I have often seen many entrepreneurs offer their product or service as a mode of payment. I read an interesting story in this blog by Waqas, CEO of Markhor and Atoms. He traded 15 pair of shoes to get hold of a Twitter handle for his company.
I think that he certainly stood a better chance of acquiring that twitter handle with an interesting offer of 15 shoes instead of cash. Moreover, by paying with his product, he delivered more value and incurred lesser cost.
In e-commerce, most business owners pay influencers with their products. The influencers in turn review the products and get to keep them for free. The business owners get UGC (user-generated content) that they may use on social media and in their ads. In addition business owners receive content-distribution as the influencers review the products for the followers. The large influencers also receive store credit as a form of payment in addition to free products. The influencers receive higher value (e.g $99 goods if they had to buy), while the businesses incur lesser costs (e.g $30 cost of goods).
Product as a currency works and is a preferred mode of payment for modern businesses.
The past few days I have been working on a highly competitive product that I know hundreds of sellers are working on. There’s demand for it, but the product has lower sale price of $20 and is competitive to sell with paid media.
After analyzing competition and discussing strategy with Saad, I decided to sell the product in non-mainstream geolocations primarily targeting middle-east. This allowed us to generate sales at cheaper CPA than US/UK/CA/AU/NZ/EU and we were able to scale freely in untapped markets.
The CPA for “other geolocations” can be seen $2 lower than US and $6 lower than UK/CA/AU/NZ /EU
Sales from Middle-East, Asia, Africa & South America costed us 25% less and also accounted for 48% of total sale volume with US only accounting 17%.
Our average order value was 40% higher in Qatar and UAE in comparison with average of all other geolocations. 8% of our sales came from Mexico. We also received substantial volume from Chile, Hong Kong, Taiwan, Brazil, Oman, Bahrain and Caribbean states.
Our seed data was built using Singapore and Hong Kong which I think have high conversion rates and purchasing power. The seed data was then used to create custom audiences and lookalikes to scale in all other locations.
Over-all I’m really excited by the new avenues this unlocks because a few years ago, I couldn’t have imagined this. Selling in these geo-locations is one thing, but scaling there is a different ball game.
During the last week, I’ve tried (and trashed) a fitness brand, a home improvement company, a lingerie store, an arts and crafts company and a hair product company. What do you need to launch a new brand? A logo, a story and a line of products.
A brand launch even if you private label your products, does not cost more than $1000-$5000 in most cases. Without private labelling, it costs under $50.
You get your free Shopify trial for each new store which by the way they are extending to 90 days right now. You’d need to buy a domain which can cost anywhere between $2 to $9. You have many many options for free logos including hatchful or logojoy. Information or copywriting of your products and their photoshoot is generally free. You can get it from AliExpress/AliBaba. All of this is enough to get started. The keyword here is that it’s enough to “get started”. Of course once it works out for you, you can give it the attention it deserves.
If your product doesn’t work out, you trash the brand. You come up with a new one. It’s simple and it’s effective. You could create any kind of business using this model. You could make restaurants the same way. My co-founder did that with a biryani start up. All you need is a menu, logo/branding and a story. If it doesn’t work out, come up with new menu and new cuisines. You keep trashing the brands until it works out for you.
If you don’t test, trash, test, your competition will be done making their first ten million dollars by the time you’ve finished finalizing your brand’s concept.
I received an email from a reader who needed some advice regarding the diagnosis of sales funnel. I’m going to keep this short as I’m busy with launching some more campaigns right now, but I hope that I leave some value here.
There’s no rocket science here. The first thing for you to do is to be aware of all the steps that your potential customer is going to take in order to purchase something. Starting off from seeing your ad on Facebook or other platforms, watching/engaging with it, clicking on it to reach your landing page, reading the product description, adding the product to cart, initiating checkout, adding shipping/payment info, and eventually committing a purchase. These are the steps that the customer goes through in most of my advertising. It can be different for everyone.
The second thing for you to do is to find where the breakage is. If you’re failing to see results, you need to identify the point where something is going wrong. If you’re doing video ads and have good watch time, your creative and your targeting should be okay. So you’ve diagnosed this step of the funnel and should move forward. If you have a good CTR (1%+ for Facebook), it means your ad copy was convincing and the customer is interested in knowing more about your product.
If your bounce rate is low and your time on site high, it means your landing page was engaging and informative. If over 10% of the people on your LP add the product to their cart, it means your ATC button placement, color etc is good. If over half of those who added the product to cart then initiate check-out, it means your cart page is not broken and created as it should. If over half of those who initiated check-out, purchase the product, congratulations you’ve made it.
Key metrics that I really like to focus on: average video views in seconds: 10 seconds or more. Average video views in percentage 25% or more. CTR minimum 1%, ideally 2%+. ATC rate, I like it over 10%. Initiate check out rate, I prefer having over 5% and conversion rate should ideally be 2.5% or more. Below are the today’s stats for one of my stores
Most drop-shippers start off by fulfilling the orders by placing them on AliExpress. As they progress with the journey and are able to do larger volumes, they use tools like Oberlo or Dropified for auto order placement on AliExpress.
Although we have been working with a private supplier for a few years now, we were able to reduce our product cost by a significant percentage while we placed orders via AliExpress.
AliExpress has an affiliate program that you can sign up for using AdmitAd. Once you’re in the program, you’ll get an affiliate code that you’d need to pass on to Oberlo or Dropified by contacting support.
By doing so, on each order that you’ll place using Oberlo or Dropified, your affiliate cookie will be dropped earning you up-to 10% cashback on your COGS (cost of goods sold).
At average, we have received 7% cashback. Since product is usually 33% of your gross revenue, you can increase 2-3% profit margins which are significant in an e-commerce business.
As an entrepreneur, it’s very important to stay calm even when the world is breaking apart. Most of the time, when there is a world changing event like COVID-19, people’s consumption behavior change. They buy different things compared with their previous spending habits.
While doing product research for our E-Commerce holding company, I got to know that Hair Clippers was one of the best selling products while China was on lockdown because of COVID-19. Who would’ve thought that people would buy Hair Clippers when hundreds are dying because of an extremely deadly virus.
But when barbershops are closed, you still gotta cut yours and your children’s hair. 3 of the fastest growing Chinese companies from January to March are companies which are either manufacturing Hair Clippers or are leading retailers.
Another great example of this trend is blankets, hand warmers and mini electric heaters. Due to control measures of COVID-19, apartment buildings turn off heating and you have to open windows for fresh air. However, temperature in many parts of the world is still too cold. China’s leading e-commerce marketplace Pinduoduo reported that sales of blankets and hard warmers saw 165% increase during the lockdown.
When you find calm in chaos, you can find opportunities like these and benefit from them. Insights like these coupled with lethal digital marketing can create new companies which capitalize on new purchasing behaviors.
This is a guest post by Socialoholic’s co-founder @SaadBassi
I thought about software businesses, which may also be struggling, but far less than other kind of businesses. In fact there are some software businesses that are doing better than they have ever done before; Zoom for example. As S&P500 index goes down as much as 30%, the stock price for Zoom is up by 30% as more and more people resort to work from home.
You may have also read that Amazon is hiring as many as 100,000 people to fulfill the customer demand. So Amazon doesn’t seem to be doing too bad either as people resort to online shopping to follow social distancing.
The more you read about the bad news on Twitter, Facebook or wherever you get your news from, the more opportunities are presented to you. In fact, when the world was functioning on full-throttle, it was tough to find opportunities because every industry was so competitive. Now, opportunities present themselves to you.
For example, you may have read that in many parts of the world, everything has been closed except for pharmacies, groceries and food deliveries. This is an obvious proof that if you could deliver medicines, essentials or food, you might be doing better than others. But what’s more obvious is that if there was a delivery version available of everything else that’s on a complete shutdown, that could be an even better opportunity.
If people are locked in their houses, they might need more than food or medicines. They certainly need video conferencing (zoom) to continue to work from home. They need Netflix, obviously. They probably also need to workout, right? Probably other things to keep themselves entertained or busy.
Because people need to still workout, we’ve launched our “workout from home” brand in the last couple of days. We’ve seen initial demand for it, and plan to scale it in the coming weeks. There’s a big e-commerce opportunity right now and I encourage that you seize it.
Moreover, Shopify is giving away 90 days free trial instead of the regular 14-days to help small businesses stay afloat. So what are you waiting for? This could be the time to kick-start your e-commerce journey.
I like to scale my Facebook ad campaigns with manual bids. One of the the tough decisions is to identify what is the optimal bid with regards to the best combination of number of sales and profit per sale. In short, getting the best return on ad spend (ROAS).
One manual way that I’ve used in the past is to start my ads by placing a bid that would result in 1.00 ROAS. For example, if the cost of goods sold is $10 and I’m selling the goods for $30, I’d start by placing a manual bid of $20. What this translates into is that I’m willing to break-even to initiate the learning phase for the ad-set.
Then I reduce this bid by 10% everyday until my ROAS keeps getting better and stop when the spend starts going down. This has helped me identify the right manual bid in the past. But there’s one drawback and that is the auctions change everyday and I only run the top down bid-identifying strategy once. So my manual bid may not be the most optimal manual bid everyday in the future.
However, since the launch of campaign budget optimization (CBO), there’s a simple solution to this problem. You can create multiple ad-sets with different manual bids and place them in a CBO. So if you’re selling that $10 product for $30, you can may be create 5 ad-sets in a CBO with a bid of $13, $14, $15, $16 and $17. The CBO will automatically choose the ad-set that’s likely to get the best results and each day a different ad-set with a different bidding may be getting the sales for you.
E-commerce was one the first affected industries when the COVID-19 hit China. There was a supply-side crisis and many e-commerce stores were unable to source the goods to sell.
Our dropshipping stores came to a stand-still. All other businesses, e-commerce or offline, that relied on China for sourcing or production of goods are in the same boat as us.
But the e-commerce stores that rely on sourcing and shipping products locally or domestically are set to post growth and higher profits. As more and more countries are advising social-distancing, many people around the world are staying at home. This trend will continue to increase in the coming weeks. During the social distancing period, many people are relying on e-commerce services for grocery and other essentials.
Proof of this can be seen by having a look at e-commerce platforms in China tailored to serve the local customers. Carrefour in China has reported 600% growth in sales in Q1 while JD, one of the largest e-commerce services in the world, has reported 200% increase in sales during the first quarter.
2020 is not only going to be a good year for those associated with domestic e-commerce, especially grocery, but such businesses could continue to see more demand beyond the 2020 as well. The current pandemic situation has shown a unique use-case for e-commerce platforms and has proven the need of such businesses in times like these.
In the summers of 2016, I saw an advertisement for Dewan motors. They are the authorized sellers of BMW CBUs in Pakistan since BMW is not assembled in Pakistan. The 4 million Rs price tag for their 3-series caught my instant attention.
This was cheaper than any other German car brands available in Pakistan for similar compact sedans. Audi A4 prices began from 6 million Rs while Mercedes C-class started from 8 million Rs. BMW obviously caught my attention. So I visited their dealership in Islamabad.
After discussing the car further with the dealership, I realized that my attention has been captured by a cheap price but the dealership has no intention of selling it cheap to me. The 4 million Rs 3-series came with absolutely no features. It was a manual transmission, without climate control, sunroof, or even a cigarette lighter/power outlet. There wasn’t even a paint selection option and the car was offered to be shipped as “Alpine White”. It was a Corolla XLI equivalent of BMW.
The automatic transmission alone was for 1 million Rs. Adding other basics to the car, raised the price up by another million. At this point, I realized that the 4 million price point was advertised only to get me to the dealership. I didn’t buy the car, but I learnt a bit about sales.
In e-commerce, some sellers advertise “Free + Just Pay Shipping” offers. The obvious intention is to sell $1-2 goods for for $0 + $10 for shipping. The same product can also be advertised as $10 with free shipping. However, a split test will prove that the Free+Shipping offers convert better. Because we’ve never been interested in $10 price-point, we’ve never advertised F+S offers, but we do play with this particular area of human psychology in order to get the best value. Let’s explore this further.
If you want to sell something for $25, you could offer it as $25 with free shipping, or for $19.95 with $5 shipping. You’d still get the same $25, but your conversion rates will vary. While there’s no rule of thumb here, but we’ve often seen that it’s better to offer $25 + free shipping to customers in US as they feel entitled to free shipping, and one can advertise $19.95 + $5 shipping to customers outside of US without hampering conversion rates since they are conditioned to pay for shipping from a store that’s not operated in their country.
However, my favorite example is the “Dollar Shave Club”. It was advertised as such that no one should ever need to spend more than a dollar to buy a razor. Except that their cheapest offering which is $1 razor called “humble twin” shipped for $3 including the shipping while they offered free shipping on their other, more expensive blades.
They also called their cheapest blade as “humble”, and others fancier names terming their mid option also members’ favorite. But all of this was only when they had just launched. In the present state, you’re bound to spend 10s of dollars, and that too on an on-going subscription basis. Let’s have a look at what they’re doing today
What is advertised as Dollar Shave Club, now creates a “personalized” basket of goods for you after taking you through a “quiz”. Instead of $1, they attempt to upsell to $42, and bill that every 2 months.
