In late 2016 I purchased an existing Shopify store, in today’s post I am going to provide an update of how the last month went with the site. If you want to get more details, read about how I purchased the Shopify site, why I bought it, how much it cost, and more.
This post will go into more detail on the things that have happened over the past 6 months, and then look ahead to what the next steps for the site will be. The website carries products that have demand year round, but the summer is a time when there is a size-able spike in demand for certain products on the website. With this in mind April through June was when my business began investing more time in this project. My goal with this post is to allow you to follow along with my journey of buying an existing Shopify store and see how the results turn out.
This store that I will be sharing results on is only a small portion of my business. This particular website is operated by one member of my team. The majority of my business is currently selling on Amazon, so this website is one form of diversification. The point of sharing this is that if this site was my primary focus then I would likely see better results faster.
With that intro, let’s dive into some numbers. Here’s a look at the total sales for June of 2017 that shows the breakdown by day:
and here’s one with a bit more detail:
The difference between the 2 is that technically 5 of the orders during the month were not directly from the online store. I am using an app that allows me to send custom invoices directly to customers for products that they expressed interest in but did not initially purchase. There were 5 orders from this app that show up in the 2nd screenshot that aren’t in the top one.
Now, here’s some stats on the visitors to the site for June of 2017:
and more importantly, stats on how well these visitors converted into sales:
This report shows how many visitors added products to cart, reached the checkout page, and then actually dropped off along the way. The goal will be to get all of these percentages to increase, especially the number that drop off from adding to cart compared to actually completing their purchases.
Next up, I will share the income statement for the month of June for this website:
Here’s a look at some of the results from a few of the Facebook ads that I have running:
You can see that a few of these are typically pretty solid, and a few are quite expensive. On the low end my margin on products are right around $10 per unit, so I’m willing to spend up to that amount in ads to have a customer make a first time purchase. The reason for this is that they can buy a product that has higher margin, they can potentially buy multiple products, and they will then be on the email list to potentially buy additional products in the future. In addition to the Facebook ads, I also have ads running through Google, and through Reddit. As I get analytics dialed in, I will be able to better calculate exactly how much I should be spending on ads.
Speaking of the email list, here’s a look at the growth of this website’s email list over the last 30 days. Mailchimp doesn’t have the option to filter by specific dates, but this closely approximates what happened in June as well:
I am very happy with this number. With 594 new email subscribers and 4,261 unique visitors, that means north of 13% of visitors to the website are opting in to the email list. Properly utilized, this should be very valuable for the future for both this website, and launching any complementary sites in the future.
Overall, I am pretty happy with how the month of June went for this project. This was the highest sales month yet for the website, including when it was owned by someone else.
The majority of the work on this site is being done by a member of my team who helps with a variety of projects in my business. This project he works on at least 10-15 hours per week, and I do not track it separately currently. I am able to put plans in place and then have him execute upon those plans. With his wages factored in it would take a significant bite out of the net profit number that is shown above. It would still be profitable, but not by a ton based on this month alone. If I was doing all the work on the site, which would be very doable, then the full amount of the net profit shown above would be mine.
I am perfectly fine with this as it allows me to continue to work on the areas that are producing the most income, and still test out new things. Essentially I am willing to have this project run at about break even initially as long as it’s increasing the value of the overall site. The reason for this is that one of the potential exit strategies for this website is to sell the website.
Most websites sell for around 24 times the average monthly profit. On the smaller sites, and even some of the larger ones, the valuation is based on the owner investing time in the business. Based on this metric, the net profit amount above would stand as is. If I was able to maintain this level of net profit for 1 year, then the site would be worth around $32,300 without factoring in the value of the inventory. At this level, I would see a very size-able return on my initial investment all while having a member of my team do the majority of the heavy lifting.
So while the sales for this particular site are less than 1.5% of my businesses overall monthly sales, it still allows for a nice payday in the event of selling the site. I still think it has a lot of room to grow, and if it does the payoff for selling the site gets higher and higher. The way I look at it is that every additional $1,000 of monthly profit should yield an additional $24,000 if the site is sold. I am also learning a lot of things that will be very beneficial for the future and can be applied to additional projects.
That’s a brief recap of where things are at, and what we’ve been working on with the site. In terms of next steps that I need to get completed:
- Launch some of the products on Amazon. I plan on doing this within the next month.
- Optimize conversion rates and setup better conversion tracking on all ad spend.
- Testing out upsells.
- Dialing in email marketing to maximize the value of each subscriber.
- Working out partnerships with local companies to sell these products wholesale and distributed via other channels.
That’s a quick rundown on how things are going with the Shopify Store experiment. There are definitely things I could have covered in more detail, but I wanted to keep the post a reasonable length. I’m happy to go into more detail in the comments. Please let me know in the comments below what questions you have on anything I covered in this post, or related to this project.