mack grenfell

A Probabilistic Dropshipping Forecaster

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When you're thinking about launching a new dropshipping store, there's always one question going through your head; how much profit am I likely to make from this?

If you've found yourself in this situation before, you might have used one of the many online ROI calculators or forecasting tools out there.

These approaches are great for getting some quick estimates, but they all suffer from the same problem; they're rigid and inflexible. Nobody knows exactly what their advertising cost per click is going to be before they launch, or what sort of conversion rate they're likely to see.

To accommodate for these issues, I created the dropshipping forecaster below using Causal.

This forecaster allows you to enter ranges instead of exact figures. This means you don't have to know that your conversion rate will be 2.5%, you can simply say that it'll be somewhere between 2% and 3%.

The model then runs 100,000 different simulations with conversion rates between 2% and 3%, and shows you how your other metrics look in each of these simulations. Crucially, it tells you how your overall profit will vary in each of these simulations.

How do I use the forecaster?

The forecaster has been set up with some dummy figures below, under the Inputs section. To use the forecaster, change these numbers to some that look reasonable for your campaign.

Note that you don't have to enter precise figures, but that you can use ranges. If you think your gross cost per item will be somewhere between $6 and $10, you can write this as 6 to 10.

Once you've changed all the inputs, the text and graphs will update to show you what results you can expect from your dropshipping store.

Found this forecaster useful? Have thoughts on how it can be improved? Reach out to me on Twitter @mackgrenfell

To create your own forecasts and models, sign up at causal.app