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Author: Hamad Dar

My Chromecast Goes Everywhere With Me

I don’t have a smart TV at home. I don’t think that paying extra for smart TV is a better solution than buying streaming devices such as Chromecast or Fire Stick. There are many reasons why I think that, but here are my four favorite reasons.

I take my my streaming device everywhere with me. I shamelessly plug it in all my hotel rooms and all my Airbnbs so my smart TV also moves with me regardless of what the hotel or the apartment offers.

I don’t want to deal with firmwares of TVs and be at their mercy for updates, app supports, and to determine what I can or can not do with my TV.

Despite these two additional advantages, streaming devices actually cost lesser money than the difference between smart and regular version of the same TV model.

Lastly, many people don’t know this but Chromecast shows significantly lesser ads on Youtube than any of it’s counterparts. It’s the extra juice you get for staying loyal to both the service and the product.

Do you prefer smart TVs or streaming devices? What is your favorite streaming device and why?

Overlapping Audiences, Competing With Your Own Ads And My Take On This

Yesterday, I wrote about my ad account that got disabled and I concluded by saying the following

And in the super optimist world, I’ll have two ad-accounts burning twice the fuel, delivering twice the sales, making twice the profit. I want to think that this will happen. Because without this kind of optimism, it’s hard to want to run a business

Today when I read my own blog post, I realized that overlapping brigade must hate me right now for saying something so foolish. But I don’t care about overlap as much as many other people.

I hear a lot of people say that this audience will overlap with that audience or that your ads are competing with your other ads and that you’re bidding higher against your own ads etc. I understand. I understand what you’re saying and I understand what you mean. But I am not concerned on the same level as you.

First things first, I mean no disrespect to other marketers. I will also never claim that I am good at what I do. I am always learning. I spend everyday in this industry with an open heart and an open mind with will to learn more than I knew yesterday. I understand that different marketers have different strategies and yet they are able to deliver results. In summary, I think any strategy that brings the results we seek, is the right strategy and that many strategies can co-exist together.

Now off to some of the reasons why I’m comfortable with overlapping and competing with my own ads.

In the past, I’ve had a successful product where we were spending thousands of dollars per day in ads, and were generating tens of thousands in sales. I did everything in my power to scale the ads profitably until I couldn’t anymore without hurting profitability. So I created a second ad account, created 100% duplicate campaigns as my first ad account, and started competing with my own ads.

The end result was that I was able to increase my sales by over 60% and my profits by over 40%. In summary, by competing with my own self, I slightly reduced my margins, and significantly increased the money I took home.

Now I don’t know about you, but I prefer focusing on the actual dollars I take home, and while the margin percentage remains the significant focus of my business, it isn’t what I’m actually focusing on at the end of the day.

There are many occasions when simply raising the budget will cost you much higher CPA than creating a duplicate copy of your campaign and duplicating budget like that. Of course, you’re overlapping and competing with your own ads, but if it works, then why not?

In addition, not many people know this but Facebook sets CPM penalization not just for ad-accounts, but even for business managers based on the reports it receives from the users about your ads. In this case, running identical campaigns from multiple ad accounts or even different business managers will generate significantly different results.

Furthermore, my attitude towards overlapping and self-competition is also lenient because we like to scale fast. If we won’t scale, someone else will. If we won’t compete with our own ads, someone else will compete with our ads. This is how we like our marketing at Socialoholic.

My Ad Account Got Disabled, But I Live On Optimism

Today, an ad-account for one of our e-commerce stores got disabled. There was no violation. It was the same ads that we had been running for 4 weeks. Usually when the ad account gets deactivated, there’s an appeal link. The account is usually sorted in couple of hours. But today, there was no notification or appeal link.

I’ve still appealed through a different support channel, but its not going to resolve in couple of hours but would take longer than that.

Meanwhile, I’ve exported all campaigns to a different ad account. Theres a way to export CSV of campaigns and import to a different ad account. Here’s a walk-through video of how to do it. The process can still be very messy because of custom audiences, and lookalikes. When Facebook deactivates one ad account, it locks everything inside that ad account including all custom audiences and lookalikes. So its not possible to move those if they are owned by a disabled ad account.

I had a shitty day trying to do these manual, hateful tasks. I really had two options. Option # 1 was to basically feel angry at Facebook and stop advertising. Option # 2 was to start-over.

The option # 2 can be interesting because I may be able to make the 2nd ad account deliver profitable campaigns too. In the best case scenario, I may get the first ad account back as well. And in the super optimist world, I’ll have two ad-accounts burning twice the fuel, delivering twice the sales, making twice the profit. I want to think that this will happen. Because without this kind of optimism, it’s hard to want to run a business.

Travelling, Rediscovery, Places & People

I try to travel at least once every year to reset and rediscover. Sometimes I travel more. Sometimes I travel to new places. And sometimes I travel to the places I’ve been before.

There are places that I genuinely like to go back to. I appreciate them when I visit them again. Although, I appreciate them a bit lesser than I did the previous time. But I still like them enough. It is why I go back, of course.

Nevertheless, for places, first time is the charm for me. Every repeat visit, I still love them, but slightly lesser than before. So in a way, I think humans have the tendency to want to go to new places. It keeps the excitement alive and one can continue to witness things that are beautiful in unique ways. This is how I feel about places. The gratification from places is temporary, it is why it reduces on each repeat visit.

For people, it doesn’t work in the same way, at least for me. For example, every repeat meeting with my parents, or my daughter, or my wife, or my friends isn’t lesser gratifying than the previous one. Each repeat meeting can make our relation warmer than before. Each new day spent with them, can build on the last one, and be more rewarding for my happiness.

The problem is that people are location-dependent. To be with your people more, you have to be at one place more. And to be at new places, you have to be further away from your people.

Recycled Clothes, Landa, And How Large Is The Industry

I learnt something unique in the past few weeks. The size of the recycled clothing industry is mind-boggling and Pakistan get’s the lion’s share of this market.

Zari originally introduced this to us, but my curiosity was further fueled by my long-time friend Saad who filled me in with complete details. I’m left speechless by the sheer size of this industry.

Since 80 billion pieces of clothing are produced every year, more than 10 times the number of human beings in the world, it is obvious that every year there’s a lot of clothing waste. Since I buy roughly 5 pieces of clothes and hope them to last 5 years, I must admit I was shocked with the amount of production and could obviously imagine the wastage. But what happens to all this wastage? It’s sent to emerging economies like Pakistan for nearly free.

The west gets rid of their “waste” instead of using it to fill lands, or decompose in environmentally hazardous manner. Pakistan then puts a new soul in what is termed as a waste.

This wastage that comes to Pakistan is approximately about 1.5 billion pieces per year. This is 125 million pieces per month or 12.5 crore pieces of clothing.

After sorting, nearly 50% of this clothing is marked unfit for wearing and eventually goes into fiber extraction. The other half, which roughly comes down to 60 million pieces of fashion, are restored and made fit for wearing. But what surprised me the most is this fun part; a large chunk of what is restored as fit for wearing is then exported out of Pakistan.

Now I’ve given you the size of industry in terms of number of units, but not in terms of revenue. Pakistan as a country generates nearly $200 million out of export proceeds from these products.

Mind boggling, isn’t it?

Thanks Zari and Saad for the input.

We Almost Ended Up In Greece, But You Can’t Go Wrong With A Pakistani Passport

I asked my wife to look for a hotel for us at a resort town called Çeşme. She headed to Booking.com to make the reservations. By giving 0 shits about the location, she sorted the listings by price and found a cheap and nice property.

It was cheaper than everything I had seen in Çeşme so it surprised me a bit. But she had made the reservations by that time. Later, but not too late, I found out that she booked us up in a resort town of Greece instead of Turkey and the hotel is in Chios and not Çeşme.

I was annoyed, but I was also surprised. How did Booking.com recommend her a place in Greece instead of Turkey. The reason is that both the places are really close. They are about 15 KMs apart and it takes merely 20 minutes to reach by ferry from Çeşme.

My suggestion to the travel website; when you make a recommendation like that, it’s not a feature but a bug. I understand they recommend near-by places when sorting by price, but they shouldn’t be recommending near by places beyond borders.

It’s such a shame that we can’t stay at the property we booked because obviously we can’t go to Greece without a visa. It would have been fun though, to cross borders like that on a ferry. I’m sure someday, but today isn’t that day.

Coronavirus, E-commerce & Grave Situation in China

We kept taking orders after the first news of coronavirus surfaced. We thought, like most other things, this will come to an end too but it hasn’t thus far. A large part of China is still closed, and e-commerce is pain in the ass right now.

Dropshippers had no option but to shut down operations entirely, including us. But even those with inventory are running short of goods. Some sellers are increasing prices so goods can last a bit longer. Because everyone is affected equally, even with higher prices the sale velocity is hanging there, somewhat.

After we were unable to dropship some of our orders, Saad spoke to one of our friends who generally buys inventories for his FBA (Fulfilment by Amazon) business. He then spoke to the vendors he works with to score some inventory for us. We were obviously willing to buy goods at higher prices, even from outside China, preferably even from within US, just to fulfil the pending orders.

While we were able to eventually find some inventory for our pending orders, what our FBA friend told us was shocking to say the least. He said Chinese want to import right now. They want to import face masks. The same ones that they exported and at higher prices than they exported for.

While those of us who aren’t affected by this outbreak are aware of some of the risks this virus is causing, but the fact that Chinese want to import face-masks right now was really able to make me imagine the gravity of the situation.

Booking.com Is Restricted In Turkey, But There’s Something Interesting Happening

Because I use booking.com to book my hotels, I sometimes ask the hotels I stay in about the percentage of bookings they get from booking.com. The answer varies between 60% for some hotels and 80% for others. But it is safe to say that majority of the bookings.

For the last hotel I stayed in Istanbul, the manager claimed 75%. This is despite the fact that from within Turkey you can not use Booking.com to book properties in Turkey. So it means most of the bookings that hotels in Turkey get from Booking.com are booked from outside of Turkey or by foreigners. But some Turkish people also use booking.com to book properties within Turkey by using VPN.

Those who aren’t tech-savvy, and do not know how to by-pass the restriction, then book the properties using Kayak or Agoda. Hotels claim that after Booking.com, they get most bookings from Kayak or Agoda because they are not restricted from usage in Turkey. My last hotel claimed he gets 15% bookings from Kayak or Agoda. In summary 90% of his bookings are coming from Booking.com, Kayak & Agoda.

The interesting thing is that Kayak, Agoda and Booking.com are all owned by Booking Holdings.

Not just that Booking Holdings also own Priceline, Rentalcars.com, OpenTable, Momondo, Cheapflights and many other travel websites.

Booking.com charges 15% commissions to properties which most hotels are happy to pay as “marketing cost”. The manager I spoke to today says before this network, each hotel employed marketing staff and spent money on internet ads that may or may not always worked.

Booking Holdings posted $15 billion dollars in revenue in 2018. They don’t own any properties or any hotel rooms. Marriott posted $20 billion dollars in revenue in 2018 and it is the world’s largest hotel chain with 10,000+ properties and 1 million+ rooms. Since booking holdings has low operating costs compared to Marriott, their operating income is 2.5 times higher.

Where Are Valuations Heading For Internet Businesses And What Does It All Mean

I believe it’s getting tougher on the internet. All markets are getting more competitive. When I started out, it all seemed too easy. Sometimes I wonder if it’s just me getting older & inefficient or are internet businesses actually getting more competitive? The answer always lies in statistics, so I decided to dive in.

I started off my career by making content sites or blogs. There was a mega estate on desktop screens for ads, and the ad-blockers didn’t exist. It was so much easier to monetize blogs compared to now as the screens have gotten smaller and tech-savvy customers are using ad-blockers. With some browsers such as Brave designed to offer ad-blocking by default, it’s getting tougher to run a content site. Despite this trend, a blog would sell for 3x annual profit multiple now compared to 2008 where 1-2x was considered the norm. I sold my first blog in 2010 for a 1.3x multiple or for 16 months profit but the same blog would easily sell for much higher today.

In theory, such low valuation for an internet businesses appear absurd to me. It appears absurd because real-estate in comparison is sold for 15-20x annual earnings which is commonly known as price to rent ratio. This means, buyers of internet property are willing to pay only 15% of what they would pay for a real-estate if both generated similar earnings per month.

The reason why buyers do that is because they believe that real-estate would generate revenue for a longer time-period than internet businesses. But have internet businesses started generating revenue for longer time-period compared to 2008? If not, how have the valuations gone up? Is that because people trust internet businesses more and are willing to believe that they do and will last long enough.

This multiple, in my opinion, will keep going higher. For large softwares, where this multiple is the highest, it already hoovers around 10x. While small to medium softwares go for around 3.5x to 4.5x.

E-commerce, both stand-alone as well as FBA, also seem to be selling for 3.5x to 4.5x annual profits as long as they have minimum 1 year history.

Why are the multiples getting higher? I think this is a sign of trust in the internet businesses. More and more people realize, trust, and believe that internet and internet businesses are here to stay and hence they are willing to pay a higher price to acquire these. With more trust and better valuations, more people want to start internet businesses. I believe that the valuation multiple and competitiveness on the internet are directly proportional.

This is no more an open field. There is cut-throat competition, and it will keep getting harder to the point that economics will be nearly identical of what it is for offline businesses. Before that happens, I recommend that you hop on and enjoy the journey.

Hundreds of Wrong Orders & Service Recovery Paradox

We had a rather wild situation with one of our e-commerce stores in 2017. We had 10s of thousands of orders. We dealt with that kind of volume for the first time and it was increasingly difficult for us to fulfil those many orders even with the help of many many vendors.

We exported the order data as CSV for one of our vendors and sent him the list of thousands of orders that he had to fulfil. But there was one small problem during the export which became a very large problem for us.

For all post codes starting with 0 such as 01234, during the exports, change of formats, somewhere along the way, the post codes became 1234. Our vendor sent out 100s of orders with the wrong post code, all of which were only going to be returned after a huge delay and after making a round trip to US from China. In addition, we were going to lose all the money spent on shipping.

This landed us into awkward situation and we hired Zeeshan for service recovery operations. Zeeshan explained me about the phenomenon called service recovery paradox. What that means is often after you solve a customer’s problem by providing him extra ordinary service; you can leave the customer happier than he originally would have been without any problem.

Zeeshan started by producing a personalized video message which we emailed to all customers whose orders were misplaced. The video was well-scripted, 50 seconds long, stating exactly what happened. In situations like these the best practice is to be straightforward. In the video we highlighted how a small computer error resulted in wrong shipping and cost our e-commerce store hundreds of dollars in shipping. Our rep simply apologized in the video, explaining the entire situation and presented two options for the customer to choose from.

The goal was to make them feel valued by offering them control over the situation. They were offered A) if they could wait 8-10 more days so we can reship them their order, plus as an appreciation for their patience, refund of their shipping fee and free shipping for the next order. B) Giving them a chance for a full refund if they would like to refuse the order.

The video worked like a magic! A customer always feels appreciated when you go to a personal level to engage with them. In this world of corporations and computer bots, people genuinely feel touched when they can see a person right on their screens. Only 4% of the customers opted for a refund. The remaining received their orders in the promised time.

The product we were selling was a kitchen accessory primarily ordered by women. We asked our vendor to add 2 more things with the orders. A) An inexpensive plush teddy bear toy with a heart on its chest with text saying “I’m Sorry”. B) An additional 20% discount coupon that they could share with their friends or redeem themselves. Remember, we had already promised them free shipping on their next order.

In the coming weeks, we saw a large percentage of repeat customers, much higher than the usual for that store, that happened due to this activity. The best part is that there was no marketing cost involved, other than the cost for reshipping and teddy toy.

The customers felt emotionally elevated and did more shopping on our store. The strategy helped our customers to get a feeling that their prepositions were being valued. Remember, our goal was to convert an unhappy customer to a happy customer. Not only did we put a smile to our unhappy customers’ faces, but we also made some extra dollars. In hindsight Zeeshan says we sold freezers in Antarctica. We took control of the bad situation and turned it around. We call it smart selling.

We also had a record low chargeback rate of 0.1%.