Income Report: October 2019
Let’s dive into the numbers behind my print on demand profits for the month of October. This month saw a course correction on Etsy Ads, more Shopify sales, and more benefits of outsourcing!
Premium Brand – Etsy
Orders: 25
Revenue: $1,633
AOV: $65
COGS: $551
Platform Expenses: $147
Gross Profit: $935
Gross Margin: 57%
This month revenue is down 57% from October, but profit is only down 37%. This resulted in an improved gross margin of 57% (>50% in a physical product business is excellent), which is almost exclusively the result of returning to a responsible advertising spend. I was able to achieve a solid return on advertising this month by limiting my Etsy Ads budget to <$3, which is spent almost exclusively on promoted listings instead of google shopping.
Ad Spend: $40 ⬇️ 96% MoM
Revenue: $444 ⬇️ $1,101 MoM
ACoS: 10% ⬇️ 53% MoM
CPC: $0.17 ⬇️ $0.34 MoM
CTR: 1.2% ➡️ 0% MoM
Conversion Rate: 2.5% ⬆️ 2% MoM
By slashing my Etsy Ads spend and taking advantage of promoted listings ads for budgets under $4, I was able to earn a reasonable return on a small budget. These metrics mirror the success I found on promoted listings earlier this year, and confirm that the changes to Etsy Ads (primarily, consolidating with Google Shopping) had negative impacts on all of my advertising metrics.
Premium Brand – Shopify
Orders: 2
Revenue: $206
AOV: $103
COGS: $87
Platform Expenses: $38
Gross Profit: $81
Gross Margin: 39%
This month I was able to land a few more customers to checkout via Shopify. I’ve been growing a small but consistent email list via Mailchimp and have found success incentivizing customers to sign up to the email list in exchange for a discount. The challenge will be getting these customers to convert at full prices, now that they’re used to the discounts.
Still on the to-do list is to hire a VA who can help with some basic instagram and pinterest content creation and marketing. I did manage to add review capability to my site and will be working on asking my customers to leave a review so I can continue to build social proof and improve on-site conversion rate.
Random Items – Etsy
Orders: 3
Revenue: $115
AOV: $39
COGS: $55
Platform Expenses: $15
Gross Profit: $45
Gross Margin: 39%
Expenses
Photoshop: $11
Virtual Assistant: $50
October Pre-Tax Profit: $1,015
Gross Profit: 52%
Can’t complain about 52% gross profit, however, there’s lots of work I need to do in order to grow the top funnel. I’m still looking to add to my virtual team to make sure the creative and outreach marketing can be as hands-free for me as possible.
What’s Up Next?
I’m working on my own store(s) to get ready for Q4, so the in-depth product reviews will slow down for a bit.
I’d love to hear thoughts, feedback, and suggestions from you anytime!
Best,
Spencer
Full Transcript
Hey everybody, welcome back. My name is Spencer, and today we’re going to talk about my October income report using print on demand, primarily on Etsy and also on Shopify. We can consider this the first full month of data that I have without running Etsy ads, and it’s a return to normalcy at a much lower revenue than I’m used to.
When we take a look at the numbers for my premium brand that I sell on Etsy, and you look at it in contrast from September, the revenue is quite low, quite a bit lower than it was last month. Last month that came in around 3,200 this month. It has been cut in half. However, what is interesting here is that the conversion rate for my store is 1.6% on every visit, which is double the conversion rate that I had last month, which why merely the traffic was driven by advertising via the Etsy ads platform.
And, and what we see against this revenue too, which is interesting, is that when you shake out the cost of goods sold and my platform expenses, things like transaction fees, you get to a gross margin of 57% which is about 17% higher than it was last month. So I’m keeping more of every dollar of revenue that I earned, which is a really encouraging sign, which means that I made a change, which is spending my money more responsibly, and what I attribute that to primarily is, is a little bit of a change on advertising, which we’ll talk about in a second. However, we can’t ignore that it sucks that the revenue is down by half. That’s never a good story. And especially going into the holiday season.
What this tells me is that I’m losing out on keywords. I’m losing search position. I’m not getting the views and I know my funnel can convert. When you think about views to people who click on listings, to people who put something in their cart to someone who checks out and becomes a customer.
I’m not doing a good enough job getting enough views on Etsy and on other platforms. So I needed to go figure out why that is. And it’s probably because of increased competition in search, and it’s probably due to my keywords not being optimized on my prime listings. So I need to go focus is to go figure out how to get more views.
Given that I know the advertising part of it, it’s maxed out, on what I can spend there. And I’ll talk about that in a second. So that, that’s my challenge for the month and when I looked at these numbers is, Holy cow, I have to really take a look at how to drive a little bit more traffic. If I’m going to be driving that traffic, I might as well drive it to my Shopify store instead of Etsy because there, I keep more of every dollar that I sell.
I’m not having to fight for ad space. When we look at a little bit more of the data, the visits were roughly consistent, most of that’s going to be organic traffic and a little bit of advertising. And you can see that my revenue here and my spend was a lot more responsible. So really less than $150 on on platform type expenses, including marketing.
When we look at the vast difference and advertising statistics for October, which I had completely slashed my Etsy ads budget, I took advantage of lowering the budget to about $3 a day. Which I think actually works to get you that, that return on investment or return on ad spend that you were seeing before Etsy ads when we were in promoted listings world.
Your ACOS, or at least mine was about 10, 15%. And I’ve heard and read about a couple other users who are finding that if you price your, your, that’s the ads budget, below $4 a day. And there’s some people believe that it excludes Google shopping from being able to spend your money and that it’s really just going towards those on platform promoted listings.
So I decided to test that out and I well, I can’t confirm whether or not that’s true because I, I don’t have visibility to, Etsy’s platform and their code, et cetera. But what I can show you is the data, and I think it supports that hypothesis pretty well. So in October, you can see my numbers here.
I spent $40 and 28 cents on ads to drive $443 in revenue. But when we look at the key stats, my ad spend is down 96% month over month. So last month I spent almost a thousand dollars. This month I spent 40 following my own advice. I’m giving Etsy a thousand dollars less per per month due to their change in the platform.
My revenue, it was interesting that my revenue was down about $1,100 from the last month, but that, that’s not directly in line with the 96% reduction in spend. The key number where we started to measure on whether or not this is successful is that my advertising cost of sales, which is every dollar that I spend on marketing.
And how much revenue is derived from that? So when my a cost is 10% that means for every 10 cents I put in, I earn a dollar in revenue, which is great because I know my gross margin is higher than 10% my a cost is down 53% from the last month, which is fantastic. That’s, that’s what I was seeing with promoted listings.
That’s where we want to be, and that’s where it was profitable. Cost per click is back at 17 cents. Last month it was at 51 cents, and my click through rate remained about the same. But one of the biggest metrics that I’ve seen change is the conversion rate too. It’s a two and a half percent on all my advertising, whereas last month it was half a percent.
And if you remember a couple of episodes ago, we talked about how critical that conversion rate percentages, and if you can, you can get an extra percent that that little number can really add up when you start to scale it across how many people you’re reaching with your advertising. When I look at this, and I can’t know definitively whether dropping her budget below $4 only is spent on a promoted listings type of advertising, but the data would certainly support that, if that is true.
The variable that changed with the move to Etsy ads was Google shopping. And when you look at, if you, if you can imagine where these numbers are stripping out the effect of that Google shopping consolidation, then you see a massive difference. And what it might tell you is that Google shopping clicks are more expensive and they convert less well than a, than a typical on Etsy advertisement.
Which returns to one of the points we had made earlier about why Etsy ads is really not a great move for sellers. And I think Etsy will really struggle to scale it up and to get the kind of buy in that they’re telling their investors that they’re going to from sellers.
Because when you strip out these numbers and you look at the effects of one month using Etsy ads and another month where you’re dialing back, the spend to just achieve possibly a hundred percent promoted listings type advertising distribution.
The numbers really play back into your favor and they get back into that familiar territory where many sellers were comfortable with, and many sellers were comfortable with having high budgets because it was profitable. And what this tells me is all of these numbers and these advertising metrics tell me I should be spending more money.
I should invest and scale this up. But we know that if you start to, from my data last month, where I spent $900 to drive 1500 bucks of revenue, and this month I spent 40 to drive 440. It doesn’t really add up to me. I think there’s really a ceiling on how high we can go in this current state of Etsy ads.
If you’re looking to go above that three or $4 a day mark, I think you’re going to see a lot more spend for a lot less results and I’ll continue to follow and publish what my advertising data shows. There’s not a ton we can know behind the scenes from what Etsy is willing to share and not . Well, what I can tell you is I do think that there roll out of Etsy ads is going to take a long time and there.
The idea that they’re going to push the entire Google shopping performance marketing spend on the sellers and that and that people will just accept it. And not really, I have a marketing budget towards what’s profitable, versus what they think, which is people will just eat it up and not understand where their money’s going or whether they’re getting a return. Oh, I don’t think that’s going to work very well for Etsy. And we’ll see how that plays out.
They got some really interesting questions on their Q3 earnings call, prior to the first question right off the bat was about Etsy ads and, and understanding, you know, analysts were a little bit concerned.
They’ve been hearing from sellers like you and like me, they’ve been concerned that people are slashing their budgets and holding. And I think that’s the leadership team is well aware that sellers are in a buy and hold kind of pattern where we’re waiting to see what shakes out, but enough about Etsy ads.
This is my data. Continue to check in with me as I publish more, but I really think you are a seller and you haven’t slashed your budget yet. Okay. I think putting it down to about three bucks a day as a way for you to at least get a little bit of return on what could be a promoted listings hack, if you will.
I got a couple more sales on Shopify using my premium brands. So these are other customers that I’m driving to my website. I’m incentivizing them with a coupon to get them to sign up to my email list where I can do some remarketing margin on the website.
Or when that small email list I sent out my first email blast, I’m able to start tracking retention, click through, and I actually did drive one sale through email engagement. And that’s really cool when you click, when you send a campaign and it, and it drives a sale. That’s, that’s really powerful stuff.
So on the to do list for me is to really hire a VA who can help me take the marketing and really establish it and start becoming consistent with it. I think the platforms I want to start with are Instagram and Pinterest. I have a bit of a philosophical problem with marketing on Facebook, so you won’t see that from me.
I know, acknowledging that Instagram is owned by Facebook, that’s a, that’s a happy medium I can, I can get behind for now at least as an experiment. And we’ll try out Pinterest and see if that drives any return. But I really, like I said in the beginning, it’s all about driving some more views into the funnel because I know, at least on Etsy and on my store, when I get people on the platform or or likely to check out at a high average order value, and that’s what’s really gonna drive the growth for me.
One other thing I did, which was pretty cool. I used a tool called YOTPO to integrate with my websites and now I can start collecting reviews. And I think that’ll be good too. I have some social proof. So when people land on my website, they need to see some proof that this isn’t something shady and that they’ll be willing to check out, especially when they’re spending on my site vs somewhere where they’re more comfortable like Etsy.
I think reviews are going to be that way to do. Random items store. You know what? You love it. Another 45 bucks, hands free. We’ll let, we’ll let the random item store ride, and we’ll keep checking in with it. Month over month. It’s definitely not an area of focus to wrap up.
For the month of October, expenses were low, photoshop 11 bucks. Oh, I paid my VA out for a couple more hours of work and we eked out a pretax profit, barely over $1,000 as most. It’s definitely the lowest it’s been in a while. Definitely some red flags for me to make sure I’m spending some time on, you know, one, how do I increase those views?
Again, even that, a lot of my growth this summer was driven by an ad platform that has completely been flipped on its head. And then also, it’s never been a better time for me to start learning how to do marketing, but I, I really understand that the creative and the outreach side and the consistency with making content as far as marketing my premium brand, that’s not really where I’m super interested to be.
So I need to hire somebody who can take that off my hands and really help me scale it so I can what the message should be sort of actually pushing. And again, we’re in the middle of Q4 so you’ll see me working on my own stores a little bit and continuing to provide you that transparency.
We’ll see if I can top a December’s haul of last year, I think it was about $7,000 in profit. That was also when I had my Merch by Amazon business, so it’s a lofty goal. We’ll see if we get there this year and I’ll be sure to bring you guys along for the ride. With that, I’d love to have any of your questions, comments.
You can join my email newsletter, shoot me a note there and I’ll get back to you. Okay, with that, I’ll let you guys go and we’ll talk soon. Bye. Bye.