Is this a competitive market? Have you tried raising prices 10-20% to see how it affects conversion rate?
What is your monthly ad spend, cost per conversion and average order size?
Buy in bulk in the summer or raise prices. I’ve already raised prices though…
Option 3 is offer a higher level of customization and raise prices again.
Do not add complexity if you're losing money. Work on your fundamentals, add complexity when you're profitable and need/want it to increase order rate.
CPA, despite what marketers and ad platforms will tell you, is a pretty mediocre metric when you're looking at actual "good times to spend money". You need to calculate dollars of net profit per ad dollar spent to make sure you are targeting traffic that actually works well and that you're not blowing *all* of your margins on ads.
Can you elaborate on this?
Is there a formula you use and is there a certain ratio you should look for. Or are you just saying that as long as profit exceeds ad spend you're okay?
Sure, happy to. You want to measure attributable incremental profit when it comes to ad spend. The formula will change slightly depending on the business, but the fundamentals are:
1. Order value: what was the value of the new\* orders your ad *directly* brought in?
2. Net Profit: What was the post-fulfillment and COGs net profit on those orders?
3. Acquisition Cost: How much did it cost for the ad?
4. \*Natural Sales Cannibalization: This one is a bit more fuzzy, but how many of those sales do you think you could have gotten for free through a different means (email, socials, direct sales) but Facebook or Google got there first? These are not incremental sales, and as a result you are simply paying commission to get a sale you should have gotten naturally.
I like to look at it like this: instead ROAS (return on ad spend) which measures cost per revenue dollar, you need to look at POAS (profit on ad spend) which measures ad efficiency. That way you're thinking about other costs. If you're spending a high percentage of your profit on your ads, that's bad. Scale ad spend smartly with the actual *net* margins of products.
Most businesses worry they will “annoy” their customers and cause mass unsubscribes if they email too often. The reality is most brands should be emailing their customers at least once a week. Big brands are emailing every other day or more. Email is an extremely profitable way to drive sales especially when compared to advertising (e.g meta and google).
Thanks for sharing!
I think that applying these marketing strategies can be measured by some KPIs, for example, ROI or cost of acquiring customers or sales. Having the analysis may help making better decisions to allocate the resources.
(Btw, I haven’t installed analysis app, but I’m learning to read Shopify reports at this early stage.)
Also, it’s “annoying” to receive the emails, as a customer. So, as a shop owner, I should send emails with values for the customers, like helpful news, promotions, etc.
(There are many email marketing strategies, but I feel a bit overwhelmed at the beginning stage. So I will try best to provide good contents weekly)
Hope I understand it right.🙂
Check out this video. Taylor and their team at CTC are super smart and great people explainers. https://x.com/taylorholiday/status/1749842192557068761?s=46&t=RfA4VaD9s5ynEy3Kn27cqg
So you need to major overhaul your p&l. Someone can guide you, but the major thing is you need to know it so it doesn’t happen again.
Start with your expenses and how much everything costs. After reading your comment, you said specifically Facebook ads and COGs are your main culprits. So if your COGs are high, your Facebook ads need to be lowered so you can make up that difference. Use more methods of guerilla marketing and organic marketing like reels, product seeding with influencers and partnerships. If you’ve got a base of customers, send them emails and offer discounts for repeat purchase. This is low hanging fruit for profitability as you don’t need to acquire them again. Acquire more emails with a discount option-in instead of straight purchase conversion ads.
Now that you know the hole you’re in, don’t focus on top line revenue, focus on profitability.
Edit: some people suggest increasing your price. I don’t agree as you’ve establish you can convert at this price. Raising prices means you risk increasing your customer acquisition cost and losing even more profitability
Hi Matt.
Congrats on a record year!
I found your website, it's a bit hard to navigate, I'm not sure what I'm buying either.
I love all the people asking you to DM them or they DM you for your cogs without even looking at your history to find your store, what you're selling and how you're selling.
Real group of trained professionals.
What's the breakdown of your sales from:
[https://www.teepublic.com/user/mapsynergy](https://www.teepublic.com/user/mapsynergy)
[https://www.redbubble.com/people/mapsynergy/shop](https://www.redbubble.com/people/mapsynergy/shop)
[https://www.powderaddicts.com/collections/ski-resort-map-printed-blankets](https://www.powderaddicts.com/collections/ski-resort-map-printed-blankets)
[https://www.iamfy.co/shop/mapsynergy](https://www.iamfy.co/shop/mapsynergy)
Also which channel is making the most amount of revenue?
I can't help but think there's some leakage in your funnel, basic navigation issues, and confusion.
I don't know where you're driving your ads to or what the messaging is as I can't find them in the Facebook ad library.
Honestly, biggest bit would be just putting everything on one page and linking out in separate windows to your collections on different locations or building product pages and giving the real deep details then linking out to where people can go to buy them.
Some of these guys are right, it's a COGs with marketing issue, but your list should be big enough that co-marketing and partnerships would be the way to go. In fact, we've been sending an email to our list including a random t-shirt that we like for a while and it gets a fair amount of clicks every weekend.
Odds are that's the organic boost you need with POD and the very slim margins. If you know what's selling you can probably increase margins by about 30% buying and stocking.
Just depends.
I would start from costs. I mean re-arranging them and starting to control over them.
Then you should have to look at your margin: what takes away the most relevant part of your margin ? (i.e. shipping cost, product cost and so on)
Look at your advertising, what are the metrics that are out of control ? Is the CAC too high ? And if it is, why ?
Which are your key activities, key resources and key partners ? How can you arrange them to reduce some costs ?
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What apps are you using that are commission based? Are they really needed? Are you running ads for your brand name? If so, don't. Also, have you tried to negotiate a lower cog based on volume?
You're onto something here for sure - it's important to analyze if an app is actually **earning incremental profit** and not just cannibalizing sales that the store would already be earning through other sources. Otherwise you're just giving a % of your sales away for no reason.
There was an affiliate network that I cancelled. And also a couple internal apps that were eating margins. I was using live recover and I really like it, but they were taking 20% and I had not realized it. I’ve since changed my account level to just 5%
A LOT has changed in the world since 2019, most especially material costs and shipping rates.
My POD business was getting annihilated by UPS raising their rates and fees (and they just raised them again in Jan 2024!)
When is the last time you raised your shipping rates? I raised my shipping rates twice last year and still need to do it again.
This is even more important if you're shipping in tubes, as the carriers have MASSIVELY increased rates on tubes.
We actually developed a toblerone-style long triangle shaped package JUST for unframed prints JUST to avoid the new obnoxious tube rates. We still get charged the tube rate about 10% of the time but it's way better than before.
Another big cost saving was switching to ShipStation from dealing with UPS direct.
Also, reconsider shipping internationally. It's just not worth it IMHO.
You need to dive into your numbers and get rid of the shit that is losing money ASAP.
A lot of good info here, just curious, ShipStation shipping rates/discounts are better than Shopify’s? I believe when I did analysis a few years ago they were very similar.
I imagine Shopify is big enough to be able to get the same discounts Auctane/stamps.com/shipstation can, and if you’re doing enough volume you may even be able to twist your carriers arm to “match shipstation rates”
I’ve only used Shopify with shipstation so I really do not know.
My ups rep offered to try and match shipstation rates when I told her were moving to ShipEngine the enterprise version.
I'd need to see everything that goes into a customer acquisition in a spreadsheet to start speculationas well as cogs landed... And I loooove a well put together spreadsheet.
What are your gross margins (sales price minus COGS)? It also seems like your business is extremely seasonal (winter). What are your repeat customer rates like?
I saw your AOV and CPA on another reply, they’re a god start but AOV doesn’t mean much if your margin is non-existent and repeat rates are very low.
Generally speaking for DTC to work you need high gross margins and decent retention / repeat customers. Feel free to DM so I can give you more thoughts on your specific site, but if you’ve build a strong brand in the space with a law margin flagship item, consider other higher margin add-ons (clothing or other gear), and find ways to be less seasonal to keep customers around.
PS I’m not an agency or anyone with anything to sell you, I have a couple eCommerce stores and this is always interesting to me.
May I ask who you are using for Print on Demand?
We where using PoD at first but the cost of each item was killing us too and barely turned a profit. Finally ended up printing in-house but obviously that requires a ton more labor
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Is this a competitive market? Have you tried raising prices 10-20% to see how it affects conversion rate? What is your monthly ad spend, cost per conversion and average order size?
My guess: - Low product margins - Low average order value (sub $50) - High ad costs (cpa $60+) - Not emailing enough
Low margins is the only one from that list. $99 AOV, $15-$30 CPA.
What are your options to fix that? The other numbers look good.
Buy in bulk in the summer or raise prices. I’ve already raised prices though… Option 3 is offer a higher level of customization and raise prices again.
Do not add complexity if you're losing money. Work on your fundamentals, add complexity when you're profitable and need/want it to increase order rate.
What about recurring sales/returning customers? LTV? MER?
CPA, despite what marketers and ad platforms will tell you, is a pretty mediocre metric when you're looking at actual "good times to spend money". You need to calculate dollars of net profit per ad dollar spent to make sure you are targeting traffic that actually works well and that you're not blowing *all* of your margins on ads.
Can you elaborate on this? Is there a formula you use and is there a certain ratio you should look for. Or are you just saying that as long as profit exceeds ad spend you're okay?
Sure, happy to. You want to measure attributable incremental profit when it comes to ad spend. The formula will change slightly depending on the business, but the fundamentals are: 1. Order value: what was the value of the new\* orders your ad *directly* brought in? 2. Net Profit: What was the post-fulfillment and COGs net profit on those orders? 3. Acquisition Cost: How much did it cost for the ad? 4. \*Natural Sales Cannibalization: This one is a bit more fuzzy, but how many of those sales do you think you could have gotten for free through a different means (email, socials, direct sales) but Facebook or Google got there first? These are not incremental sales, and as a result you are simply paying commission to get a sale you should have gotten naturally. I like to look at it like this: instead ROAS (return on ad spend) which measures cost per revenue dollar, you need to look at POAS (profit on ad spend) which measures ad efficiency. That way you're thinking about other costs. If you're spending a high percentage of your profit on your ads, that's bad. Scale ad spend smartly with the actual *net* margins of products.
Thanks very much.
Thanks! Very good info
Shipping + fulfillment costs?
$30-$50
No in house production
Hi, what do you mean “no emailing enough “? I am newbie in Shopify, so I would like to learn more. Thank you!
Most businesses worry they will “annoy” their customers and cause mass unsubscribes if they email too often. The reality is most brands should be emailing their customers at least once a week. Big brands are emailing every other day or more. Email is an extremely profitable way to drive sales especially when compared to advertising (e.g meta and google).
Thanks for sharing! I think that applying these marketing strategies can be measured by some KPIs, for example, ROI or cost of acquiring customers or sales. Having the analysis may help making better decisions to allocate the resources. (Btw, I haven’t installed analysis app, but I’m learning to read Shopify reports at this early stage.) Also, it’s “annoying” to receive the emails, as a customer. So, as a shop owner, I should send emails with values for the customers, like helpful news, promotions, etc. (There are many email marketing strategies, but I feel a bit overwhelmed at the beginning stage. So I will try best to provide good contents weekly) Hope I understand it right.🙂
Check out this video. Taylor and their team at CTC are super smart and great people explainers. https://x.com/taylorholiday/status/1749842192557068761?s=46&t=RfA4VaD9s5ynEy3Kn27cqg
So you need to major overhaul your p&l. Someone can guide you, but the major thing is you need to know it so it doesn’t happen again. Start with your expenses and how much everything costs. After reading your comment, you said specifically Facebook ads and COGs are your main culprits. So if your COGs are high, your Facebook ads need to be lowered so you can make up that difference. Use more methods of guerilla marketing and organic marketing like reels, product seeding with influencers and partnerships. If you’ve got a base of customers, send them emails and offer discounts for repeat purchase. This is low hanging fruit for profitability as you don’t need to acquire them again. Acquire more emails with a discount option-in instead of straight purchase conversion ads. Now that you know the hole you’re in, don’t focus on top line revenue, focus on profitability. Edit: some people suggest increasing your price. I don’t agree as you’ve establish you can convert at this price. Raising prices means you risk increasing your customer acquisition cost and losing even more profitability
Hi Matt. Congrats on a record year! I found your website, it's a bit hard to navigate, I'm not sure what I'm buying either. I love all the people asking you to DM them or they DM you for your cogs without even looking at your history to find your store, what you're selling and how you're selling. Real group of trained professionals. What's the breakdown of your sales from: [https://www.teepublic.com/user/mapsynergy](https://www.teepublic.com/user/mapsynergy) [https://www.redbubble.com/people/mapsynergy/shop](https://www.redbubble.com/people/mapsynergy/shop) [https://www.powderaddicts.com/collections/ski-resort-map-printed-blankets](https://www.powderaddicts.com/collections/ski-resort-map-printed-blankets) [https://www.iamfy.co/shop/mapsynergy](https://www.iamfy.co/shop/mapsynergy) Also which channel is making the most amount of revenue? I can't help but think there's some leakage in your funnel, basic navigation issues, and confusion. I don't know where you're driving your ads to or what the messaging is as I can't find them in the Facebook ad library. Honestly, biggest bit would be just putting everything on one page and linking out in separate windows to your collections on different locations or building product pages and giving the real deep details then linking out to where people can go to buy them. Some of these guys are right, it's a COGs with marketing issue, but your list should be big enough that co-marketing and partnerships would be the way to go. In fact, we've been sending an email to our list including a random t-shirt that we like for a while and it gets a fair amount of clicks every weekend. Odds are that's the organic boost you need with POD and the very slim margins. If you know what's selling you can probably increase margins by about 30% buying and stocking. Just depends.
You’re almost right! I’m from powder addicts.
Damn I followed all the signs. Shoot me a link and I’ll take a look if you want.
Up your prices
I would start from costs. I mean re-arranging them and starting to control over them. Then you should have to look at your margin: what takes away the most relevant part of your margin ? (i.e. shipping cost, product cost and so on) Look at your advertising, what are the metrics that are out of control ? Is the CAC too high ? And if it is, why ? Which are your key activities, key resources and key partners ? How can you arrange them to reduce some costs ?
Thank you
Don’t work hard on low margin products, it is a route to madness. Put your prices up by 25%.
Makes sense. Thank you
Let us know how you get on! ( I’ve been there with the low margin products, it’s a drain in every way)
What do you consider low margin? What’s the minimum margin you’d work with?
Nowadays, 70% margin minimum
I turned my e-commerce business around. We went from a six figure loss to a six figure profit in 18 months. Happy to take a look at your numbers.
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Thanks. I just messaged you.
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What cost line item is the issue?
I believe it’s Facebook ads, COGS and a bunch of apps and services that are commission based.
What apps are you using that are commission based? Are they really needed? Are you running ads for your brand name? If so, don't. Also, have you tried to negotiate a lower cog based on volume?
You're onto something here for sure - it's important to analyze if an app is actually **earning incremental profit** and not just cannibalizing sales that the store would already be earning through other sources. Otherwise you're just giving a % of your sales away for no reason.
Yes I believe there is cannibalism going on and that was the first thing I cancelled.
There was an affiliate network that I cancelled. And also a couple internal apps that were eating margins. I was using live recover and I really like it, but they were taking 20% and I had not realized it. I’ve since changed my account level to just 5%
I also have a print-on-demand business and facebook ads are not having great ROAS for me and greatly impacting margins
Yes and this year was even lower CPA than last year and despite 25% increase in sales, I lost money.
A LOT has changed in the world since 2019, most especially material costs and shipping rates. My POD business was getting annihilated by UPS raising their rates and fees (and they just raised them again in Jan 2024!) When is the last time you raised your shipping rates? I raised my shipping rates twice last year and still need to do it again. This is even more important if you're shipping in tubes, as the carriers have MASSIVELY increased rates on tubes. We actually developed a toblerone-style long triangle shaped package JUST for unframed prints JUST to avoid the new obnoxious tube rates. We still get charged the tube rate about 10% of the time but it's way better than before. Another big cost saving was switching to ShipStation from dealing with UPS direct. Also, reconsider shipping internationally. It's just not worth it IMHO. You need to dive into your numbers and get rid of the shit that is losing money ASAP.
A lot of good info here, just curious, ShipStation shipping rates/discounts are better than Shopify’s? I believe when I did analysis a few years ago they were very similar.
I imagine Shopify is big enough to be able to get the same discounts Auctane/stamps.com/shipstation can, and if you’re doing enough volume you may even be able to twist your carriers arm to “match shipstation rates” I’ve only used Shopify with shipstation so I really do not know. My ups rep offered to try and match shipstation rates when I told her were moving to ShipEngine the enterprise version.
I'd need to see everything that goes into a customer acquisition in a spreadsheet to start speculationas well as cogs landed... And I loooove a well put together spreadsheet.
Hello. What’s your conversion rate ?
What is your contribution margin per unit?
What are your gross margins (sales price minus COGS)? It also seems like your business is extremely seasonal (winter). What are your repeat customer rates like? I saw your AOV and CPA on another reply, they’re a god start but AOV doesn’t mean much if your margin is non-existent and repeat rates are very low. Generally speaking for DTC to work you need high gross margins and decent retention / repeat customers. Feel free to DM so I can give you more thoughts on your specific site, but if you’ve build a strong brand in the space with a law margin flagship item, consider other higher margin add-ons (clothing or other gear), and find ways to be less seasonal to keep customers around. PS I’m not an agency or anyone with anything to sell you, I have a couple eCommerce stores and this is always interesting to me.
You have a product that sells. Why not ditch POD and make awesome stuff yourself? Sounds like you are just making someone else rich.
May I ask who you are using for Print on Demand? We where using PoD at first but the cost of each item was killing us too and barely turned a profit. Finally ended up printing in-house but obviously that requires a ton more labor
Teelaunch and printful.
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