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Category: E-commerce

Spying On Shopify Based E-Commerce Stores

I don’t know about you, but spying and reverse engineering are the top two most popular things that we’ve done for years in our company.

In fact, without spying the space, we couldn’t have done much of what we’ve done so far. Two brains are better than one right? A hundred thousand brains are even better. So by all means, always spy in the space you’re trying to create a dent in.

One of the things that we’ve constantly done in the e-commerce space is watching and tracking all the stores hosted on Shopify. Since all the Shopify stores are hosted by Shopify themselves, they actually exist in a very small IP-range. Reverse look-up of the IP range will actually output all the stores hosted on Shopify ever.

If you’re smart and want value out of this data, you could always track their rankings, watch out for sudden movement in stats, identify new entrants that are growing fast i-e trending stores etc. If you’re smarter, you could then dive down even deeper on the stores of your interest and then do the same thing with the products of the stores. You know where this is going, and what all the possibilities are.

It’s really all out there on the internet. Isn’t it?

WooCommerce Vs Shopify

I recommend everyone to commence their e-commerce journey with Shopify. But many e-commerce veterans are seen siding with WooCommerce instead. From the data available, it seems that WooCommerce is more widely used than Shopify. I wanted to compare the two based on my experience.

You will likely find much more detailed reports on this comparison, however, many of those are written by web hosting companies which are biased towards WooCommerce as Shopify comes pre-hosted while WooCommerce is self-hosted and requires a hosting plan. I recommend that you read those reports since they are very detailed, but for the ones written by the hosting providers or by the affiliates of the hosting providers, please take what they say with a grain of salt.

Let’s explore.

Cost

Let’s begin with the cost. Shopify’s basic plan starts from $29/month but you will also need to pay 2% of the order value as transaction fee to Shopify. By upgrading Shopify plan, you can reduce this to 1% and 0.5% depending on the plan you choose. You also need to pay a monthly subscription for most Shopify apps.

WooCommerce in comparison is free and has many free apps available as well. But since you need to host it yourself, there will be a hosting cost of roughly $10/month. You will also require SSL certificate which you can get for $50-$100/year or for free using Clouldflare or a similar service. WooCommerce ‘seems’ to be cheaper in most cases but Shopify is also only expensive when you’re doing large volumes. For someone who’s just starting out, Shopify is going to be very affordable as well.

In addition, since WooCommerce is self-hosted and self-managed, there could be outages, security issues, hacks etc which may cause you monetary losses. In order to avoid these issues, you may require a technical resource. So after assuming these costs or losses, I don’t think WooCommerce is truly cheaper than Shopify. It may or may not be depending on who is using it.

Ease of Use

Ask anyone you like, including the ones who are using WooCommerce as their goto solution, and you’ll likely hear that Shopify is easier to use. It truly is. You don’t need to know anything about domains, hosting, SSL, security, integration, customization etc. Everything comes pre-configured and you can start a store in a jiffy, literally.

I recommend everyone to begin their journey with Shopify for this very reason. You’re likely working on your products, developing and frequently iterating them. If you’re a dropshipper, you’re likely constantly hunting new and trending products for your store. You’re likely figuring out a marketing plan. You or your team need to have A game when it comes to Facebook ads. If you can do Google, Snap, TikTok and emails, you could literally add at least as much revenue as you do from Facebook. All of this needs your attention. When your attention deserves all of this, you shouldn’t be wasting anytime looking into non-issues such as whether the hosting can take enough traffic, or whether part of my traffic is getting stolen from malware etc.

The ease of use is huge.

In addition, you don’t need to know much about how to optimize your conversions. Or how to have a perfect sales funnel. Free Shopify themes are VERY nicely done and have high conversion rates. They are perfect for inexperienced sellers looking to start a store on a budget.

Features & Customization

WooCommerce is light years ahead of Shopify as far as features and customization is concerned. It is why I think many advanced store owners eventually need a WooCommerce store. The amount of customization that you can do with a self-hosted platform is unthinkable.

I was listening to this podcast of a founder of a large D2C brand, and he said he hates the fact that you’ve to manually put in Zip Code, City, State and other information on your Shopify store. This became the reason for him to switch to WooCommerce since he wanted to just take in Zip code, and auto fill City and State info which wasn’t possible with Shopify. When your brand requires conversion optimization on that level, your hands are tied on Shopify.

Hence, it makes total sense for the advanced users to go with WooCommerce.

Conclusion

As a general rule, I think that new and small e-commerce businesses should start with Shopify while large business doing larger volumes should use WooCommerce so they can avoid transaction fee, hire a technical resource if needed, and get unlimited flexibility and customization.

At Socialoholic, we’ve been doing 7-figure e-commerce for a while, but still have found ourselves using Shopify. For 8 figure and beyond, I think one should definitely be using WooCommerce.

Artisans of Pakistan, E-Commerce & Government Plans

In 2017, a software company in Pakistan reached out to us for support in a project that they were building for the government. The government wanted to provide an end-to-end e-commerce solution to the artisans of Pakistan so they could easily export their product on D2C basis. This means access to e-commerce software/platform, payment gateway, training on how to sell etc. The budget was over a billion Rs. I don’t know the exact budget but I do know it was more than 1 billion Rs. Here’s how I saw the project evolve.

The government required of the software house to build the e-commerce platform in-house in Pakistan. I saw it, it wasn’t bad. But I’m sure it wasn’t and can’t be as good as Shopify – a $100B company, with over 5000 employees. Majority of the billion Rs budget went into the development of this software, which could have been offered to artisans for $29/month with an existing solution or for free with the likes of WooCommerce. For the payment gateway, the government wanted the software house to setup a company in US and setup a payment gateway e.g Stripe that could be shared between all the artisans. And the last stage was to train artisans to enable them with e-commerce skills.

The correct distribution of funds, in my opinion, could be to have the least amount of money spent on the software/platform, slightly more for access to payment gateway, and the most to enable artisans to sell.

In reality, almost all the funds were spent on creating a Shopify clone, that may never see the light of the day with no budget left for payment gateway and training.

This was either yet another attempt of action faking by the government, or a complete lack of strategy despite having good intentions. Whatever it was, it was a disaster, and we quickly saw ourselves disassociate from the meetings.

Amazon In Pakistan

I saw this article making waves in all the e-commerce & startup groups of Pakistan. After I read it, I couldn’t really make much out of it. It didn’t excite me. So I shared it on slack to get the opinion of my colleagues to see if they feel anything different. But we all came to the same conclusion.

One of our colleagues said that this news is similar to PayPal coming to Pakistan for the 24th time.

Another one of my colleague reminded me of another story from 2017 when government spent over a billion Rs to get artisans of Pakistan to sell on the internet. More on this in tomorrow’s blog.

Somehow we all feel, this is headlines. Exactly what the government is good at. Making headlines. And only that.

As I understood it, the government has sent a list of 34 exporters from Pakistan to Amazon so they could be eligible to sell on Amazon. After the trial run, based on the performance of these exporters, government and Amazon will expand this list to other categories.

However I am curious how these exporters were selected? I’m assuming they were either selected by nepotism or by the size of their volume. For the sake of optimism, let’s assume there was no nepotism and they were selected solely based on the size of their volume. Or another powerful metric that made them seem worthy of this selection. However, these traditional metrics say nothing about the exporters’ ability to do well on Amazon. Because selling on a platform like Amazon is a science which isn’t determined solely by the quality of goods, but also largely dependent on the science of launching a product on Amazon.

The transition from offline to online isn’t for everyone. Businesses that have years of selling experience through the old means can not always, and often, transition successfully to new ways of selling.

I can think of countless examples in every industry where the old successful companies often fail to pivot if the industry sees a technological upgrade. Nokia is an example in the phones industry. Kodak is a similar example from the camera industry. When there’s a technological evolution, the old giants fail. The new giants emerge. The large exporters will fail on Amazon no matter how good they are with their products and with the old distribution channels. They need support from the e-commerce experts to run a successful e-commerce business.

For the trial to be successful, a partnership with an e-commerce consultant agency is a must. I’m not sure if there’s a partnership in place. This consultant would ensure that most product launches by most exporters would be successful. This could then help with the expansion of categories as the government plans.

The people who specialize in e-commerce are usually different from people who kick-ass with traditional export channels. For the program to be successful, young blood from the e-commerce space needed to sign up through this program and not the large exporters, or at the minimum in partnership.

Unless the Amazon seller central is available to every citizen of Pakistan, that allows the young blood to compete in a cut-throat marketplace and win, I see this news or any similar news as fake news.

 

Affiliate Marketing Vs Dropshipping

A reader of the blog contacted me to get my opinion on these two topics. For this blog, let’s assume we’re only talking about affiliate marketing of physical products. As with the digital products, the comparison is like apples and oranges.

I prefer dropshipping over affiliate marketing for a variety of reasons so let’s compare the two.

During both affiliate marketing and dropshipping, you’re often creating very little value outside the revenue generated right there and then. However, affiliate marketing, in my humble opinion, is an even lower hanging fruit than dropshipping and I consider dropshipping itself to be a pretty low hanging fruit.

The reason why I think that is because in dropshipping you control the offer end to end. You control the sourcing price of the product. You can play with the quality of the product to increase or decrease the sourcing price. You control the sale price of the product. So, if you’re able to sell the products but unable to make a profit, you could always increase the price and make it profitable for you.

With affiliate marketing, your hands are tied. You only get certain commission per sale. The commission is determined by what the goods cost, how much they are sold for, and how much does the offer provider want to pay you after keeping profits. If your advertising costs are higher than your commissions, then your only option is to optimize advertising. You can not play with the sourcing cost of goods and the sale price to make a profit.

In addition, in affiliate marketing your access to data about the customer is very limited and restricted. You can often not reach out the same customers again to generate more sales in the future without adding additional email capture steps in your funnel. You may also not be able to use the customer data to create lookalikes on ad platforms to target similar customers due to lack of access to customer data.

When dropshipping, you have a much better lock-in with your customers, and a better access to data. While lifetime value often stays low in both cases, you still have better control with dropshipping.

You could also copy anyone’s offer as almost all products are available for sourcing in China and recreate a dropshipping store using the same product, similar landing page etc. So it’s not that difficult at all to use someone else’s offer to create your own dropshipping store.

In addition, for dropshippers just like affiliate marketing, there’s very little to no work that needs to be done with regards to shipping and handling of the products as there are plenty of Chinese vendors who can make this process very seamless for you.

In the end I’m not too fond of both the models, but if I had to do one, I’ll definitely go after the dropshipping model.

Amazon As A Cashier

Many times I’ve seen sellers drive traffic to their Shopify and WooCommerce product pages with no buy or cart option. The only way to buy the product is a link to their Amazon listing.

Like you, I also wondered why the sellers aren’t driving traffic straight to Amazon but routing through their privately owned store when their only goal is to sell on Amazon. The short answer is that these sellers use Amazon as a cashier.

Since how well you rank on Amazon is determined by how high your conversion rate is, for external traffic it makes most sense to provide the product details and description outside of Amazon, and only take warm traffic to Amazon with high purchase intent.

This has a much better impact on your rankings in comparison to routing external traffic directly to your Amazon listing that may or may not convert.

Pepsi Is Now a D2C Brand.. But Why Did It Embrace D2C

As online shopping goes through forced-adoption and becomes the new normal, Pepsi has embraced the direct-to-consumer trend and launched PantryShop & Snacks.com (will not open from Pakistan’s IP).

Some say that it’s more cost effective to be D2c by eliminating all middlemen. Which I think could be true in some cases if your brand has strong affinity but not necessarily true if you don’t have enough repeat purchases and always acquiring customers through advertising on Facebook, Google etc (the new middleman).

It makes sense for smaller, newer brands to embrace D2C as that probably is the most cost-effective way for them to launch the brand. But Pepsi has the supply network streamlined better than most companies in the world and probably not going D2C for cost-reduction. So why did Pepsi embrace the D2C?

I think, they are going D2C for other benefits of the model. Such as building relationships and acquiring data.

When you’re winning over your competition at a retail store, you may be winning the sale, but are you winning over your customers? Do you have control over your customers’ experience?

Do you have your customers’ data? Do you have their address, phone number, or other demographic data?

Do you really know your customer, or are you making (educated) assumptions about them?

How do you test or launch new products?

These are the reasons why I think Pepsi is embracing D2C.

Last Mover Advantage

The first mover advantage is talked about a lot. The first mover advantage is often quite great but not necessarily game-changer. First mover advantage is both for businesses and early users of the businesses. For example, Amazon has the first mover advantage in the e-commerce space. The early sellers of Amazon also enjoyed first-mover advantage on the platform by monopolizing competitive niches. All early users of social networks that eventually go big have a huge first-mover advantage in influencer marketing.

But the last mover advantage is not frequently talked about. The last mover advantage is that you look at everyone’s mistakes, let them take risks, and you only launch a product after learning at their expense. This isn’t talked about a lot probably because it’s not fancy to talk about it and that not everyone can enjoy the last mover advantage. Often but not always, you need to be at a place of influence to enjoy the last mover advantage.

On Amazon, as a seller, you often prefer going after products that others have tried and tested for months, you learn from their experience by studying the listings, and launch in the end so you have absolutely no risk of dead or wasted inventory etc.

In a similar manner, as a seller, Amazon enjoys the true last mover advantage. After all sellers are done testing, trying, risking, & iterating, Amazon comes right in the end with their own private label product often under the brand name of Amazon Basics. Because they enjoy a position of having everyone’s data, they truly love having the last mover advantage.

The Chinese Live Streaming E-Commerce Craze

Tech adoption and associated consumer trends in China are a few years ahead of the west. One such trend took a massive boost through the COVID-19 crisis in China and has become a major craze.

It is the live-stream e-commerce which Chinese believe is the closest experience to shopping offline in a retail store.

Many Chinese e-commerce apps, live-streaming apps and super-apps have embraced this trend including TaoBao, WeChat and Douyin (TikTok China) and the shopping experience really is friction-less.

Here are some of the reasons why I think this trend will grow, not just in China, but in the west too.

Firstly, live-stream e-comm is great for product discovery. Amazon in its current form is great for search and buy shopping experience but awful for discovering new products. On the other hand, Instagram is a good platform for discovering new products, but doesn’t have a seamless shopping experience in its present form. Although, with the announcement of “shops”, there’s an obvious plan to change that.

Secondly, all the Chinese apps are offering in-app checkout. So you can tap on the products shown in the live-stream and conduct your purchase right within the app while the live-stream stays uninterrupted. Instagram plans to bring in-app checkout with “shops”.

Thirdly, the Chinese apps have in-app frictionless payment options e.g AliPay and WeChat Pay. Facebook/Instagram do not yet posses the capability to offer in-app payments, but plan to offer with Libra.

Fourthly, in-app streaming & shopping experience enhances consumer trust as the products are shown live instead of the photoshopped 3D photos and professional videos.

Fifthly, apps also offer AR try-ons. So you can try the products e.g glasses, shirts etc to get a feel of how they would look on you.

And lastly, the apps have built-in game mechanics with features to induce scarcity, and get credits/cashback for sharing the stream with your friends etc.

It is unbelievable how far in the future China is with e-commerce in comparison with the western counterparts. But I’m sure that the west will catch up to these trends.

Instagram and TikTok are best positioned in the west to capture this in the future. If you’re an influencer on one of these platforms, the great days will come as the west catches up with the Chinese frenzy.

Why You Should Start A Business In Recession

One of the advices that seems to come from everywhere with regards to recession is to lower your customer acquisition cost because the lifetime value of the customer is going to be lower than before. Of course this makes sense. There will be behavioral changes in the purchasing patterns as well as cut in spending. This will make your customers less valuable for you than before.

However, when the customers are spending less, and the businesses are paying less to acquire them, it makes customer acquisition cheaper for all businesses. Sure, they are cheaper to acquire because they are less valuable, but you are being given a one off opportunity when it’s over-all cheaper to start your business.

The cost to start a new business is significantly lower during a recession.

If you’re not VC funded but bootstrapped like me, this means a great deal. We’re already planning some e-commerce stores and hoping to schedule the launch right when the markets are in deep turmoil.