are:

• Female Products: Items that address personal insecurities or health issues, like joint pain or weight loss.
• Baby Products: Products that help parents make their lives easier, driven by the emotional attachment parents have to their children.
• Gimmick Products: Novelty items that offer unique or fun features, such as interactive games.

Choosing the right niche and product is crucial, as different markets have varying demands. For example, pet products might not perform well in the UAE due to lower pet ownership, but they could thrive in the USA. Similarly, a product successful in one GCC country, like the UAE, is likely to perform well in neighbouring countries like Qatar, Saudi Arabia, and Oman.

So, when it comes to setting up an ecommerce business, I understand you also offer a course and mentorship groups. Could you tell me more about these offerings?

We offer a range of mentorship programs with a global reach, featuring five different coaching packages. The Standard Package includes guided, recorded videos for self-paced learning. The Automated Package takes care of the entire e-commerce setup for you, from product sourcing to store management. Our newest offering, the Elite Private Mentorship, provides access to all five of our coaches for highly personalised support. Each coach has been with me since the early days of my ecommerce journey, gaining extensive experience and knowledge under my guidance, ensuring they are well-equipped to assist you.

You mentioned Shopee, which is similar to Shopify. Do you typically use Shopify, or do you find it can sometimes be excessive?

Yes, we do use Shopify, but our SaaS company is currently developing our own platform as an alternative. While Shopify is excellent, its $30 monthly fee may not suit everyone. We aim to create a more affordable option that offers even more features and capabilities than Shopify, potentially providing a complete site solution at a lower cost.