How is e-commerce viable for low value products?

2020-07-25T10:04:03-06:00By |Categories: Finance|Tags: , , , , , |

This is a Quora question I was asked.  My answer as follows. That depends. You really need to maximize your average order value (AOV), ideally above $75 in order to make the e-commerce operation pay for itself and earn a profit. If you can do that, then yes. Subscription orders and repeat customers will help [...]

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How can I get better margins for my products in my e-commerce business?

2020-06-17T12:25:26-06:00By |Categories: Finance|Tags: , , , , , , , , , , |

This is a Quora question I was asked to answer. By margins I am going to assume net margin, which is net income. Think of the flow of money in a consumer goods business as a way to help you improve margins. I have a spreadsheet model accompanying this graphic here. In the [...]

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What is the ROI average for e-commerce sites?

2020-06-09T08:49:51-06:00By |Categories: Finance|Tags: , , , , |

This is a Quora question I was asked to answer. I don’t look at ROI in terms of consumer products or ecommerce because that number is not as meaningful due to its wide range across categories, channels and geography. EBITDA, net profit margin, payback period, and revenue-to-funding are metrics I prefer. Based on that, [...]

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How do you calculate the ROI for channel sales?

2020-02-17T10:37:31-07:00By |Categories: Finance|Tags: , , , , , |

This was a Quora question I was asked to answer. I’ve not personally thought of or used ROI for channel sales, but I suppose you could. To be clear, when I think of channel sales in context of what I do, which is consumer products, I think of the retail channel, or a subset of [...]

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What are some barriers of entry to running a successful eCommerce business?

2019-12-28T14:26:27-07:00By |Categories: Finance|Tags: , , , |

This is a Quora question I was asked and my answer is as follows. My sense is that a minimum qualification for “successful” is profitable on an EBITDA basis (net profit or earnings before interest and taxes, depreciation and amortization) such that your profits will pay back your original investment in a defined time [...]

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What is the cost to revenue ratio of an e-commerce infrastructure in the retail industry?

2019-12-28T16:21:48-07:00By |Categories: Finance|Tags: , , , |

This is a Quora question I was asked and my answer is as follows. For my P&L’s, I break cost up into 3-main buckets: COGS (cost of goods sold) Marketing Operations I compute COGS based on landed costs, which includes the complete costs to produce a product so that it is sitting in your warehouse [...]

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Marketing campaign goal metrics model: a simplified version of the most important financial model for any consumer product company

2018-12-08T14:21:41-07:00By |Categories: Downloads, Finance|Tags: , , , , , , , , , , , |

The ultimate goal in any company... ...is to acquire AND retain customers where costs to acquire and retain are less than expenses, which leads to profits. Boiled down to this single statement, then the most important variable in the finances is the marketing spend. Even if your other expenses are high or way out of [...]

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One method for determining channel margins when you are not able to talk with industry insiders

2018-12-08T14:18:43-07:00By |Categories: Downloads, Finance|Tags: , , , , , , , , , |

This post answers this question I received on Quora: Does the manufacturer of robotic kits for kids have a potential to enter markets overseas by offering a 50% discount on MSRP to importers? Will the importer have enough space to markup the price before CE retailers markups his own purchasing price? The answer is unknown [...]

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The North Star Metric

2017-09-23T21:05:33-06:00By |Categories: Finance|Tags: , , |

There's something called the North Star Metric, which one can also refer to as a super metric or a super KPI (key performance indicator). I found it to be best described in this one sentence, pulled from this post: The North Star Metric is the single metric that best captures the core value that your product delivers to customers. I think the [...]

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