There’s no shortage of ecommerce stores online. But did you know more than 1 million businesses are powered by Shopify? It’s estimated that Shopify represents around 11% of the total ecommerce market. From Allbirds to Tesla and Pepsi it’s not just small businesses using the popular ecommerce software.
What Shopify does better than almost any other platform is give you an ecommerce store in a box. For a few bucks per month, anyone can set up a store, find products to dropship, and start running advertising to get traffic to their website.
It’s never been easier to become an ecommerce entrepreneur than it is right now. And the payoff for starting a profitable business is greater than it’s ever been. Ecommerce aggregators are buying up Amazon FBA businesses left and right. According to Empire Flippers, the market for aggregators buying up Amazon businesses grew between 30-50% last year.
It’s no doubt a great time to start, grow, and sell an ecommerce business.
In this case study, we’ll focus on one ecommerce business that’s doing just that. In less than a year they’ve grown more than 300%. Here’s a look at what they’ve accomplished.
- 1,173% increase in monthly organic sessions (836 to 10,643)
- 438% increase in monthly profit (-$12k to $42k)
- 48% increase in average order value
- $1,000,000+ in total value of the business
The case for ecommerce content.
The Shopify blueprint goes something like this.
- Find a product to sell or dropship
- Set up your website
- Get traffic from ads
- Markup your products enough to cover your customer acquisition cost
This works well if you have some funding and a team to build the website, manage ads, handle inventory, respond to chargebacks and refunds.
But the majority of ecommerce entrepreneurs I talk with aren’t raising money from VCs. They started a growing business that they intend to sell when it gets a little bigger. Their dreams don’t include a seven-figure marketing budget or a global supply chain.
In this case, if you’re focused on increasing the value of the business for a possible exit, scaling up ads may not be the best way forward for a few reasons.
- Ads are becoming increasingly less effective
- Advertising platforms control your destiny
- Scaling ads scales your workload
Recently, we’ve seen a rise of editorial content flowing to the top of search results for the keywords you’re probably already bidding on.
Why humans and Google prioritize long-form content.
Longform SEO-optimized content can and should have a place in your broader growth marketing strategy. Let’s look at an example.
If you search for best 4k video camera. Once you scroll past the ads, you see list after list of long-form content reviewing the best cameras on the market. And you’ll bet a lot of those links are affiliate links.
We’re not suggesting you build an affiliate business, but instead create content that helps users on the journey to buying the ecommerce products you already sell. This is exactly what we did to help one of our clients boost traffic, rankings, and ultimately sales.
Subfolder created long-form content well-optimized around the primary money keywords.
Our strategy was simple.
Identify products that were easy for the business to fulfill, rarely got returned, and had the highest profit margins. Next, we searched for the best opportunities relating to these products. We narrowed down our list to a dozen or so unique keywords that would help drive traffic to these products and started creating content.
Each month we would research, write, edit, publish, and distribute a new batch of content. Since Subfolder is an end-to-end content creation service the business owner didn’t have to worry about publishing new content, optimizing images, adding meta descriptions, or any of the other hassles associated with content creation.
Each week he got an update on what was being published to the website as well as the performance of new content in terms of impressions, clicks, and conversions.
Over time the growth started to compound. What began as a slight trickle of visitors to new content turned into a tidal wave of traffic. Keep in mind that this is just organic traffic primarily from SEO-optimized articles.
What’s growth for growth’s sake?
A secret that few SEOs will tell you is that getting traffic to a website is actually pretty easy if you optimize for the wrong keywords. There are plenty of high-traffic keywords that are easy to rank for and have very low competition because they lack commercial intent.
But if you want to truly grow a business, especially an ecommerce business, you need to focus on intent over traffic.
In this case, we were able to find the balance between traffic and intent. Not only did the additional traffic lead to an increase in visits, it also tripled the number of orders from organic traffic.
As you may have guessed, orders from organic traffic is still a minority of total of total sales for this ecommerce business. What you don’t see is that orders from organic traffic have a $0 acquisition cost. So even a modest gain has a seismic impact on the profitability of the business overall.
When we started working with them at the beginning of last year, they were spending nearly $20k on paid advertising to drive 24k website sessions. That website traffic resulted in $77.7k in top line revenue across 531 orders. For the sake of round numbers, let’s assume that each product has a fixed cost of $100.
- $77,739 Sales
- $18,558 Ad Spend
- $53,100 Product Costs (531 orders)
- $5,280 Profit
- 24,054 Sessions
This leaves our client roughly $5K in profit at the end of May. Now let’s take a look at the impact of great content just seven months later in December.
In December our client’s website received 29,000 sessions and spent $21,890 on ads. They had $122,306 in gross sales across 575 orders.
- $122,306 Sales
- $21,890 Ad Spend
- $57,500 Product Costs (575 orders)
- $42,916 Profit
- 29,342 Sessions
The average order value increased from $153 in May to $227 in December. The result of increased traffic, sales, and orders from organic SEO-optimized content had a huge increase in monthly profits. If we assume $100 in wholesale costs on every fulfilled order, we’re left with an estimated monthly profit of $42k.
From $5K in profit in May to $42K in December, just seven months later.
What's the value of the business?
Based on data from Empire Flipper’s, the average ecommerce multiple in 2020 was 30x. Which would make our client’s business worth around $158k in May, when we first started working together.
Seven months later, the business was worth more than $1.2M using the same multiple—a 700% change in the value of the business in seven months!
If you’re an ecommerce entrepreneur and your dream is to start, build and grow a profitable business then it’s important to start with the end in mind. If you know roughly how much you want to make on the sale of the business, then it’s easy to figure out the amount of monthly revenue and profit you need to reach your goals.
A big part of Subfolder’s thesis is that growth marketers undervalue the impact of content in creating a predictable, profitable, and sellable business. And there just aren’t many experienced content creation services out there who go beyond delivering a word doc.
What’s surprising to us as an agency is how few ecommerce businesses are taking advantage of the opportunity to drive traffic and revenue growth through content creation. A similar opportunity exists in almost every niche, and while it’s common for ecommerce businesses to spend $10k-$100k per month on ads, it’s fairly uncommon to spend half of that on content.
Our client’s monthly organic sessions continue to grow because SEO-optimized content has a compound effect on traffic.
Investors love to use the analogy of pouring gasoline on a fire, but truth be told, just dumping more and more gasoline on a fire is a terrible way to stay warm. Our approach is the opposite, we carefully stoke the fire that is your business with increasingly larger logs so it’ll burn for a long time to come.
If you’ve started an ecommerce business or Shopify store and need help scaling or would just like a well-diversified more predictable business, let’s talk. We’ll put together a plan to help scale content, traffic, and conversions without taking equity in your business or increasing your workload.