How to diagnose why your e-commerce store isn't making money. The presenter breaks down the funnel: creatives, cost-per-click, traffic, offer, AOV, conversion rate, sales. If a winning creative stops working when you spend more, it's weak. Boost profit by bundling products, adding post-purchase upsells, or raising prices.
Chapters
Teaching you guys how to cook a steak and become profitable with ecom. Alright, so first things you want to do, you want to lay out the steak, Slap that bitch, get that shit dry, alright? Cut off the fat. I can afford to cut off the fat. So I do. I don't like eating it, obviously. Throw the fat pieces away, pat the other side dry. Make sure it's nice and dry, right? Alright, now we got our season, we got our Italian, we got our black pepper, we got our sea salt, alright? Paprika. Switching it up this time like a little freak. And I'm going to score this bitch. I usually don't do this, but I decided to do it today, don't know why. So score the shit out of it. We're going to season it. Salt first, always, always. Pepper next you already know, paprika. And then we're going to pat that shit in. Alright? We're going to pat that in, lock in that flavor. And then soon we're going to make sure the sides get a little seasoning on them as well, you know, Pat the sides now season the other side. Pat it in. All right, and then we're set. Next thing we got this thing on high heat, two minutes, one side, all right? Get that nice glaze, that nice sear on there. And then we're gonna switch it looks good, another two minutes and we're gonna start freaking sauteing that motherfucker. And then we're gonna get both sides here, cover it for five minutes on low heat. And then we're going to take this thing out. Look at that. Perfect. Already cut it. Then we're going to check out, you know, perfect. Medium rare. Maybe a little rare in that. I don't know. Depends on how you think. Chick Fil A sauce. Not too bad, not too bad, not too bad. So this is the basic funnel that most of you guys have. Most of you guys that are either breaking even or, you know, haven't been profitable yet. So you have your creatives and you have your ad strategy, right? These affect your cost per click. Your cost per click affects how many people are sent to your store. This sends your store and see your offer and your landing page. Your offer and your landing page directly determines what your average order value is and what your conversion rate is. And this will determine the amount of sales you have. If you want want to become profitable, you need to figure out which one of these is not cutting it. Or in some cases for beginners, it could be multiple. So the result, like it's never sales, obviously, because that's an end result that doesn't affect anything else. So you can't say it's sales. But let's say, you know, cost per click is 0.5. So 50 cents. That is, you know, a very good cost per click, 0.5. Let's say your offer and stuff, and then your AOV is 1%. AOV is something like, I don't know, $35. Okay, so let me just fix that real quick. 1%, $35. Okay? So you should just know if you have a 1% conversion rate, that's not good, that's below average for E commerce. Doesn't matter. Unless you're like selling a very high ticket item, which obviously I don't recommend for beginners. That is definitely the issue because a cost per click of 0.5 is usually pretty good. Depends on the product, but usually that's pretty good. So, but if you're getting. Let's say you spend a hundred dollars max, all right? You get a 0.5 cost per click. Let me see, 100. So 200 visitors to your store, all right? And then your conversion rate is 1%. So you convert, you get two sales at $35. So you get two sales, $70. And you spent $100 in ads, right? So that's going to be, you know, very unprofitable. $100 in ads and $70 in sales. That's definitely unprofitable. So what can we do? So, creatives, you're getting 200 visitors, which is really good. So obviously here it's got to be something with the offer or the landing page. Either your offer isn't, you know, enticing enough, your offer, you're not selling the product for enough, so people think it's just cheap, or it could be the other way around. You're selling it for too much. Let's do another example. So make the same kind of thing. So. And we got creative up here. All right, so let's say in this case, we're just gonna make an imaginary thing in our head. We say you're selling a product for $40, okay. And it costs, you know, we'll say $13 to fulfill that. So almost a 3x markup, which is pretty, pretty average. Okay? So your creative. Let's say in this case, you know, you got a good conversion rate, right? You got like a 5% conversion rate for AOV. You know, it's okay, let's say it's $45. You're spending $100 a day on creative. And. But you Only gotten. Again, you've only gotten two sales. Two sales for $90. Okay. Yeah. So if you have a 5% conversion rate and you got two sales, that means you're gonna have 40 visitors. So in this case, you have a good conversion rate, right? 5%. 5% is a very good conversion rate for Econ. And let's say you have a $45 AOV. That's not terrible. I wouldn't say that's a good Overview for a $40 product. Definitely we could get that up to 50, 55, maybe even 60, who knows, with bundles and, you know, upsells and different stuff like that. But overall, you have a good offer, you have a decent offer, you have a good landing page because you'll be getting this 5% conversion rate. But what the issue is here is obviously not the conversion rate, not the aov, but the issue is the visitors. And what do the visitors come from? The creative. So obviously there's something wrong with your creative. Your creatives are getting conversions, which is, you know, a plus. But usually if the visitors are too low, it's the hook rate is too low or, you know, all the other thing to look at, you know, cost per click is too low, but cost per click is pretty much determined a decent amount by hook rate. I would focus on hook rate if that's the case. But hopefully if you're getting like some of these metrics, this helps you kind of understand the funnel a little better. And the last thing I wanted to talk about is if you're unprofitable or you're profitable for one day, and this could be day one of testing a new creative. This can be, you know, just day one of testing a product, but you're profitable on day one. And then you, let's say you're at a hundred dollars and then you bump this to 200, and then now you're unprofitable. And this, if this happens, if you bump from 100 to 200, that is simply, simply your creatives are not good enough. And you might be thinking, well, one day they were doing well, so, you know, there's a chance they're so good. No, if you have a winning creative that is a good creative, that is a solid creative, it's going to be consistent. I've something I've learned and something I'm, you know, have seen from my brand is if a creative is actually really good and, you know, is a winning creative, it's going to be consistent and you're going to be able to scale easily with it like you'll be easily profitable at a. A low budget. Like 100. Bumping to 200 won't affect it at all. So if it gets affected when you bump to 200, it's simply just not that good of creative. So hopefully this, you know, helps people who have inconsistencies in their ad account. You know, one day they're really profitable, the other day it doesn't get like any sales or something like that. It's simply creative. Your creatives aren't consistent enough and aren't good enough. So that's my take on that. If you want to know what you know, metrics exactly, you need to aim for when it comes to your funnel. You can, you can write it out. You can do like the thing I did, you can have, and you can create this yourself. So you can create different things and you can kind of figure out what you need at a certain level to become profitable. So let's say that you're like breaking even right now. Okay. You're getting a $1 cost per click, which isn't bad, by the way. That's not bad. I've, you know, scaled on a $1 cost per click before, and that's pretty good actually for Facebook. So $1 cost per click. You're spending, you know, 200 a day on ads. So you get 200 visitors to your store. Okay, bought it for 50 bucks. Okay, 50 bucks. And let's just say like a $20 cost of goods. All right? And let's say your average order value, you know, is just $55. Okay. And then your conversion rate is going to be. Let's do this average order value conversion rate. What's 6 divided by 200? 3% is 3%. Okay. And so this would give you from 200 visitors, all this would give you 6 sales, which equals $330 in sales. Okay. And this looks good, right? You spent 200, you got 330 back, but you're actually only profiting $10 on this. All right, well, I just filmed a bunch more and my iPhone storage got full, so I think we were right here. But basically you end up with only $10 profit. Okay. And what I was explaining is that, you know, $10 profit, obviously that's what I kind of consider break even. That's not good enough. That's not a lot. And that's not going to be very consistent. So you can increase your conversion rate, you can increase your aov, and these are two things that will really affect that. $1 cost per click is pretty Good. So I wouldn't, you know, try to make that any better. But I think an easy thing for here in this situation to improve would be your AOV because your price is 50, you can easily get this to 65 or something like that. And let's say you get it to 65, that's going to take your sales to 390, which is going to leave you with $50 profit, which is, you know, five times more than what you were getting before. And that's a little bit of improvement. Obviously in the ideal situation you'd want to increase both of these. Even if it's like 0.5% on that, that will make you that much more profitable or even like 1% that would make. That's a huge difference. Especially when it comes to scale. That's literally 25 like 30% more sales. So that's a huge difference. So those are some things you can do. So yeah, I would say like, you know, right now when it comes in E. Comm. And you know what's left, a lot of methods that are out there. I feel like breaking even is, you know, a common thing and a lot of people are, you know, desperately trying to get out of that. And you know this, these are some ways you could do that. But I will say, you know, if a, if a product's a really winning product, like you should find an ad for it. You should be able to find an ad for it that's gonna pop up on, pop the hell off on Facebook and that will an ad like it might seem like offer landing page and all the stuff like directly correlates this. Your ad can tie into all this stuff as well. But yeah, but if you, if you need to increase your aov, get after sell. It's an upsell app on Shopify that's for back end upsells. So that's like after the customer purchase on the thank you page, they can just, you know, add something to their order. They don't have to go through checkout or anything. It's really quick and easy. So it's a really good thing. I use that. But there are a lot of different things you can do. But this is just kind of a basic overlay of that, how to become profitable. And it just depends for every store. So it's complicated, it's not easy. But just keep learning. Keep on getting better at every part of the funnel. Get better at creatives real quick. Get better at making creatives, get better at making stores, get better at making offers and landing pages and get better at this whole funnel, tying everything together. Make it at match and your conversion rates and your sales and your Profitability will increase 100%. Thank you guys for watching. I appreciate it. This is kind of a new style of video, so I hope you liked it. Leave a thumbs up. Subscribe. Thank you. Bye.
