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Tag: E-Commerce

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.

Variable Sale Pricing & Facebook Ads

One of the readers of the blog was discussing his Facebook ad strategy and mentioned that he has to increase the sale price of the product due to expensive shipping.

This quickly reminded me of my personal experience with variable pricing and Facebook ads and I thought to write a bit about that.

When you start advertising a product on Facebook on a specified price point e.g $19 and have a ton of qualified events stored in your pixel and ad account, a change of pricing can be sometimes disastrous. When you record hundreds of add to carts, check-outs, and purchases at a $19 price point, you’ve trained the Facebook ad algorithm to bring you buyers who are comfortable to spend money in that range. Facebook looks into the historical purchase patterns of the buyers and their average cart value in order to serve your ads to the right audience.

An increase of pricing mid-way in the campaign with a lot of recorded data will have more negative impact as you’re not just going to have lower conversion rate due to the hike in price, but also because your ads will not be served to the right audience further reducing your conversion rate. Due to this reason, personally, I like to start my ads with the final sale price and not something lower.

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.

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.

Market Inefficiencies & The Fuel Of The Internet

While you have to pay for most products or services in real life, most products and services that exist on the internet have continued to stay free. Since all internet companies have to make revenue, alternative options are looked into of which a large portion has been advertising.

As advertising became the main fuel of the internet, mega players jumped into the advertising industry to have power and control over the internet’s oil. To power effective advertising, data became even more valuable asset. But the internet advertising had and continue to have many many inefficiencies and over time, all markets try to remove inefficiencies to move towards higher profitability.

A major chunk of the advertising dollar has been going into the pockets of agencies, networks, exchanges, and other layers over layers of middle-men. I look at that as market inefficiency.

With influencer marketing, we saw the markets tried to get more efficient and remove the middle-men altogether. Everyone who explored this area, including us, saw over a 1000% higher ROAS compared to traditional advertising.

A large part of internet continues to stay free because one way or another commerce happens. Advertising is only the means. Facebook and Youtube videos continue to stay free because these companies make money with advertising and data.

However, advertising and data work because commerce happens. Everything else, including the advertising and data are also middle men. They are the inefficiencies that we need today, but hopefully the market will continue to find more efficient ways for higher profitability or cut-throat competition.

All websites and blogs that relied on advertising for years have been increasingly moving towards affiliate commissions to keep their businesses alive. As Amazon cuts affiliate rates, and others might follow, these content websites will need to find smarter ways to make their businesses work. What you could do before by just selling ads can only be done today by selling a product. Today, you can make it work by making a sale happen for someone else and getting an affiliate commission. Tomorrow, that may be seen as a market inefficiency and you may have to generate a sale for yourself either by selling products, or charging for your own product or service.

Youtubers today make up-to 80% of their income not by Youtube ads but by influencer marketing and brand deals. Youtubers and brands are cutting the very platform as the middleman that they host their content on.

We started Socialoholic with content and blogs. We relied on selling advertising in order monetize our network of websites. We drove traffic from the influencers to our content so we can sell ads and pocket the difference. We became content-arbitragers. So many middle-men while the true value was only created because someone somewhere bought something.

Years later, we found ourselves driving the same influencer traffic but instead of driving that to content we drove it to products. We removed the inefficiencies.

Over time, we have pivoted from content to focus on e-commerce as our core area of business because that is the real fuel of the internet. Everything else is only relevant because it assists e-commerce and when something more efficient pops up, it is replaced.

Here’s How To Lower Your Product Cost By Up to 10%

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.

Finding Opportunities in a Recession

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

There Must Be Something That’s Recession Proof Right Now?

COVID-19 has disrupted businesses of all types across the world. I have already written about the turmoil that markets are in. I’ve also mentioned that our business was largely affected too. In fact, our business was affected before most other businesses when COVID-19 was only limited to China. All this while I’ve been thinking what could be the right thing to do during this tough time.

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.

My Life Right Now

I don’t like doing these posts too much. I like to talk more about meaningful things that could potentially help others and less about myself. But I don’t feel like talking about meaningful stuff today. I want to talk about myself.

Pakistan

2 days ago, Pakistan reported more than 100 cases of COVID-19 in a single day. The government of Pakistan so far is claiming that 100% of the cases are imported ones, and there are no local transmissions. The problem with Pakistan is not the virus itself, but the healthcare system which is over-loaded and in a mess even without the virus. The second problem with Pakistan is that with lockdown more people will die of hunger and poverty than the virus will kill without the lockdown. Hence, Pakistan has adopted a mid-way strategy with regards to social distancing.

Mental Health

For the past few days I kept reading to learn more and more about the virus in order to be more aware of the virus to protect myself and others not only in health terms but also in the markets and to create the right investment strategy. The good thing about consuming all that information is that it kept me busy while I was distancing socially and I learnt a lot of things. The bad thing about consuming this much information on a pandemic is that it induced fear, anxiety and panic in my mind. Today, I’ve decided to pull back. The important stuff will reach me as it will reach everyone. The details, I’m not interested in anymore.

Work

My work is a mess. For the past 15 years, I’ve only known two ways to make money. I either sell ads to make money i-e publishing, blogs, ad-breaks etc

Or I buy ads to make money i-e e-commerce, influencer marketing etc.

Both are in a mess right now.

The CPMs are down as much as 75% depending on the industry you are in. So selling ads is 75% lesser profitable as before. This in theory means this could be a good time to buy ads. While that’s true that CPMs are lower for buying ads too, but that’s because the demand for buying things except for certain essentials is down too. In addition to demand, the supply chain is disrupted too as most things are manufactured in China which is not fully functional even now.

In summary, both e-commerce and publishing are largely affected.

As I was spending more time at home than usual, and do not have much work to do except for reading about the virus, it has been a bad combination for me. So I’m taking a step back.

Options

The options that I can personally think of to keep me engaged are Netflix, reading, courses etc. I don’t think binge-watching Netflix will be too helpful in restoring the right state of mind for me. So I’ve decided to enroll in certain online courses. Work has been absolutely essential for me always to keep me in the right state of mind. I think getting educated further about digital marketing is going to feel as an extension of work to me.

What are you guys going to do if you are in a similar position?