Zach Oldham breaks down e-commerce as a numbers game, not a passive income scheme. You need to track metrics like ROAS and gross margin, systemize operations so you can delegate, and accept that success requires active, ongoing work despite low barriers to entry.
Over the past few years, I've generated millions and millions and millions of dollars in revenue and profit for dozens of e-commerce businesses. And in this video, I want to talk about a few things that you should take into consideration and that you should know before you enter the e-commerce space, whether that's by starting an e-commerce business, some sort of e-commerce agency, trying something like Amazon FBA or dropshipping, whatever it may be. These are things that you should 100% be aware of before you enter the space. So I'm hoping to cover a few things that people don't really talk about much online and also kind of lay out a path/roadmap of what it takes to be successful in the e-commerce space. So without further ado, let me get straight into it. Before you get started, there are a couple of myths that continue to float around on the internet that I need to address. The first is that starting an e-commerce store is easy. This couldn't be further from the truth. Starting an e-commerce business is incredibly difficult. One of the reasons is because you face an extreme level of competition on the internet because the barrier to entry within e-commerce is relatively low, the amount of saturation and competition online is much more exponential. There's way more people competing in this space than any other space at the moment. However, the path to success is relatively simple, and that's something that should inspire confidence in you. Also, the gurus have lied to you. There is nothing passive about starting an e-commerce business. Maybe 2, 3, 4 years down the line. And there are occasional success stories where people can come up with a passive income stream within a few months. Generally speaking, when you're starting out in e-commerce, there is there's absolutely nothing passive about this business model. It's not just going to print money whilst you sit back and relax. Instead, it requires a lot of hard work, both in setting it up and continuing to put out the small fires that ignite as you continue throughout your journey. In fact, there's not really such thing as passive income in starting any sort of business. So get that out of your head and get to work. The next thing to know is that e-commerce is a numbers game. You're going to do well if you can look at numbers and understand what they're telling you. It's all about understanding your KPIs, your key performance indicators, and adjusting things on your website or your funnel and your marketing in order to change and get the desired change for those KPIs. There's a lot of trial and error involved. You also need to be able to look at your metrics and understand which ones are pointless to be looking at and don't actually have an impact on your business and which actually determine the performance of your business hence the name KPI. Some of the ones that you do want to pay attention to are your break-even ROAS and your gross margin. For those of you that don't know, your break-even ROAS is the return on ad spend, the multiplier that you need in order to break even after all of your COGS, your payment processing, your shipping and handling, everything required in order to fulfill a purchase. What that means is that if you have a $100 order and you spend $20 on cost of goods, You spend $5 on shipping and handling, and you spend $3 on payment processing. That's cost you a total of $28 to fulfill your $100 order. So you've got $72 left. That $72 is your gross margin, and that would give you a gross margin in this instance of 72%. Dividing your gross margin percentage by the number 1 will give you your gross break-even ROAS. So in the case of a 72% gross margin, you'll have somewhere around a 1.3 1.38 or 1.39 breakeven ROAS, which means that for every dollar that you spend, you need to get $1.39 back in revenue in order to be breaking even. Anything above $1.39 is straight profit. Your breakeven ROAS and your gross margin are the key drivers of your business and the most important stats that you should know. Finally, you're going to want to know how to optimize your e-commerce business. This can be done by systemizing everything, with the goal of eventually removing yourself from that system. As an example, if you build a systemized way of handling customer service, you can eventually hire somebody to handle your customer service for you. And that means that you can remove yourself from that system. Make sure to create systems for anything and everything that might happen within your e-commerce business. A system might just look like a Google Doc with a few bullet point notes explaining how something should be done. These will help guide you. Another thing that you should be doing is learning constantly. The internet has made it easier than ever before to find knowledge that will help you with different problems in your business or just general growth goals. There are people like me making content in front of cameras and lights at their house explaining stuff like this all day long. YouTube, books, and courses are great resources that you can be taking advantage of. I hope some of these things were helpful. Let me know what type of content you guys would like to see in the future and if you'd like some more kind of course tutorials on getting started with the e-commerce. And have a really good day. Bye. I'm gonna stop now.
