Income Report:   August 2019

Let’s dive into the numbers behind my print on demand profits for the month of August. As usual, my main profit driver was Etsy, but I also re-launched Shopify to start the long road to diversifying away from Etsy.

Etsy – Premium Brand

Orders: 71

Revenue: $6,223

COGS: $3,509

Gross Profit: $2,714

Gross Margin: 44%

August delivered another strong month of gross profit, however it is curious that visits were up 15% this month with and top level revenue didn’t keep pace. That could be due to more customers preferring a less expensive item, or that Etsy is sending more customers my way that just aren’t looking for what I have to sell.

 

 My AOV (average order value) is roughly $88, which is fairly unique in the POD space. Most are selling items in the $20-30 range, but I’m trying to position my brand as a premium choice against a sea of commoditized items.

I’ve found that overall conversion rates are lower for higher priced items. That should make basic sense, as people tend to spend higher amounts of money less freely than they do for a one-off low dollar purchase.

There are a few things you can do with your online store to help increase average order value & conversion:

Bundle items together

Have great quality mockups

Respond quickly to customers

Provide high quality items (print and item quality both need to be top notch)

Provide fast, free shipping

Here’s an example of how these little changes can make a big difference when it comes to profit.  My conversion rate from views to orders is 0.7%. If I could increase that conversion rate to just 1% (so that only 1/100 people who visit my listings check out), my profit would increase by over $1,000 per month!

My focus going into Q4 will be on several new iterations of my winning products, as well as a heavy focus on conversion factors to try and bump that conversion % up!

Recently I was forced to switch my advertising on Etsy over to Etsy Ads. This is a change that I was highly skeptical about, and will be able to go into more depth on in September’s income report after having let it run for a full month. Here are the numbers for August:

Ad Spend: $896 🔺 $163 MoM

Revenue: $3,737 🔻 $1,058 MoM

ACoS: 26% 🔺 11% MoM

CPC: $0.24 🔺 $0.03 MoM

CTR: 1.5% 🔻 0.2% MoM

All of the metrics went the wrong way this month. Costs were up and revenue was down. I didn’t adjust my key tags, titles, budget, or spend in August, so there must be more competition on my main keywords.

I plan to deep dive my top few listings in the coming weeks to see what can be done to boost my positioning in the rankings. My focus with mockups and conversion should help shore up the revenue erosion from clicks that didn’t convert.

 

Etsy – Random Items Store

Orders: 6

Revenue: $154

COGS: $87

Gross Profit: $54

Gross Margin: 35%

This little store will be here when I need it for launching & testing new items, and it’s still worth keeping around!

 

Expenses

Shopify: $38

Photoshop: $11

Design Assets: $139

Overall I’m happy with how low I’ve kept my expenses. I’m expecting an uptick in the coming months as I complete my move to outsource more of my order fulfillment work, but that’s going to be money very well spent. Shopify is painful to pay for when it’s not making sales, but I’m trying several strategies to pull customers off Etsy and on to my own store, including building an email list.

Overall Pre-Tax Profit: $2,617

Not bad, but I really enjoyed July’s $3,519.  I’m very skeptical about the effect Etsy Ads will have on my September, but then again, I’m competing with everyone else on Etsy, so if I can master it, I’ll be in a better spot then before!

E-commerce is fraught with twists & turns, it’s best to take them in stride and try to master them instead of getting upset or quitting.

 

Photo by Simon Zhu on Unsplash

What’s Up Next?

I’ll be doing some more reviews on POD posters, canvas, and the gildan 64000 t-shirt in the coming weeks. I’m lining up more guest interviews as well and launching more screen-share type walkthrough videos for you as well.

I’d love to hear thoughts, feedback, and suggestions from you anytime!

Best,

Spencer

Podcast Episode Transcription

Link

Hey everybody, welcome to another episode with Merch lifestyle. I’m your host Spencer from Merchlifestyle.com and today I’m going to share with you my income report for August twenty nineteen.

Another strong month I’m going to share with you what went right what went wrong so you can take lessons from it and use it to grow your own print on demand business.

Before I get started, i wanted to share with you an opportunity. I wanted to highlight a couple of my recent newsletters that I sent out. This is my email newsletter as you can see. I usually hit people up just once a month and I try to give a lot of really high value information. So here’s a couple of examples, last email blast I sent out we’re talking about an actionable, very quick summary type email where you get a link to the video, you get key takeaways , you get some thoughts and then you get to stay on top of what is coming next, right? So you get exclusive discounts potentially and it’s a really easy way for you to stay on track as everything that I’m learning and print on demand, and I share it first with my email list usually before I get a chance to do a video.

So if you’re interested in that head over to Merchlifestyle.com and on the home page there you’ll see my free ebook. So once you sign up right down here with your name and email you’ll be able to get that free ebook and then you’ll be on the sweet email list too. I think that’ll be interesting for you. And if you’re not already on there go ahead and check it out.

Okay, let’s get into what you’re here for with the income report. First of all, I usually start with two different Etsy stores, but I’m not really going to talk about the second one very much, we’re gonna talk about this one my main store which is my premium brand and it’s a little bit different format. I’m going to be walking through my website instead of sharing that slide presentation. I figured if I’m already putting together slides I might as well put it in a blog post format so you can go check this out on merchlifestyle.com as well. So Etsy was interesting this month views and visits were up roughly 15%.

You can see the breakdown here. I had 71 orders, roughly sixty two hundred dollars in revenue cost of goods sold 3,500. Things that go into cost of goods sold is things like transaction fees, listing fees , money that I pay for marketing. Obviously the cost of my product into the store is posters mostly fulfilled through printful . Then the gross profit there is kind of your gross profit before you subtract any expenses that are more broad for your business.

So for example, Shopify subscription is not included in my gross profit and gross margin any fees that I’m paying for design assets that are not really specific to this business. And anything I just spent to run my business in general is not included in here, but we’ll get to that at the end. So the gross profit for this month on this store was about $2,700 in a gross margin of 44 percent.

So what was interesting about this is that visits were up 15 percent but top-level revenue didn’t didn’t follow the same path. So either I’m getting different kind of customer that’s not converting as well. And Etsy is sending them to my store and then my conversion rate is lower or my customers just didn’t want those higher dollar more expensive items I’m selling this month.

Kind curious to see that growth on the visits but not on the revenue. But what kind of keep digging into it as you can see here. Here’s the breakdown of the orders over the month, Etsy rolls up this number here sales and credits, which is my total revenue number that’ll include things like expedite fees that I charge, shipping costs, pretty much everything revenue goes into here, whereas this is just breaking out product product specific. So this is the number of pay attention to. What is interesting about my store is that my average order value is $88 and I think in the print-on-demand space that’s kind of interesting. A lot of folks are selling the 20 to $30 t-shirt package or mugs.

I think this is an interesting point for you because if you’re selling a bundle or a premium product and you have the right branding around it, you can go sell, one, two hundred dollars at a time on print on demand and it’s not really that difficult to do.

Once you find your niche and there’s plenty of people selling these products at these higher price points, and I actually really like the higher price point items. You have to give a higher level of customer service and there’s a little bit more friction and a little bit harder to convince buyers to part with that money, but you’re typically able to drive really high margins on those high dollar products. If you’re bringing the whole brand experience around to the customer. So it’s really nice to be able to make, you know, the other day made a hundred ten dollars in profit on one order that was less than $200 and that feels really good.

And it only happens when you have the systems in place, the reviews, the quality , people who trust your product. That’s where I’m playing is the higher average order value space and that that’s fun too because it unlocks a little bit more you can do with marketing. When average order value is 88 bucks in your gross margin is 44 percent then you have roughly thirty dollars of profit on each order after marketing expenses to play with. And if you want to increase your marketing expenses, like it gives you a budget where you can be creative as far as at the ads or where they want to run Google ads or whether you want to do some different forms of promotion.

I’d recommend if you haven’t considered selling anything other than a t-shirt or a mug take a look at some different stores on Etsy that are selling higher dollar products. One thing that’s interesting for me is that customers are a little bit harder to convert at the those rates. I’ve noticed I’m taking some action on a couple things that you can do pretty easily to increase your conversion and and kind of help those customers through.

To increase your average order value can bundle items together. A good example here might be. For a father-daughter or father-son or just kind of mom and dad kind of gift for grandparents. If you’re doing kind of family things you can bundle one shirt and two shirts together and then your customer can just buy them both at once and it increases their ability to check out.

Or you can do a set, right, if you’re providing some kind of custom item, if someone’s buying one item as a gift, why can’t you offer them a set of three? And that way if you can convert that customer you’re making three times as much but they’re still only having to check out once and it’s just a nicer version of something already considering. So bundling is interesting increasing order value.

One thing I didn’t put it in here is personalization. So that’s a big trend I’m seeing on Etsy. It’s harder on your workflow because it’s just it’s not going to be something you always have in stock and you might have to make it on order, but personalization is a huge way to drive margin and especially on Etsy see people people are looking for that more and more.

I would recommend you look into providing personalization or doing some competitive research on people who offer that. So it can be a great margin driver one other thing that everyone can do is to have great quality mock-ups and there’s this whole ecosystem of free mock-ups if you just start searching t-shirt mock-up and you go on a search engine binge, you’ll find a lot of free stuff. And there’s lots of different ways you can do it.

Actually you can buy great quality mock-ups on Etsy lot of stores will sell digital, that will be good. But just having really solid quality mock-ups filling up your listings as far as 10 pictures, include pictures of the packaging, include pictures of people wearing the product if it’s apparel, if it’s home decor but pictures of it in the home, put it pictures of it in use, don’t misrepresent the product but make sure you bring a really high-quality mock up to the table and that’ll help your conversion rates as well. That’s something everyone can do and there’s there’s no excuse for not doing that.

If you’re doing apparel to include the sizing charts in your listings to one thing that you can do on Etsy to is respond quickly to your customers. I’ve won quite a few sales from being able to just send a quick note to people who are asking a question and they’ve actually told me that.

I said, why did you go with me over this other store? They said, well, that’s because you responded quickly. So I think if you’re offering that level of customer service “, hey, I got your message. Let me let me get back to you tomorrow. I’m if I’m doing a custom order. Hey, I’ve got a scope this out and let me get you a quote soon ” People in that see really appreciate that and you can be you can be pretty personal with your messages and send emojis and smiley faces and just be really polite, people love that on Etsy. I have yet to have a customer who’s been rude with me, sold quite a few items now, so I think that just comes from trying to kill them with kindness I think that pays off pretty well for you on Etsy as far as orders and as far as conversion.

Another thing to do is just provide high-quality items. When you when you’re doing a print on demand product that’s got to be the item quality. So if that’s a shirt you’ve got to pick the right version of shirt. I just did a review on the Bella Canvas 3001 shirts across five print-on-demand providers and that’s a high-quality shirt. you can provide.

But it’s not just about the actual physical product. A lot of times you have to care about the print quality too, so both of those things. I highly encourage you to order test prints. I do a lot of reviews of test prints if you don’t necessarily want to go do it yourself, you can look at the ones I’ve reviewed but the items have to be high quality.

They’ve got to come in decent packaging. People just people don’t want something that’s garbage quality and and especially not on Etsy where they’re expecting something handmade. Some people don’t feel that it’s as authentic as something that someone literally made by hand, but I have a lot of happy customers and a lot of other print-on-demand sellers do so i think there’s a question about what customers really want and what they’re willing to pay for there.

But at the end of the day provide a high-quality item that has high quality print, find a supplier that can do it for you consistently so you don’t have to worry about quality. Otherwise, it’ll tank your store and you’ll have upset customers.

One of the last tips I can give is to provide fast and free shipping. I’ve been an advocate for free shipping long before Etsy tried to force people to offer it by threatening to derate them in search if they didn’t. I think that it increases the perceived value of your product again, if you’re selling a twenty dollar product and you’re charging $5 shipping. People might feel that they’re getting a bad end of that deal. Whereas if you charge $25 and offer free shipping, they automatically perceive the item to be worth $25 and not $20. So you can increase the perceived value and people feel like they can convert easier because you’re not throwing another fee in their way.

I think free shipping is really simple and you should bake that shipping cost into your margin of your pricing and and compete simply there. And then your shipping and fulfillment should be relatively quick. One thing that you could do in print on demand is you can source your print-on-demand items from a low-cost countries outside of the US. If most of your customers are in the u.s. You might save a ton of money. However, your shirts aren’t going to get there for a long time. Your customers gonna be upset. So you want to balance out your cost to fulfill with the ability to fulfill quickly and cheaply. So those are those are a couple tips I think you guys can use to kind of increase just if your store is lacking in any of those areas or you’re looking for ways to kind of boost your conversions or what to work on before Q4. I think I think those are a few easy things that you can do to bump up your average order value and conversion.

One little calculation. Iran is at my current conversion rate is point seven percent. So if I could just increase that by 0.3% to having a conversion rate of 1%, which means only one out of every hundred people that would come to my store would buy something , then my profit would be up over a thousand dollars a month.

So it’s crazy how these little percent changes in conversion can really have big shifts on your on your profit. And that’s where all these little things like mock-ups may feel like it’s a lot of work for no return or you might ask yourself, why would I pay for Etsy plus as it’s just making my story look that little bit nicer?

Well, when you think about how that that little bit of increase might increase your conversion, that’s why we do these things is to try to increase the number of people who are checking out when they actually come to the site. So my focus on Q4 is going to be a lot of these items and then adding a couple new iterations like taking my winners, finding some ways put a new Twist on them and then putting those up there with different keywords and seeing how those sell and trying to move into owning an itch a little bit better.

Alright, so the next thing I wanted to share with you guys is that I gots forced to switch over to Etsy Ads and I will do a separate video on Etsy Ads once I’ve had a month of the platform under my belt so I can bring some numbers to the conversation. I’m very skeptical about it. There’s a there’s many many reasons that I will share with you guys in a future video why I think the move to Etsy Ads is not good for sellers.

Long story short if you haven’t heard about it, Etsy took away the ability to run promoted listings, which you could control your cost per click on Etsy and my cost-per-click in some cases was as low as 7 or 8 cents. And my advertising cost of sales was 15% which was really good.

But now you’re not able to set your own cost per click and they bundle Etsy paid ads with Google shopping ads. So you really don’t have a choice on whether you want to do Google shopping ads or not, and I’ll have some data to bring at the end of September about how that has gone.

So gone is the lovely bar chart used to now you get this lovely advertising stats box where they hide the amount that you spent on ads. It’s like not one of the main metrics up here, which I find funny because every business owner knows that part of measuring the success of your campaign is you need this number. So why would you not want it? It’s like the one of the most important numbers you need, so why would you hide it?

Anyways ad spend, everything went in the wrong direction for me this month on at the ads . ad spend was up $163, revenue was down $1,000 which means my advertising cost of sales was up 11% that’s not 11 percent change. That’s like I used to have it at 15% and now it’s at 26% which is way bigger than an 11% directional. My cost per click is up slightly and my click through rate was down.

It’s just a little bit strange because I didn’t really adjust any titles, budget, or spend ,one thing that might be going on is I have some more competition in the space. Most of my at the ads spend is directed around one particular listing. So I’m actively in the process of reviewing my competition for that listing and then that’s where the variations and the iterations on those products come to play. I might try to win back those keywords with some different listings that have a different style or that are similar product but different enough that to not be a duplicate of listing, and try to really figure out where I’m where I’m losing out and on competition.

So that’s my guess, i don’t really have any information or insight to say, you know Etsy’s ad campaign is really the source of all of but I think after this month, I’ll have a full set of data on ads the ads and I’ll be able to tell you exactly what a month of promoted listings was like versus an entire month of Etsy Ads.

Wrapping up here moving towards the bottom. I have this random small store that has a couple items in it. Hey, it brought in 54 bucks in profit this month so let’s keep it around as it’s not worth shutting it down.

On the expenses. I typically keep the expenses pretty light. I am trying to move some of my Etsy sales and pull customers to Shopify, trying to be compliant with Etsy’s rules about how to do that.

You can apply a pretty light touch. You can’t get very aggressive with it. I’m trying to incentivize customers to sign up to my email list too, I’ve had a little bit of success with that about 10 customers of signed up. So it’s slow growth, but that’s something I really believe in doing.

The Shopify expense here is the nine dollars that I pay on one store to enable Teelaunch to print and fulfill mugs. And then the other 29 or $27 is what I pay for my full sole domain store for that premium brand . Hoping to get my first Shopify sale in the next month, we’ll see. On Photoshop, 11 bucks a month and then design assets, I increased that spend a little bit to enable a few more designs.

Overall expenses were fairly low netting out on a overall pre-tax profit of $2,617 dollars which is which is solid . Definitely a little bit down almost a thousand dollars down from July, but then again in July, I was looking at the numbers and it really just that my promoted listings just popped in July and it was extremely lucrative.

When I think about what I can really control in my business, it’s a my optimizing that promoted listings or that Etsy advertising spend. Am I adding new products. And I’m not really expecting a lot of thousand dollar increases from here to Q4, but I do know that if I spend time working on outsourcing right now so I can spend more of my time on the conversions and marketing and my external website. So I don’t have to actually do a lot of the order fulfillment.

I’m working on conversion factors, I’m working on mock-ups, I’m working on advertising and keywords. So really a lot of the foundational work I’m trying to lay so that I can be successful in Q4 and have the resources in place to be able to handle the big surge in orders. Because last year when Q4 came it was it was a huge month for me ended up making over $7,000 dollars in profit from it, but I was fulfilling orders just everyday and I think with this new outsourcing effort, I’m doing with my virtual assistant, they’re really going to be able to help me out and help me provide faster service to my customers and provide just a better quality overall so I can step back from the configuration and more into the strategy. $2,600 from a print on demand business again didn’t touch the product, you don’t have any inventory. That’s a great model and it’s still successful for me.

So hopefully you’ve taken some ideas from this I wanted to share with you guys quickly, what’s up next . I just put out that Bella canvas review. I have a bunch of Giildan 64000 softstyle shir ts that I’ll be reviewing as well. And then I’ve got a few requests for obviously posters and canvas, so I’m going to be lining those up as well.

The product review videos are a little tough. They’re hard to edit their much harder than a video in this style. So be patient with me and I’ll give you more of the good stuff.

I will catch you guys next time sign up for that email list on merchlifestyle.com, get this ebook, drop your name in there if you’re interested and leave me a comment and a like down below and I will catch you guys next time.

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