Purchasing An Existing Shopify Store: February 2018 Update

Toward the end of 2016 I purchased an existing Shopify Store. On a monthly basis I have been sharing the results of how this experiment has been going. If you are new to this series, you can read about the initial purchase in this post.

In each post I include screenshots of performance metrics, problems we are struggling with, tactics that are working well, and strategies we are using to grow the sales of the store. As I go through this process, I believe you can learn from my successes and failures alike, which should help you grow your own business.

If there is specific information I left out, please comment at the bottom of this article and I will provide the information when I can. If there is a popular question, I will be including answers in next month’s post. If you missed January’s results post, you can find it HERE.

As we examine February performance, there’s a few terms you’ll need to know from this report.

The above graph shows my total sales, total online store sales, draft orders, and Zipify OneClickUpsell sales. Draft orders are wholesale orders from retailers carrying our products. Zipify OneClickUpsell is a new Shopify app we are working on getting setup. This tool offers the customer a special discount if they add another product to their order. The shipping doesn’t increase much for each additional product that we add to the order, so this tool adds a lot of margin.

The $415.09 shown above is the total for orders that an upsell was offered on. It’s not all orders that actually included a purchase of an upsell that was offered. We setup the tool the last week of February, and initially only set it up on a handful of products for testing purposes.  In the time that it was setup, there were 2 orders where customers purchased the upsell item.

The upsell we offer is about $20, and with the additional shipping costs factored in, it adds about $12 of margin on each order when purchased. As long as we have more than four upsells per month, the tool will pay for itself. I’m excited to get this running on all products, since the early results are promising after only a few days.

Let’s take a look at the sales for February compared to February of 2017:

Overall, you can see we are up 6,190% compared to February 2017 and I can safely assume we are on the right path heading into Q2 and Q3. Here’s a screenshot compared to last month:

 We saw an increase of 38% ($1,044) compared to last month. My online store sales totaled $2,608.24 (increase of 69%) while wholesale orders totaled $749.50, which is down 37%.

However, we successfully closed our single largest wholesale client during February. They have over 800,000 followers on Facebook, and we allowed a payment plan for them based on their order total and followers. The total order value with that payment plan is $1,500 for wholesale orders. Once we take this into account, we actually had some growth on the wholesale side as well.

As I mentioned in my previous post, the order volume with wholesale makes the lower margin worthwhile. Wholesale orders will also be especially valuable if we are able to secure repeat orders. Additionally, placements in retail stores get the brand in front of more people, potentially creating more overall demand for the products.

Here’s what my total online store visits were compared to February of 2017: 

Overall traffic was up dramatically compared to 2017. I will share some more details on the spike that happened at the end of the month later in this post.  

Next up, here’s a screenshot comparing traffic in February to the prior month:

We started out pretty similar in terms of traffic, and saw a spike between February 5th and 12th.

This first traffic spike was the result of testing out a variety of Facebook Ads for the products. Most of these were not producing a good ROI, so they were subsequently turned off. However, there were a few that were performing reasonably well. Here’s a look at a screenshot from my ads dashboard: 

The top ad is a retargeting campaign, and has generated a very good return on ad spend. As you can see in the last column, it generated $7.50 in sales for every $1 spent on ads. This is a great return and leaves a lot of profit per order after the cost of ads.  The plan is to continually have retargeting ads running, and seeing if that return on spend will continue.

The second one down is a normal campaign promoting one specific product. During February it generated $1.96 for every $1 spent on ads. The ad cost on this is taking up a good portion of the margin, but at this level it’s about $5 in profit per sale. This one I will keep tabs on, as long as it stays around 2X ad spend, I will keep it running. If it starts to drop, then this ad will need to be adjusted.

The 3rd through 5th ads in this screenshot were not profitable. I should have turned them off sooner, but there were some early conversions that led me to test out slightly higher budgets per day. After increasing the budgets, I did not see the same rate of conversion continue. Going forward I will turn off ads that aren’t generating a return faster.

At the end of February there were a couple of promotions that we ran, and we also had our products featured in a YouTube video. These both provided some nice traffic and sales spikes. It will be interesting to see the sustained impact of this. So far the traffic that is coming from Youtube is performing much better than several of our other traffic channels. The traffic from Youtube had a bounce rate of 23%, averaged 8.07 pages viewed during a session, and spent an average of 5 minutes per session.

I see YouTube influencers as a potentially huge opportunity to increase online traffic and sales to my store. The video we were featured in was on a channel with about 2,000 highly engaged subscribers. We are going to continue to explore this channel, and see if we can get some larger channels to feature our products. 

Next, I will share some stats on the conversion rate for February. Below is my conversion rate compared to February of 2017: 

We improved all metrics compared to 2017 and overall we saw an increase of 95%.

Here’s a look at the conversion rate compared to last month:

From January to February, the conversion rate dropped by 8%. I don’t have a definitive reason for why this dropped compared to January, but it’s something I will be keeping a close eye on moving forward.  

Next up, I will share the income statement for the month of February for this website:

The month of February resulted in a loss of $382.75. This was primarily driven by the amount that was spent on ads. There was about $2,300 spent on ads in the month of February, and as was shown above, only a portion of this was profitable.

With some of those ads turned off, the site would have done less in sales, but would have been profitable. Part of getting the site up to speed has been testing ad strategies, so I’m not worried about the numbers at this point. My goal is to get these strategies dialed in over the next couple months. As we get ads going that are profitable then the plan will be to scale them from there.

An important note is that this doesn’t include wages for the individuals that I have working on this project. The main reason for this is that the team members working on this are helping with other projects as well. In future posts, I will consider breaking this out separately to give the full picture. Just know that with that factored in, this project is operating at a further loss. On the flip side, I could have put in all of the time myself, so it depends a bit on how you look at it.

Conclusion:

Overall the site made good progress during the month of February. As discussed previously the best months in the past were over the summer, so continuing this growth trend should look quite good over the summer. The goal is to see it start to turn a larger profit over the coming months as well.

We’ve put some good processes in place for the wholesale side of things, and have some other things in the works that I believe will increase sales.

Thus far, we’ve been targeting our wholesale outreach to the 3 states that show the highest search volume for our product type according to Google. Through this process we’ve been optimizing the outreach, and will be rolling the process out to additional regions soon.

Over the past 2 months we’ve launched a few new products on the site. A couple of these are now competing with our prior best seller. It’s exciting to see  the new products get early traction, and if it sustains we’ll be rolling out more similar “tweaks” to existing products.

Goals for the next few months:

  1. Launch the product on Amazon.
  2. Get One Click Upsell running on every product. 
  3. Optimize email marketing process. 
  4. Increase the number of retailers we are reaching out to for wholesale purchases. 
  5. Partner with influencers to help promote our products. In particular we’re planning on targeting Youtube channels.   

That’s all for this months post. Let me know in the comments below if you have any questions.

 

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