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Category: E-commerce

Receiving Ad Delivery Penalty Due to Coronavirus

It should be no surprise to anyone that coronavirus has affected some of the global trade and specifically slowed down the e-commerce industry.

Since we were facing increasing difficulty to source and fulfil our orders, we had stopped advertising some of our stores by end of January where product sourcing had become difficult.

But even though we had stopped the ads, there were still shipping delays for the orders that we had already received. By last week, after a three week break, we had made alternate arrangements for our product sourcing and resumed partial advertising operations for the affected stores. However, today we received an advertising delivery penalization. This has caused us to stop ad-ops one more time.

Although our delivery rates received poor reviews and for obvious reasons, I’m still relieved that nearly 100% of the customers were happy with the product quality.

In the end, I’m not just an e-commerce seller, but many times also an e-commerce buyer. Since I expect to receive a certain quality of service as a buyer, I need to ensure the same as a seller too and when I fall short, with or without coronavirus, I’m not proud of it.

What I Absolutely Hate About Dropshipping

Although dropshiping is just a fulfilment method and there’s nothing wrong with this fulfilment method given that there is a good process in place. But the dropshipping that I commonly refer to on this blog has some shortcomings. I’m going to list a few below.

When you’re fulfilling orders only and only from China, and shipping across the globe, there will be delays despite using e-packet only shipping method. Delays result in angry customers and angry customers aren’t repeat buyers. It’s more challenging to have repeat customers, subscriptions, or higher lifetime value if you’ve 1 fullfilment center in China responsible for your global shipping.

I dislike this about dropshipping and my team does everything in their power to resolve this as much as possible. This can be resolved to some extent using 3PLs once you have a proven product. Like I said, I dislike this but I wouldn’t go so far to say that I hate this about dropshipping.

What I absolutely hate about dropshipping is that there are many many stores that use the same or similar creatives, copywriting, landing pages and scam customers in the end. The customers, who are often very naive, can not even differentiate between two or more stores running ads for 1 identical product.

Moreover, most customers can not understand that they were scammed by someone else. Our support inbox is often full of queries about orders that the customers never placed with us. These are the nicer emails. The other types of emails are accusations and abuses also intended for someone else, but sent to us. Our ads on Facebook get flooded by unhappy customers, who also aren’t our customers.

I wouldn’t say Facebook doesn’t do enough. They run surveys targeting the people who bought from Facebook ads and penalize sellers based on the feedback. But such sellers move from one LLC to another, one domain to another, one theme to another, closing everything behind.

In the end honest sellers suffer. Facebook will obviously crack down even harder. The honest sellers will lose their accounts even more. This is what I absolutely hate about dropshipping.

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.

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.

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.

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%.

Why I Like Facebook’s CBO (Campaign Budget Optimization)

Facebook launched campaign level budgets in the mid of 2019. Initially, I was skeptical but I’ve started to like CBOs a lot. By using campaign level budget, I can now test 5-10 adsets in the same budget that I needed before to test 1 adset.

Facebook simply spends higher budget on the adsets within a CBO that are more worthy of my budget and spends lesser budget on adsets that are more likely to burn cash.

There is always a risk of missing out on a potentially winning adset but the reward overshadows the risk. In addition, you could still define minimum spend per adset within a CBO to ensure that each adset gets a bare minimum spotlight. Although, I generally advise against that.

My only problem with CBOs thus far is the organizational structure. Prior to CBOs, I only had to create 1 campaign per product. My campaign could then have hundreds of adsets.

Now I’ve to create multiple campaigns per product with each campaign grouping similar adsets together. Because of this, I’ve to create 10s of campaigns per product. The downside is I can’t group together data for 1 product without using filters which is just an added inconvenience

If Facebook introduces something which is above the campaigns level only for sake the of categorization, I’d really like that.

What Is Private Label? And Why Are Some Products Superior Than the Others

Private label products are manufactured by 3rd parties and packaged by them to be sold under retailer’s brand names. A lot of e-commerce that you see today is simply private labeling. Many stores and brands often only come up with the product idea, theme, design etc and do not really go into the details of actually manufacturing a product.

Since there’s almost always a 3rd party manufacturer available that aces at manufacturing a certain kind of product, it’s often easier, better and cheaper to source and PL the products by them instead of getting into the manufacturing business. The store can then simply sell the product that they only had to design, or in some cases only had to design the packaging for.

A few days ago, I went to the barber. He was quite disappointed with the state of the health of my hair and so he began the process to up-sell his hair oil product that he had private labelled.

He started by asking me how often do I use an oiling product for my hair. He then asked me if I can do it more often; daily for a week. Until this point he hadn’t introduced his product to me. He went further on, and showed me this perfect product that isn’t available for sale in the market. It’s a private product that can do wonders, he said. He then opened the bottle and made me smell it; it smelled incredible. From his perspective, everything was going great. But he messed up.

The bottle label sticker was a bit blurry. The printing quality wasn’t up to the mark. And so he lost my interest. I instantly decided that he is just selling this normal oil with a heavy markup by private labelling it that you can get from anywhere. But, could he have kept my interest intact if the label had better printing quality? I think he could have had my attention for slightly longer.

In fact, if the bottle was made of glass, appeared like a perfume more than the bottle of a hair oil, had super high quality label sticker, I might have paid twice the amount than the one he was looking to get from me. Because I may have led into believing that this actually is a really high quality product that is not available in regular supermarket.

In this day and age, there are products for every problem there is. There are products for potential problems, that could be. And there are also products marketing the solution by forcing you to believe that there is a problem, while there isn’t any. What sets you apart is how you private label, package and market one of these products. It is what gives you that leverage to charge that extraordinary markup.

They say don’t judge a book by it’s cover. But they said that because that is exactly what an average human does.

Retargeting Campaigns – What I Do With Them

I had a really busy day today. We successfully launched phase 1 of scaling for our new store. I also started retargeting campaigns today. For those who don’t know, retargeting is simply reaching back to the potential customers who showed some sort of intent to purchase your products.

Generally, I like to run 5-6 types of retargeting ad-sets including retargeting those who visited the product page, added the product to cart, initiated check-out, watched at least 75% of our video ad, and top 25% of the users by time-spent.

Recovering abandoned carts, and potential customers with intent is incredibly important. You’ve often spent 90% of your budget already to capture their intent, you just need spend 10% more to capture the sale.

I prefer running retargeting ads with photo creatives. Although I run almost all other ads with video creatives. Since the retargeting user group have already seen video ads, they just need to be reminded again about a product with a photo. This has provably worked for me and I’ve had tons of data to support this argument.

Happy retargeting!

Why Lifetime Value (LTV) Is a Survival Game

As the ad costs to drive sales keep going higher, at some point you’ve to understand and work on the lifetime value of your customer. Otherwise, you’ll not stay competitive and will be crushed away.

You pay Facebook or other platforms a certain amount to display your ads to people who are interested in a certain “interest or a keyword”. At some point you realize that the cost per acquisition has gotten so high that after paying for acquisition cost, cost of goods sold, and other infrastructure costs such as fee for shopify/server and other plugins etc, you’re losing money.

Sometimes after optimizations of all kinds on the ad level as well as on the landing page, you’ll realize that you’re still losing money. How can that happen? How could your competitors by bidding so high? How can their business model work if they are spending higher than you to acquire customer. The simple answer lies in LTV: Lifetime value. And LTV should always be higher than CPA (cost per acquisition).

If your business model is designed such that you acquire a customer who would pay you once only, your revenue model is limiting you to compete. The reason why that happens is because your competitors are now betting on the lifetime value of a customer. They are interested in recurring purchases, subscriptions, and in summary to acquire user once, and monetize him again and again.

Other buyers of ads are bidding higher in order to purchase data that they can use later to either bring the bids lower, or use it elsewhere to generate revenue.

To conclude, in this day and age, if your business doesn’t account for the lifetime value of the customer, you’re simply not competitive.