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NOTABLE! E-commerce: $100k in one hour

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deepneuralnet

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Congrats mate. Process->Event
 

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MartijnS

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We did about $94k in ONE HOUR (just shy of $100k, hehe), BUT our total for the day ended up at $108,000. Check the Shopify screenshot. Feels good to get an over $100k deposit in your bank account for one day of sales!

We ran a 20% off our entire website for ONE HOUR only. We don't run promotions often, as we believe it dilutes your brand over time. We sell high dollar widgets (over $500) with lower-dollar accessory widgets that compliment the high dollar ones. So here was our strategy:
Congrats! Must have felt pretty sweet!

Playing devil's advocate though and just trying to ask critical questions:
You're talking about sales, and you had a 20% discount on the widgets, so the question then remains of course how much that cut into your margins.

I mean, you can have a mega sale and discount down right to the COGS without any profit margin left, and sell $1M in an hours, but all you have to show for then is sales numbers and maybe new customers, but zero profit.

So how far down do you go?

That being said, if you have non tangible widgets - ie ebooks or software as a service, the costs become minimal and these kinda sales generally will still have relatively high profits.

Thoughts?

Martijn
 

Ronak

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Lower unit margin, but you make sales that otherwise wouldn't have happened. A good tool to use in a surgical manner, and assuming the gross margin isn't cut to zero, the volume bump more than makes up for the lower margin. Key number is total gross profit, which can be several weeks worth of normal profits.
 

JasonR

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Lower unit margin, but you make sales that otherwise wouldn't have happened. A good tool to use in a surgical manner, and assuming the gross margin isn't cut to zero, the volume bump more than makes up for the lower margin. Key number is total gross profit, which can be several weeks worth of normal profits.

You're close...

There's another metric that is super important in business - whether you're selling a company or running a healthy one, and that's your return on capital. ROC is talked about enough IMO.

Basically, think of it this way. Your return on capital decreases the longer your capital is tied up. So, the longer your inventory turns (or the slower you turn over your inventory), the less efficient your business is, as you could have used that capital for anything else (other/new products, other investments, taking personal profits, etc.).

So, all things being equal, a business that has a better/higher return on capital will generally be valued better than the same business who isn't as efficient with their capital.

Discounting/sales (like the one I ran) is a way to PROFITABLY in crease your ROC. Of course, this is a tool/lever to use in the business, and it's not one that can be repeatedly hammered. It should be used strategically.
 
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biophase

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You're talking about sales, and you had a 20% discount on the widgets, so the question then remains of course how much that cut into your margins.
Generally E-commerce stores have much better margins than 20%.

Imagine your product is selling for $100. Most COGS plus shipping would be around $35-$60. So selling at $80 decreases your profits by 50%. But you are still doing very well.

It’s hard to believe someone would have $80 COGS on a $100 product. That store would last long, unless it was a dropship store.

I don’t do a 20% sale but rather a buy one get something free. In the example above you can give up $20 cash or instead give them a $20 product for free that costs you $5. Same value to the customer but you make an extra $15.
 

theag

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It's a nice tactic. I have a friend who ran sth similar on black friday. It was even higher, I think 300k+ in an hour, and most of it in the first few minutes. Pretty crazy stuff.

What they did a bit differently, was to run lead gen ads specifically for this offer. So they collected leads weeks in advance of BF and didn't send them any other offer. Just a few reminders of the upcoming deal and to be ready when it starts at 8pm or whatever, the usual scarcity stuff

I'm not sure if its really worth it to delay the revenue though. And if it's an increase compared to continously running "normal" ads instead of the lead gen.

But it definitely helps to avoid cheapening the brand with too many sales. And easier to build hype/scarcity around these short time windows.

Thats why we only do 2-3 sales a year (usually around easter, black friday, and 1-2 more). We have a bit bigger time window though (2-3 days each). But in that timeframe we hit hard (3-4 emails/day).

Interesting note: our best performing emails is usually the "day after"-email with something along the lines of "did you miss the sale, too? we extended it for you, but it ends this evening! (image of big animated countdown)"

Works well :)
 
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doster.zach

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I wanted to share something very cool, and very actionable for all the e-com guys here. This doesn't work if you don't have a business or an email/customer list, but it works like CRAZY if:
You don't abuse your e-mail list
You email often (value driven, you just don't hammer campaigns/sales emails out)
You don't run promotions often .

First, results.

We did about $94k in ONE HOUR (just shy of $100k, hehe), BUT our total for the day ended up at $108,000. Check the Shopify screenshot. Feels good to get an over $100k deposit in your bank account for one day of sales!

We ran a 20% off our entire website for ONE HOUR only. We don't run promotions often, as we believe it dilutes your brand over time. We sell high dollar widgets (over $500) with lower-dollar accessory widgets that compliment the high dollar ones. So here was our strategy:

We announced our intention of the sale 5 days in advance. We included calendar links in the email. We made sure to reinforce that: 1) we very, very rarely do this and 2) the sale will be honored for one hour only, so be prepared.

We excluded anyone who bought a high dollar widget in the last 6 months. If they bought a high dollar widget, we sent them a separate email campaign on 20% off all accessory, lower-priced widgets.

We emailed them 3 days before the sale with a reminder and in our weekly blog post (content) promotion spot.

We sent this to 17,269 email subscribers (some customers, some not)

We reminded them a day before the sale via email.

We reminded them again, the morning of.

We then emailed them for the sale at kick off.

We emailed them one more time at the 30 minute mark "Last Chance"

We also designed the sale around peak traffic time on Sundays (specifically a weekend so fewer people will be at work).

We offered no phone support at this time (our phone is active M-F).

We were hoping for $50k, and we blew past that! Ended up at $108,000 for the day. That's about $6.25 per email subscriber (for the e-mail marketing geeks out there).

We used Klaviyo for our email campaigns. We heavily segment our customers based on a variety of factors - so our list has already been pruned and engaged for a long time.

If you use this technique/sale, post your results!

Disclaimer: this was not my own unique idea. I got the idea from a private forum, but I wanted to share our results with you.

We are now planning to do something like this at least two times a year but no more than three times. Again, you don't want to train customers to wait for sales and discount your brand. A further note, we've been running our business for about three years, so don't expect this to work at your one-month old e-com start up.
I've seen some crazy numbers from Shopify but nothing quite like this before! Sales and discounts are becoming very common for e-commerce, this is very impressive that you drove this much in sales. Congratulations on reaching that mark!
 

MitchC

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Generally E-commerce stores have much better margins than 20%.

Imagine your product is selling for $100. Most COGS plus shipping would be around $35-$60. So selling at $80 decreases your profits by 50%. But you are still doing very well.

It’s hard to believe someone would have $80 COGS on a $100 product. That store would last long, unless it was a dropship store.

I don’t do a 20% sale but rather a buy one get something free. In the example above you can give up $20 cash or instead give them a $20 product for free that costs you $5. Same value to the customer but you make an extra $15.

Not to mention that the promotion was an email which saves the ad cost.

20% of your gross sales being your ad spend would be a 5x ROAs which is almost unheard of, especially at this scale.

I calculate my email sales and referral sales based around my typical CPA since I am saving that cost anyway.
 

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