Summary
In this episode, Sebastian and Nathan discuss the 10 biggest mistakes e-commerce brands make. They cover topics such as shiny object syndrome, poor negotiations with suppliers, neglecting average order value, neglecting retention, lacking a blue ocean selling proposition, joining agencies too quickly, churning agencies, and taking on too many agencies. In this conversation, Nathan and Sebastian discuss common mistakes made by e-commerce brands. They cover topics such as misleading ROAS projections, agency costs, choosing the right agency, choosing the right ad platforms, and neglecting conversion rate optimization.
Takeaways
Chapters
00:00 Introduction
00:53 Mistake #1: Shiny Object Syndrome
05:03 Mistake #2: Poor Negotiations with Suppliers
10:04 Mistake #3: Neglecting Average Order Value
19:14 Mistake #4: Neglecting Retention
21:14 Mistake #5: Lacking a Blue Ocean Selling Proposition
38:26 Mistake #6: Joining Agencies Too Quickly
42:24 Mistake #7: Churning Agencies
43:56 Mistake #8: Taking on Too Many Agencies
48:37 Misleading ROAS Projections
49:32 Agency Costs and Net Profit
51:44 Choosing the Right Agency
56:29 Choosing the Right Ad Platforms
58:04 Neglecting Conversion Rate Optimization
Summary
In this episode, Sebastian and Nathan discuss the 10 biggest mistakes e-commerce brands make. They cover topics such as shiny object syndrome, poor negotiations with suppliers, neglecting average order value, neglecting retention, lacking a blue ocean selling proposition, joining agencies too quickly, churning agencies, and taking on too many agencies. In this conversation, Nathan and Sebastian discuss common mistakes made by e-commerce brands. They cover topics such as misleading ROAS projections, agency costs, choosing the right agency, choosing the right ad platforms, and neglecting conversion rate optimization.
Takeaways
Chapters
00:00 Introduction
00:53 Mistake #1: Shiny Object Syndrome
05:03 Mistake #2: Poor Negotiations with Suppliers
10:04 Mistake #3: Neglecting Average Order Value
19:14 Mistake #4: Neglecting Retention
21:14 Mistake #5: Lacking a Blue Ocean Selling Proposition
38:26 Mistake #6: Joining Agencies Too Quickly
42:24 Mistake #7: Churning Agencies
43:56 Mistake #8: Taking on Too Many Agencies
48:37 Misleading ROAS Projections
49:32 Agency Costs and Net Profit
51:44 Choosing the Right Agency
56:29 Choosing the Right Ad Platforms
58:04 Neglecting Conversion Rate Optimization
Welcome to the Blues Brothers podcast show in which we share the challenges, insights and triumphs that come with taking e-commerce brands from seven figures to eight figures and beyond and building the remarkable teams behind them. I'm your co -host, Sebastian Bench. And joining me as always is the brilliant Nathan Ferdreau. How are you? Thank you. Very well, how are you? Very well, thank you. Today we are discussing the 10 biggest mistakes e -commerce brands make. Where would you like to begin? We've got a list here of 10. I think we'll start at the top and work our way down. And considering you're talking to business owners on a week to week basis, 10 plus of them, I'll let you kick off with shiny object syndrome as I'm sure you said a lot in those initial prospecting calls. Yeah, certainly. It becomes very clear to me during those conversations, more of those, I guess, immediate consultations that we have with potential clients of ours, that they're not too sure where they should be focusing, or they're focusing on the levers that... shouldn't be a priority for them at their stage of growth. So we obviously speak with startup brands, seven figure brands and eight figure brands. And so the leave is that they should be spending their time on pulling changes. But we find that a lot of the smaller brands are fragmenting their focus across, you know, of, for example, various marketing channels. So trying to go through, you know, spread a thousand dollar budget across Facebook, Instagram, Google, TikTok, Pinterest, et cetera. Um, when they shouldn't, cause they don't have the budget to support that. Uh, and so when we are consulting with them, we, you know, guide them towards focusing on one labor and we, Uh, find that we have to sort of coach them throughout, you know, various stages of growth, uh, to keep focusing on that one lever until it makes sense to explore new ones. Because, uh, when we are partnered with them and then they're approached by other. Maybe businesses and the, you know, sold dreams or they hear on podcasts that they should be spending money on the newest and latest marketing technology. Uh, we have to again, coach them to. maintain that singular focus and ignore those shiny objects. For sure, it's the commonality really between any small business owner versus big business owner is all the small businesses are just looking for a quick fix, a quick solution. When the answer is to scaling a business, just do one thing and do it really well. And that applies to pretty much every aspect of the business, but obviously we're experts in paid media and it applies and translates directly into paid media. which is don't go and follow the trend of some new random creative or don't go follow the trend of some new random app that says that they're gonna 3X your return on ad spend or some new tracking software or this, that, the other. Everything's always just being sold to you as a shiny object and a solution, but nothing's going to make a huge incremental improvement on your current revenue, on your current performance, except from just doing more of the basics. It's just basic, simple, fundamental. the way to a mil a month really. And then as you start to go past a mil a month, it does obviously start to get more complicated as you start to go cross channel, you start to go into above and below the line media, it gets very strategical at a high level. But even at that level, it is really still the basics just done well. and at scale. And so finding some new shiny object, I see it all the time. I'm probably sent a shiny object once per day by a client in our overall portfolio. And I always just have to say, look, let's just do the basics. We know it's working. We know if we just do this in a larger volume, we'll continue to grow. And this also translates to us as agency owners. There's shiny objects literally thrown at me five times a day. There's some guy on LinkedIn saying how he can book 10 appointments with AI. Or there's some guy DMing me on email saying how they've cracked the code to paid ad funnels for acquiring new clients. And it's like, maybe, maybe not, probably not. It's all just sales on the front end to get you to click. And then in reality, the way for us to grow is to just do what we're currently doing at a higher volume with consistency. So with these smaller brands that come to us and end up coming on board, where does it make sense to start spending their dollars? Because sometimes we have a small allocation to both Google and meta ad platforms. So. where does it make sense to go cross channel for a startup brand? And why do we actually, in some instances, start with a semi -fragmented focus across two channels and then possibly consolidate down to one or maintain growth in both? Yeah, so I would always recommend at the start if you're a startup and you don't really know what's working to split between Facebook and Google and then start to optimize towards whatever's getting you the higher ROI. Now you can make a very educated guess before even launching onto the platforms which one is going to perform. simply based on your type of product and where it is within the market. There's a good little clip in saying, which is Google's a, I need platform, Facebook's an I want platform. So on Facebook, you're pushing products that people haven't seen before. It's new value prop. There's no awareness. So there's no search volume for it. Whereas if you're selling something that everyone else is selling, if you're selling commoditized products, for example, you just want to go straight to Google. Because the search volume's there, you just need to scoop it up effectively at a cack that makes sense. relation to the contribution margins of your orders and then really squeeze out lifetime value on those new customers. But generally speaking, I would recommend splitting to a degree and then starting to consolidate down to wherever you see results. I make a lot of content and a lot of posts and we're gonna do a podcast on it as well about how I pretty much hate TikTok. That's the golden shiny object at the moment, which is every small icon brand wants to just run TikTok ads. And the reason I'm so against it isn't because I don't think TikTok works. It does work clearly. There's people doing millions of dollars a month in revenue just off TikTok traffic. The reason I don't like it is because just do TikTok or just do Facebook at the start. Don't do both because you're just going to dilute spend, dilute focus and dilute time and energy across the platforms. You can do one platform incredibly well, just like with the agency model, we can do one selling system really well or we can try to do 10 at once and just do them all poorly. And so choose Facebook or TikTok and then combo either one with Google. Don't do all three or four or five and start adding in Pinterest and any other shiny object that's given to you. Are there other maybe not necessarily paid media channels, but other shiny objects that you witness and you sort of have to coach your portfolio out of? Yep, one is new product launches. People are pretty much always looking at new product launches as a way to grow rev and new product launches and cross sells are one of the best ways to grow top line revenue. If you are a mid seven figure business. If you're in low seven figures, new product launches isn't going to save you because a new product launch is hyper successful at doing two things. One, increasing return customer revenue immediately when you do the product launch. If you don't have a big existing customer database, it doesn't matter. And number two is being able to open up to an entire new customer demographic because you have already flooded your existing market. So you have to be at a level of scale to where you flooded all of the search volume, if you're selling a commoditized product or all of the target audience on Facebook to then warrant going into a secondary line of product. Unless those two things are fulfilled, there's no reason to ever really launch into another product. But you'll constantly see these tiny brands doing 60k a month 70k a month Think that the way that they get to 100 is through a new product line where the only thing a new product line does is it's going to increase operational complexity. You're going to mess up cashflow because you're gonna turn free cash into held stock. And number three, you're gonna start increasing all of your inventory fees as you now have to hold that stock somewhere and you're probably gonna pay some degree of overstock payments because you're not gonna be able to move it that quickly because you don't have an existing customer database to push it out to. So that's probably the second biggest shiny object. The third would be just generally apps, softwares, agencies, guaranteeing them crazy results. The biggest shiny object probably in EECOM is agencies, which is like later down the line and later on the list, which we'll talk about, but just joining agencies too quickly or taking on a bunch of different agencies or just churning agencies. All three of those are just huge shiny objects. And it's one of the pitfalls and traps that Acom brands can get into. Number two on our list here is poor negotiations with supplier resulting in poor unit economics. And obviously makes new custom acquisition very tricky when it comes to paid media. What are your thoughts here on that impact that those poor negotiations have on the economics of the business itself? Yeah, there's a statistic that I saw the other day, which is that out of all the Shopify stores that exist, the average revenue yearly is $6 ,000 and the average profit is negative $15 ,000. And do you imagine that's also heavily skewed upwards by the incredibly large profitable businesses that operate on Shopify? So those numbers are crazy. And it's like, why are those numbers so crazy? It's because people walk into creating an e -com brand. and they don't have a fundamental understanding of the unit economics required to be able to profitably acquire customers through paid media. And at the end of the day, the easiest way to acquire customers at the beginning is paid media. There's other avenues, but it's gonna be very, very slow. And unless you're looking very, very long-term. it's just not gonna be a quick way to grow. And most people that hop in Acorn want quick results. That's why they're always looking for a shiny object and paid media is that, paid media is quick results. But with paid media, there was a cost to acquire a client or a customer. And if you can't offset those costs with just the raw margin within your product, you're screwed from the get go. And the reason why... 99 % of businesses negative cash flow on Shopify is because they're trying to sell a $9 t -shirt that cost them $8 to make. Or they're trying to sell a $50 consumable product, but they have no repeat purchase strategy. And they only have $10 a contribution margin to play with in that first order. And once you start to understand paid media, the platforms, how much it costs to acquire a customer, you realize pretty quickly, it's very, very, very difficult, probably impossible to get customers for under $20. You can do it for sure. You can absolutely do it. We have a bunch of clients that are acquiring customers for under $20, but you shouldn't be expecting that in the first year. You shouldn't really be expecting that in the first two years of operating as a business. And so unless you want a negative cashflow for two years, you really you need to make sure that whatever products you're selling, whatever product lines you're launching into, you have just raw unit economics, particularly contribution margin on each product that is high enough to support acquiring new customers. What exactly does that equal to? At least 60%, really. And if you have a really cheap product, it needs to be way higher. So walking into building an e -comm store, you wanna be aiming for above 60 % contribution. What about your three years in joining the brand and your product margins are actually quite low, not where they need to be. What we do with suppliers to actually bump that figure up. Yeah, there's a few things. Suppliers have continued to increase pricing, particularly during COVID. Obviously, shipping got out of control and everyone's margins got hit. And there was a false assumption made by quite a few business owners, particularly clients that we worked with, which is that they can't adjust their pricing accordingly. If you have a strong enough Blue Ocean value prop, you should... not have too much price sensitivity to 10 to 20 % fluctuations in your pricing. And we'll touch on that later. So I would recommend increasing pricing to maintain that contribution margin. And the number two mistake there was that these clients weren't continuing to come to negotiations with suppliers. They were just accepted it, moved on. But there was so much you can do on the negotiation front to drive. so much better unit economics through just having relationships with these suppliers for years on end. If you've been buying from one factory or one supplier for two to three years, you should be able to negotiate prices down. you just should be able to. And if you can't, you need to consult with someone that can help you with it. Or the easy alternative if you don't want to go and consult with someone is just start looking around, start shopping around, find some other factories, get some other quotes and then bring those quotes to your current supplier and say, hey, look, these are the prices that we can get elsewhere. They guarantee the same quality. I've got a sample in my hand right here. Look, it's just the same quality. let's fix these because we can't continue to scale without doing so. And our plans are that we want a 2X next year and then 2X the year after, which means that our orders with you are going to 2X next year and then 2X the year after. So you're going to be making a lot more money. But the only way we can do that is if we get these prices down so that we can acquire customers at a faster rate. Absolutely, I think the big thing there, just in terms of advice is actually preparing for that conversation, for that negotiation, not just coming to a supplier and complaining about your product margins not working within your business model, but providing the context around what your ambitions are and really sort of focusing on the relationship that you do have with those suppliers. Yeah. Number three, neglecting AOV, average order value. Yeah, it's a it's a play on from the last one, which just directly comes from unit economics. And we could probably be more specific with this point, which is not neglecting average order value. but neglecting first purchase contribution margin. So how much margin do you have on that first order? And there's so many things that you can do here to improve it. And 90 % of Ecom stores, 90%, probably 95% don't even do one of them, which is how can we get people to spend as much as possible on that first purchase? Because normally people are willing to if you give them a good reason. Number one, upsells, cross sells, in cart landing page, post checkout. follow up EDM sequences, et cetera. Number two, bundling. Every single client would put bundles on, AOVs jumped by 30 % overnight. And what normally ends up happening with bundling as well is you normally get even better contribution margins measured as a percentage because you're shipping multiple products in one single package. Obviously, depending on what your shipping rates look like as weight and size increases, it's gonna change depending on you, but. you can set up those bundles strategically. You can run all the numbers, look at them and make sure that your bundles actually have higher contribution margins as a percentage of total price in comparison with individual products. And then. the... Sorry. I was just gonna say, and then another one on increasing AOV is just having threshold offers. So pushing people to spend more in cart through some kind of gift repair tool for shipping offer, et cetera. I was going to ask why is a first order contribution so much more important than average order value across the lifetime of that customer? Yeah. Why it's so much more important is because people can over index towards average order value and it has no consideration towards profitability of the company. So it's all well and good that yes, we're making $200 revenue rather than a hundred dollars per order. But does it matter if you're discounting by 70 % on that $200 order, which is just chewed away all of your margin? The ultimate goal is to be as profitable as possible and particularly profitable by a dollar amount rather than by a percentage amount on that first order so that you can afford to have the highest CAC or CPA possible so that you can acquire customers quite aggressively and quickly. And your marketing doesn't have to be 100% dialed in. The issue with, for example, as I said before, trying to set it at $20 cost per acquisition is you can do it, absolutely. Like we have clients that do it, we do it all the time, but you need to have perfect dialed in messaging, a perfect unique value proposition, a perfect website that's been conversion rate optimized and is firing on all cylinders, a perfect retention strategy, perfect upsells, the list goes on and on and on and on and on. All these things have to be dialed in. for a $20 CPA to be achievable. You're not gonna do that in the first year. You're probably not gonna do it in the first two years. So you need to be able to be able to operate at 60, 70, 80, $100 CPAs and still cashflow positive to be able to grow. Pulling in that thread or sort of unpacking it more is number four. Biggest mistake is neglecting retention. Yeah. In the, particularly in the early days of new econ brands, because they don't have a big customer database, they're not really considering retention. And then it doesn't even come into the fold until it's almost a little bit too late. And the reason why I say that, and there's an important caveat here in terms of how the financials operate when a customer comes back and buys again. And the important caveat is that when you go and acquire a customer for $50 and they spend $100 on site, you have $50 in contribution margin. So you break even on acquiring that customer. If they come back and buy again, you now have $50 in pure profit because it costs next to nothing to get an existing customer to come back and buy again through a basic EDM retention strategy. it's unless you're using an agency, then there's a little bit of costing in there. Clavio pricing, there's a little bit of costing, but it's really nothing. It'd be a few dollars to get that person back. And so profitability on second, third, fourth, fifth purchase is so immensely high. that you can quite literally three X the profitability of a business just by taking all first time customers and showing they buy again. Now they're not going to, you're not gonna get everyone to buy again, but you can definitely get 20 % of existing customers to buy again. And you can get 20 % of them to buy a third time. And now suddenly profitability of the business has two X. So if you can two X the profitability of your business in the short term just through retention. your reinvestment rates into paid media can skyrocket. And so that's when you can start actually seeing exponential growth because you have cashflow unlocked and you don't need to go in finance to be able to unlock rapid growth in month to month as bad. Now, you said that not all customers are going to come back again. Is there any nuance around the type of business in terms of what they're selling? Those brands where they're selling, say a high ticket product and LTV is something rather out of their control if a customer is not going to need a $10 ,000 table every six months. For sure. The best, in my opinion, the healthiest best econ brands are consumable products because of the fact that you can leverage LTV so aggressively. If people are consuming your product and it is an actual good product, they are going to come back and repeat buy. And so you can end up scaling those businesses a lot faster because of that, particularly if it's consumable quickly. You don't want something that takes a year to consume. Like for example, sunscreen in Australia. If someone buys a sunscreen from you, it's probably gonna last them like two summers, depending on how much they go out because it's only really sunny here in Melbourne for two months. So it's not, it's not really like you can call it a consumable product, but it's not a great one. You want something that's fast and rapidly turning over. For those that don't have a consumable product, let's say you're selling standup desks at two and a half, $3 ,000, the play there for retention is to view it through the lens of word of mouth and encouraging word of mouth through becoming a thought leader within a space. So your follow -up emails, your EDMs, your SMS, marketing, any other retention strategy or channel you have in place, whether it's you have pushing people into Facebook groups, the list goes on and on. In terms of strategies, you can do that. The primary objective should be to keep your brand top of mind on these users as much as possible and have the lowest unsubscribe rates that you can. And the reason being is that if you can always be top of mind for these people, then whenever it naturally comes up in conversation, whenever someone walks into their house and they see the product, they'll be able to immediately advocate for you. Because they're consistently consuming content from your brand. and you're continuing to build brand equity within the market. And that's a bit of an important caveat there, which is that your retention strategy can actually build brand equity. Brand equity being that over time, as a brand exists within the marketplace, they build the ability to increase pricing because of the widespread understanding that this is a high quality consumer brand. For example, if Coke up their prices tomorrow, by a dollar, no one cares. because everyone's been drinking Coke their whole life. They know it. Yeah, they could go to an alternative, but it's there, it's easy. They've been around for so long. So they have that ability to adjust pricing without a huge fluctuation in demand. And one of the ways to really encourage that is to become that thought leader. And then you can redistribute that content onto organic as well. So you don't just have to be hitting existing customers with this. thought leader, education -based content, you can easily repurpose into organics on Facebook and Instagram, and then people can consume it there and once again get an understanding. Okay, these guys are the go -to for understanding the benefits of standing for four hours a day versus sitting at your desk. And if you can start to educate people on that, people love sounding smart. People love flexing things that they learned. And so if you can educate your entire 50,000 customer database on the fact that if you stand for four hours a day, it burns 100 extra calories, which leads to weight loss. It also does this, it also does this, and you can spread this out across a six month period. You're going to encourage people to use the product and you're going to encourage them to encourage others to buy the product from you. For our smaller brands or for business owners that are pressed for time, they lack resources, might neglect their retention strategy. We say that all the time before clients come on board with us. What are, I guess the non -negotiables, you should, there is no excuse to do these activities from a retention side of the business. What should all brands be doing? Number one would be flows. And particularly if you have a consumable product, it's just replenishment flows. So if you have a product, it's consumable in 30 days, let's say it's 30 tablets of Omega -3s, then you wanna be ensuring that you're following up every single 30 days with those users. And then you want all your other flows in place, your post purchase flows. Post purchase flows are arguably the second most important here. And the reason being is that when a consumer buys, they will always immediately have buyer's remorse. no one ever purchases something, spends$400 on some shoes and then goes, oh that was a great decision. They always go, ah $400 just left the bank account, let's hope these are actually good. And then if you can follow up with them quickly and kill their buyer's remorse, reiterate, show social proofing, continue to build brand equity and build your pricing up to why it is where it is. You can kill buyer's remorse. And then when they actually receive the product, they're in a different frame of mind. Rather than opening up the package, opening up the product and thinking, all right, I hope this is worth it. They already believe it's worth it. And that's half the battle. you'll see return rates drop, you'll see returning customer rates increase accordingly. So that's flows. Number two is just consistent email campaigns. Ideally, you're sending one a week. If you can't, maybe one a fortnight. The big brands that, and there's some brands in Australia that do nearly a mil a month just off email campaigns, those brands do one a day. And so really at scale, you want to be ramping to one to two campaigns per day. But at a bare minimum, small e -com brand, if you can send one a week out, that's not sales -based, keep it educational -based, keep it consumption -based, try to keep sales and discounting to a minimum. That's where you're going to really start to see returning customer revenue increase over a three to six month time horizon. And then those weekly emails, a common objection is we don't want to be going on sale all the time. Or I guess default is to actually just say, Oh, I must go on sale every week as part of my email strategy. And just giving discounts without thought to unit economics or without strong economics again, is, uh, is another big mistake that we see. So what is some advice on how. a brand and let's say non consumable brand should be focusing on their retention strategy in terms of what are the emails they're actually sending out the contents. Yeah, going back to the standup desk example, in that example, what I would be leveraging, what I would be learning on is two things. And I would rotate between these two topics. Number one being social proofing and reiterating the quality of the product. And so that looks like testimonials, advertorial pieces. So we got featured in seven news, we got featured in this, this person did this. So case studies around the product. But after enough time, people will get bored of that. So you don't wanna just push them. You wanna alternate over to education-based emails. So an education -based email in the frame of standup desks would be, as I said before, new study released, which shows that standing four hours a day decreases chances of X because of Y. And so you're just throwing education and showing that we as a brand are on the forefront of the research on this individual niche, and we are therefore the thought leader in this niche. So if you need any information around why it's good to stand, why you should have a stand up desk, what makes a good stand up desk, this, that, the other, any question within this entire niche, we're the people to answer it. So go to our website, watch our videos, read our blogs, subscribe to our email list. because we have a team that's on the forefront of this. And then in doing so, it obviously builds brand equity and pricing power within their individual products in comparison to competitors. And you do see this in the stand -up desk space. For example, Deskie does this. If you subscribe to their newsletter, that's all they send. They primarily focus on just education-based emails. I've never seen them discount by more than 5 % on their products. And their products are priced 40 % above market value. All their competitors, you can go to there and you can pay half the price. You can build a standup desk yourself for like $120, but they price in the thousands and they're able to do so because they've built up this brand equity over time that's given them that pricing power within the market, which has also probably led to them having incredibly strong contribution margins. They probably set it 60, 70%. which allows them to be very, very aggressive on their paid media. And so they dominate the top of Google shopping. They dominate any Facebook ad placements, if you've shown any degree of interest in stand -up desks. And so that's how they've managed to dominate that entire space. They also have an incredible product. We're big fans of Deskie. So moving on to mistake number five is lacking a blue ocean in selling proposition. And this is something that we can count all the time when we're speaking with brands and new brands in particular. What are your unique selling points? What is the unique value that you bring to your vertical? And it is I've good product. I am reasonably priced and I really care about customer service. Yep, and none of them are unique value props. And the reason why they're not unique is because everyone has them and everyone pushes them. And the funny thing is a unique value prop now isn't one in six months as well. That's also an important caveat there because the market will just flood and clone you no matter what you're selling. So there needs to be a degree of innovation. not at the product level, because you might think does that mean we have to change our product and continue to push every six months? Yes, to a degree, like the big brands will do that. They'll always iterate. There's always a new iPhone. It's always gonna be constant improvements so the competitors don't overtake us. But as a small lecon brand doing seven, eight figures, you don't need to do that. What you really need to do is change your messaging and your framing consistently. You need to know where you are on the space. You need to be able to identify that it's becoming a red ocean. And then you need to change the positioning slightly so that you always have an edge. What does that actually look like? An example, and I've made a piece of content on this is shampoos. We work with quite a few clients who sell hair products. And when they initially came to us, They came to us and we asked that usual question, what's your value prop? And it was free returns, fast shipping, and the product is good. It like nourishes hair. And... the obvious question from there is doesn't all shampoo nourish hair? And then they're like, yeah. And we're like, okay, so what do you propose we push as the value prop? And they go, well, push the product nourishes hair. And we're like, it's not gonna work. And the reason it's not gonna work is because you have 500 competitors that are saying the exact same thing and screaming it in their copy and their creative across Facebook, across Google. Why would anyone purchase from you? They don't know who you are. Why? they change the product that they're currently using that's set up in their bathroom. And so how to start carving out a unique value prop there isn't for us to go to the client and say, hey, you need a new product. This product's too commoditized. Instead, it's how can we actually figure out how we can position ourselves uniquely within this market? And an easy way to do that is look at your reviews, see what your customers are saying, what's unique in their reviews that's different from everyone else's messaging. And you might start to find that there's a couple of reviews in there that say, this is the perfect shampoo after I've colored my hair. Right, I've tried many others, but this is the one that works. Okay, well, can we change our positioning to this is the perfect shampoo for people that color their hair right after they color. Now we're starting to carve down to more of a one of one market. We're starting to get a little bit more specific. What about for, can we combine multiple value crops to position ourselves uniquely? Everyone's saying that their shampoo is nourishing. And then another proportion of the market is saying that their shampoo is great for dry scalps. Can we combine those two and say, don't just have this, have that as well? So you can be quite clever in the way that you position yourselves, but. It's important to be able to find your own lane that no one else is saying and then start to speak to that lane and that individual. The reason why most brands don't want to do that though, particularly small businesses and it's usually always small businesses, is oh, but that target demographic is too small. If we say we sell shampoo, we have the whole shampoo market. That's the entire population of Australia. If we need down to just people that color their hair, that's too small. And it's like, well, no, no matter how small you get on your niche, you could still very easily go to multiple seven figures in that niche. And then that's when you can start to expand your messaging. You can test different unique value props. You can build out some more different blue oceans, or you can do a product launch and launch it to another vertical. There's really never two niche down, in my opinion. You can just keep niching and niching and niching and be hyper successful. What are some unique value propositions that are actually, sorry, reasonable to state as your unique value prop? Give me an example product. How about accessory products, say a key chain or a wallet with a lifetime guarantee as an example. So what? What people would normally push them we actually we have some clients that do resell wallets from large brands there's no value prop on them and then wallets quite easy because they are The people that are dominating wallets have a really core value prop at the moment. And their value prop is that it's small, it's sleek, it's simple, and it never damages. And so that's something you don't normally hear with wallets. I don't know anyone that's used a wallet, but the thing doesn't last very long. The leather always starts to crease and then it starts to fall apart. Even high quality ones. And then number two is the high quality ones, because the material is high quality, they're super bulky. They take up so much space in your pockets, they're annoying. And because you don't even hold cash these days, or most people don't, why do I need that much space? And so sleek, small, metal, aluminium. wallets that don't take up much room. That's an actual unique value prop. That's a blue ocean. And people found that blue ocean years ago and people are doing eight, I think nine figures out of it now. So that's a great example of where the product really wasn't innovated in any way. It was, it was a very tiny innovation and the product probably, if I was to guess, already existed on AliExpress nine years ago. It was just taken and cleverly put within an existing market in a way that had an actual core value prop that made them unique. For sure. You know, the metal wallets going on in that example again, you have the durability pace, which is, you know, that's unique selling point, I suppose. And then there's also the, a really strong, unique value proposition, which is the, just by default, the built -in technology to prevent sort of people from scamming your credit cards when you're out and about because... And then that's sort of a technology value prop that they push in their marketing, as opposed to just focusing on durability. That's really thinking through what is the unique value proposition, a bit of a moat or a differentiator between what I'm selling as a RFID protection wallet, as opposed to someone else who's just selling a metal wallet. For sure, yeah. Number six is, and these next three are all to do with agencies, and I think agencies can be the death of some of these e -com brands, which is number six, joining agencies too quickly. Do you want to speak to that? Yeah, this is a hard one because you... I suppose when people are approaching agencies or they get approached by agencies and they are open to hoping on a call. you know, to begin with point number one or mistake number one being shiny object syndrome, not sure, but not being sure where to spend their focus in having those conversations with agencies, these brands may not know what they should expect from an agency and what they need from an agency. And so unfortunately, many agencies will just sign on anyone without understanding the context of the brand. and that client ends up shooting itself in the foot by being misled because there is no conversation about expectations and they join an agency where it doesn't make sense either because it doesn't make sense to be doing the six services that agency offers or it actually doesn't make sense to partner with them on one service alone because they should be learning it themselves and so joining an agency too quickly is something that we have to sort of coach our possible clients on in a way that doesn't have them leave us or for us to turn them away and to jump on board with another agency who will sign them without setting an expectation. And so what we aim to do now is have a conversation about expectations and number one, look at the economics of the partnership. Do the commercials make sense? And if they won't immediately make sense in the short term, but it does make sense to partner with us because we have the expertise to support them. We need to be very clear on the expectations that this will not be a profitable partnership in the short term in terms of dollar in dollar out, but there will be a return on investment through data. learnings, information, education, and getting them into a position where they do reach a point of sort of breakeven on the partnership and profitability from that point onwards. Further to that, I think an important golden nugget that you had in there was learn the skills yourself when you're small. because it will allow you to better monitor and be able to identify the quality of the agency once you're at scale. So what you don't want to end up doing is starting an e -com brand, an e -com store, somehow you manage to fumble your way to 10, 20K a month, and then you just hire an agency to do the paid media. Because how do you know that that agency has any idea what they're doing? How do you know whether you can vet them if you don't know even the basic fundamentals of the fact that ad platform and the Google ad platform. You lack accountability and the ability to hold an agency accountable. And that is the beginning of a bad road to go down with agency relationships over time. And so you want to be learning these skills. You do not have to become experts in everything Econ. That's gonna take a while. That's gonna take years, but get basic understandings of each of these separate components that you're planning to outsource. I think that was an important caveat there, which. sort of leads into number seven, which is churning agencies is one of the biggest mistakes I see, which is an econ brand going through agency after agency after agency and just rotating through them every four, five, six, seven months. And how that has a detrimental impact on the ability for them to scale. Do you want to speak to that a little bit? Yeah, so we can use us as an example because we primarily focus on acquisition. And if we're having acquisition challenges and a client has come to us and they've been with six other acquisition agencies and... we have sort of looked at those other agencies strategies and their capability. And we know that they probably did a reasonable, they put in reasonable work towards achieving profitable outcomes for that partner. It's a bit of a red flag for us just because I guess the common denominator is the client. And there are instances that we've seen where, better media buying is not necessarily the solution to achieving or unlocking that next stage of growth. And so I guess there's a conversation to be held between a client and an agency around what is that unlock and is a new agency the solution? Sometimes yes, but... I guess from our perspective, many times not in just taking out new acquisition partners. for sure. Number eight, taking on too many agencies. Yeah, again, coming down to number one focus where they should be spending their time and then number two, the commercials of the partnership. If you're paying say $5 ,000 in management fees for five services, that's $25 ,000 or hiring one team to a full suite team at$12 ,000 to handle everything. Those are two different engagements. One is more profitable. on the front end, the other one more profitable, assuming that they're a very competent, full suite agency and taking on too many agencies is a mistake. Let's cut all of that. Note that down and go back to announcing number eight. Number eight, taking on too many agencies. Do you wanna speak to that? Yeah. Similar to joining agencies too quickly, there are two considerations that clients should have, that e -commerce operators should have when exploring their existing partner stack and whether they should be taking on more agencies. Number one is what is it they need and what are the expectations they have from a new partner and number two, the commercials. For smaller brands, for low... seven figure brands or even six figure brands looking to reach seven, we often see that they are heavily over -investing in management fees by working with three or four different agencies simultaneously to handle multiple services. The natural question is, well, if it doesn't make sense for me to bring on four agencies, how am I meant to think through? who's going to handle my paid media and my email marketing and my creative development when these are all critical components of getting my business, getting my brand from six figures to seven figures and beyond. How would you sort of suggest them to think through that problem? Firstly, it does, and I'm probably gonna be a little bit biased here, but it ultimately does start with customer acquisition. That is the most important part at the beginning. And so you need to be able to acquire customers profitably on first purchase to be able to scale relatively quickly. That is where I would always start. And that is the primary agency that I would always be focusing on. I wouldn't be touching a retention agency unless number one, you have a consumable product or number two, you are at scale. And by at scale, I mean really doing five to 6 million a year in top line revenue. And the reason being is that the additional unlock in email driven revenue that a retention agency is going to provide you with, if you don't have, a consumable product, or if you're not at scale with a very high customer turnover rate, it's just not going to pay for itself. It's just not going to be that incremental. And I'm talking about a dedicated retention agency here who's going to charge you quite a lot. If it's a little bit of an add -on service from an existing paid media acquisition agency, it probably makes sense. And the economics probably do make sense there if you're not going to do anything at all. but that would be the second CRO I wouldn't be doing until you're really at scale. And by a CRO agency, I mean one that's running consistent A -B split tests on site and then iterating the website based on those split test results. And the reason being is that you need an enormous volume of traffic to be able to validate those A -B split tests with a high enough confidence interval. and you go and sign up with one of those agencies and if you don't have a lot of traffic, they'll run a split test for two months and they'll be charging you $9 ,000 a month. There's just no ROI there. And the reason why people buy into those conversion rate agencies so easily is because swings in conversion rate, and we'll touch on this at the end, makes such a high impact. to ROAS and profitability that they can pull insane projections out and sell them to you. So they can go, look, if we increase conversion rates by just 1%, that's it, just a single percentage point, your sales double. And so you're like, oh, sales double. And you're like, yeah. So that's gonna be $200 ,000 a month in additional top line. So we're gonna charge you a reasonable 10 grand a month for that. And you go, yeah, that's reasonable. They'll never get you that revenue. Like a couple of split tests on landing pages isn't gonna double your conversion rate. It's really not. Like conversion rates gonna go up as a multitude of 20 different factors all making slight incremental improvements. So they're the core agencies that Acorn brands mainly work with. There's an additional point that I just wanna put there though, which is that agency costs, fixed costs. which have a one -to -one relationship with net profit. And that's a really important financial consideration when you're a small business owner. And what I mean by that is, well, what's the alternative? The alternative is ad spend. If you spend an extra thousand dollars on ads, that does not equal minus $1 ,000 on net profit. because those $1 ,000 in ad spend will then yield a return on top line, which will then balance out and you'll probably have more net profit. So it's basically when I want business, I know, but the more you spend, the more profit you make, not necessarily on agency costs. So you just wanna be making sure that the agency that you're working with can justify the return on top line revenue to pay for them and to not consider them as a fixed cost. Because if you're doing $10 ,000, month in net profit and then you sign an agency for $5 ,000 a month, you've just halved your monthly net profit, they better be able to justify an increase back to even them breaking even relatively quickly in the short term to justify that expense. The other consideration I just want to throw out is around, we said earlier that we would generally recommend brands to handle paid media and handle these marketing activities themselves so that they can understand how the platforms work, how to validate performance, how to validate the work actually being done when it is time to find a partner and from a commercial standpoint. We are biased because we're a specialist team, but what about... taking on one agency and they are a full suite agency offering Google ads management, Facebook ads management, SEO, TikTok, content creation and email marketing. And it's only instead of 3000 a month, it's 6000 a month. Does that make sense? Should they entertain that conversation or how? should they play devil's advocate with themselves to make sure that it's a, it is the right choice for them. two different scenarios here. Scenario one is that it's a full suite large agency, 100 plus staff, 100 plus employees. Situation number two is it's a small agency. Let's say it's laying five to 15 to 20 people, because they both exist. There's full suite 15 person agencies, there's full suite 100 plus. And they're both two different situations. They're both generally not great. And it's for unique reasons. A 100 plus agency will generally, I would hope, have really strong internal systems. That's what's allowed them to achieve the scale that they've achieved. However, talent is diluted quite heavily. There are going to be a few talented individuals within that agency, and there is a very unlikely chance that they'll be allocated to your account unless you're a very high priority client. being you really need to be eight figures because they're gonna have already a large roster of clients and they're gonna be heavily prioritizing the biggest billables and the biggest clients. Which is a side note, an important consideration when you're working with agencies. I would actually recommend always trying to be the biggest fish with an agency. Because they're gonna over service you because they don't wanna lose you. People think, oh, I wanna work with an agency where I sit in the middle. I want a bunch of clients bigger than me. No, you don't. Because you won't be the priority. The bigger clients will be. A little side note, but coming back to, I was saying, is big agencies, that's the issue with full suite is talents diluted. And if there's not much talent and you're on multiple services, it's actually very unlikely that you're going to get high quality, a high quality service across multiple service lines. With a small agency, small agencies are generally guided by the ability of the founders. And you can even extrapolate that to large agencies to a degree. But the core service delivery is going to be to be limited by the expertise of the founders running the company. Now that's not to say that the service delivery is all to do with the founders. The team is incredibly important. Having incredible talent in the team is a must. But if the founders have no idea what they're doing technically, they're not gonna have a good service because they're not gonna be able to vet high quality talent, they're not gonna be able to train high quality talent, and then they're not gonna be able to have an excellent service. So why does this matter? Well, what are the odds that you have a founder that has an excellent expertise and ability in four different service lines? pretty much impossible. There's almost no chance. Unless this person is a 15 year Ecom veteran and has been living breathing this space for a hundred hours a week for 15 years, it's so unlikely. Like I'm not gonna be out here claiming that I'm a conversion rate specialist. I'm not gonna be out here claiming that I'm the best at retention in the industry. Like I'm not. Paid media, different story, cause that's all I do all the time. And so if you're working with a small agency, full suite, there's probably one thing they're good at. And I would recommend having a conversation directly with the founder to get an understanding of where their expertise lie. And you'll probably get an understanding of what service you should choose within that smaller agency and which ones they've just added on because they want to increase their average retainer and increase their lifetime value per client. Yeah, the only addition I'd make there is in terms of, I guess, the hierarchy of importance, you would suggest acquisition is the agency to go with to begin with. And for a small team, it really comes down to information within the company or information capability that they offer to their clients. And if they have a team of 10 and they're fragmented across five different services, you're right. It is very difficult to have a very strong capability where we have, you know, we managed $20 million in ad spend across Google ads and Facebook ads for e-commerce brands and a team of 12 remarkable paid media members and all of their expertise or all of their, uh, sort of, you know, focus is around acquisition. And that's a lot of information, a lot of access to information across a portfolio that can then be leveraged onto a new client that comes on board where that is all they really need at that lower scale. Number nine, we've spoken about this a little bit already, so we can probably shoot through this one relatively quickly, but that's not choosing the right ad platforms. There's two sides to that. Number one is choosing too many, or number two is choosing the wrong one. which is surprisingly common for smaller brands. You'll see brands who have a commoditized product, shampoo for example, everyone's selling it, and they have no unique value prop that they've carved out, and they think, well, the best way to sell this is Facebook ads because that's what everyone's saying on YouTube, or that's what my friends told me, or that's what the big e -commerce brands are doing. But you don't realize that there's a ton of search volume for shampoo on Google, and you're generally speaking always going to get better CPAs on the Google platform. So be very considerate of the platforms that you choose, the platforms that you choose to spend on. I would recommend doing the appropriate research and I would also, to be honest, recommend getting a few audits done from some agencies. and then average out the general recommendation. Choose good ones. You don't want ones with basic templated PDFs that are just gonna be sent to you. You want some consideration. You wanna talk to someone that's actually on the tools to some degree or has a good understanding of how these platforms operate. And you can probably gather enough data there to have your answer. Anything to add? Nothing to add in terms of choosing the right app platforms, no. All right, number 10, the last one, neglecting CRO, neglecting conversion rate optimization. This applies for every brand doing under 100K a month, almost every single one. No one under 100K a month really has their conversion rate dialed in from a landing page perspective. So there's a basic... There's basic fundamentals here. They're pretty simple, just making sure that you have them on site. You don't have to have a squeaky clean 50K site build. In fact, that's probably the 11th mistake of most Econ brands, which is they spend way too much on things that don't matter, right? Websites, a huge website expense does not matter. A bunch of apps on the back end of your website does not matter. There's so many things that don't matter and we could probably make a list of the 10 things that don't matter in ECOM. But CRO is one that's important and it's the basics, it's the fundamentals. It's not all your add to cart butter needs to be this certain shade of green. It's number one, we need social proofing. We need to push social proofing as aggressively as possible everywhere that we can on the website. We need the highest number of reviews. We need them to be very high quality reviews and we need them to be demonstrated everywhere and every opportunity that we can. That's immediately gonna shoot your conversion rates up by 2x. And it literally will shoot your conversion rates up by 2x if you go from zero reviews on site to hundreds, that will be the incremental change. Number two is optimizing for mobile. 95 % of your traffic is going to come from mobile through paid ads. And so make sure that your website's optimized for mobile traffic, not for desktop. In fact, don't even care what your desktop website looks like until you're doing seven figures a year. Because mobile is where it's all gonna matter. Number three is having a seamless checkout process. You wanna be removing as much friction as possible. You don't want people to have to tick boxes to add things to cart. You don't want people to have to accept terms and conditions to get to checkout. You want it to be as seamless and easy for someone to add something, move through cart, get upsold, get cross -celled, move between the site. And then number four. is going to be optimizing for above the fold. So don't let people land on your website and all they can see is 75 % of your product image. And then they have to scroll and try to find more info. Pack as much stuff as you can up the top without it feeling crowded. So can we see the price straight away? Can we see the product photo and ideally the edge of another product photo? So we know that we can scroll there. Can we see what the actual core offering is? What's the threshold offer? Why should I buy this product? And then can you also show me all of those unique value props that we said aren't actually unique value props, but just validate it? Because people are still looking for them. They're just not unique. People want to know is there free returns? People want to know is there free shipping? People want to know is there a world-class customer support? If we can somehow have them mentioned and validated very quickly, it's going to make an enormous uplift to conversion rates. If you just dial in really those four basics, and they're not hard, you could literally go away and do them in the next two hours. If you sell commoditized products, you can just import reviews with approval from the supplier from anywhere else that that product is sold from the supplier. So you could immediately get thousands of reviews if you're a retailer tomorrow and just double your conversion rates. The reason why that's important is because doubled conversion rates means double return on ad spend, which means doubled efficiency, which means double revenue. And that goes back to why these conversion rate optimization agencies can sell you so easily on this stuff. Because if you take your conversion rate from one to 2%, your CPA drops in half, your ROAS doubles, your MER doubles. So it's something that you definitely don't want to neglect when it can add such efficiencies to your marketing so easily early on. Anything to add? add from my side, that was great. Those were the 10 biggest mistakes of e-commerce brands. Any others? You want to quickly throw out there or? I don't think so. I think a good follow up one here is going to be if we do the 10 biggest wastes spent by e -commerce brands as well, because I think we touched on some interesting stuff there with people wasting on website builds and things like that, I think. People get very much so into the mindset early on of spend, spend, spend, and we get returned. But really you want to be operating as lean as possible in those early days. You want to be keeping your costs as low as you possibly can keep them and then maximizing revenue with an understanding that there is return on ad spend. As long as you can have that caveat in your thinking, you're going to do really well and you're going to be able to scale profitably in that first year. Yeah, I think we just brought on a new brand, which is the second brand of an existing client. And they've grown from 14 ,000 to 50 ,000 a month over the last few months. And they've avoided these 10 mistakes. Their website doesn't look impressive at all, but it's converting at 3 % and they're spending. every available dollar into new customer acquisition and giving consideration to first order contribution and the retention strategy to follow. So that would be a good one to unpack as well. So thank you. Thanks for your time, everybody watching, and we'll see you soon.