Profit Analytics Blog
Read expert articles with insights about e-commerce profitability from analyzing thousands of e-commerce businesses' data.
From Financial Fog to Profitability: Plastic Bag Partners See 5% Rise in Net Profit
Frank Schiebler is a dedicated entrepreneur leading two thriving eCommerce businesses. With Well Care Botanicals, he has spent the last three years providing consumers with high-quality hemp extract products, crafted under a doctor's expertise. Simultaneously, with over a decade in the game, his venture Plastic Bag Partners distributes top-notch poly products to businesses nationwide. Between managing these businesses, Frank struggled to gain financial insights to improve his overall business health. "Since 2011, I’ve been trying to find a reporting software that allows me to bring in all my costs," Frank, Schiebler Founder. From 7% in Net Profit Margin to 12% Using BeProfit, Frank's managed to increase Plastic Bag Partners' net profit margin by 71%. How did he do it? While sales and cost of goods are straightforward to calculate, the real task lay in accounting for everything - from marketing, Frank’s biggest expense, to daily operations. This limited visibility of their net true profit, after deducting all their expenses, led him to overshoot on advertising expenses, mistakingly thinking they were securing a good return. As a result, they ended one year in the negative. Determined to avoid a repeat of this setback, Frank searched for a solution that would provide full clarity on profits. BeProfit Dashboard Screen is just an example We tried dozens of solutions over 12 years. Dozens. There are plenty of apps on Shopify to bring in and test out, and we tried many, but they all had some kind of shortcoming; none of them did it all the way BeProfit does.” Frank Schiebler, CEO, Well Care Botanicals and Plastic Bag Partners Implementing Integrated, Comprehensive Financial Reporting BeProfit became the solution Frank visits on a daily basis, offering him critical insights into profits and ensuring every move he makes brings him closer to healthier business management. Getting started with Well Care Botanicals was a breeze for Frank: "I was up and running in just 20 minutes." However, integrating Plastic Bag Partners, which had 11 years of data, was more complex. But with support from BeProfit’s team, Frank was able to access insights from the very first day in business. All-in-One Financial Reporting Solution Frank was constantly shifting between platforms – Google Ads, Shopify, and Google Analytics. This not only was time-consuming but also posed challenges in retaining data across platforms. BeProfit streamlined this, to a unified dashboard for all crucial metrics. BeProfit definitely saves time, but to me just to have it all right there makes it so much easier for a human to digest the information and make good decisions”. Frank Schiebler, CEO, Well Care Botanicals and Plastic Bag Partners For the first time, Frank was able to look at one platform and have all the information he needed. Being able to see the entire financial picture, especially marketing costs, became a game-changer. That’s the cool thing about BeProfit - it’s focused on profit, which is the single most important thing at the end of the day”. Frank Schiebler, CEO, Well Care Botanicals and Plastic Bag Partners Reducing Expenses and Eliminating Money Waste With a clearer, consolidated view, Frank identified the most profitable strategies in Google advertising, ensuring he gained the most from every advertising dollar. "BeProfit tells me if I’m spending too much, and basically if my marketing is working or not." Last year, we had a total net profit margin of about 7%. Now we’ve been averaging around 12%, so we almost doubled our profit with BeProfit.“ Frank Schiebler, CEO, Well Care Botanicals and Plastic Bag Partners Marketing Analytics Screen is just an example When I launched BeProfit, I immediately knew this is exactly what I was looking for, for over a decade. It was an Ah-ha moment’.” Frank Schiebler, CEO, Well Care Botanicals and Plastic Bag Partners BeProfit is where you need to be - you need to have BeProfit to really understand profitability, because we run a business to be profitable, and BeProfit is the only app out there that is hyper-focused on profitability.“ Frank Schiebler, CEO, Well Care Botanicals and Plastic Bag Partners
Profit calculationGross Profit vs. Gross Margin: How Do They Differ?Thinking of starting your own small business or looking at improving your current small business's profitability? Getting to know and understand the key difference between gross profit and gross margin will help you assess your profitability more accurately. The simple fact is that gross profit and gross margin may be closely related, but they differ from themselves in terms of what they measure as much as they differ from net and operating profit margins. Read on to learn more or check out this guide which covers how to calculate net profit margin and much more. What Is Gross Profit? Your gross profit is the total amount of profit that your company makes on the sale of a product. In other words, it is the amount you have left over after you have covered your direct production costs. Let's look at a simple example: Net sales revenue – COGS (cost of goods sold) = gross profit You are a baker. You sell a wedding cake for $50 (net sales revenue). The cost of the ingredients equals $25 (COGS). Your gross profit is equal to $25. Your net sales revenue is the total amount you generated from your sales over a period. Net sales includes the deductions you need to make as a result of goods that have been returned, as well as discounts you have received from your suppliers. It is often referred to as your "top line" because you'll find this amount on the top line of your income statement. Once your costs have been deducted from your revenue, you get your net income—also referred to as your "bottom line." The COGS (cost of goods sold) refers to your direct costs for producing your products. Some examples of COGS include the materials used, such as the ingredients for your wedding cake and the labor costs for mixing ingredients and icing it. » Discover how you can calculate gross profit percentage What Is Gross Margin? Your gross margin is calculated as a percentage of how much your sales revenue exceeds the total cost of making the sale. Let's look at another practical example: Gross profit / net sales revenue x 100 Your wedding cake's gross profit is $25. In this simple example, your net sales revenue is $50. Therefore, your gross margin is $25 / $50 x 100 = 50% » Check out our guide on how to calculate net profit margin or simply book a demo with BeProfit Which Should You Use? The short answer? You should use both of these financial metrics. Since gross profit and gross margin are not the same calculations and measurements, they will tell you two slightly different but equally important stories about your business. Gross profit gives you a basic idea of how much your business makes, while gross margin digs a little deeper. Your gross margin will tell you how well your company is generating revenue compared to your production costs for both products and services. The higher your percentage margin, the more effective your company is at managing the generation of revenue for each dollar you spend. It also makes it easier for you to compare your business to competitors, whether local or international. You can then track and benchmark your gross margin against other companies over a longer period to pick up on trends within your specific industry. The two terms may have similarities but understanding their differences is what could make a difference to your bottom line.
Profit optimization12 Essential Strategies to Maximize Profits on Black Friday Cyber Monday for E-commerce BusinessesAs the calendar flips to November, the anticipation of the holiday shopping season begins to build. Retailers and consumers alike are gearing up for two of the most significant shopping events of the year: Black Friday and Cyber Monday. These annual events have become a beacon of hope for businesses and shoppers, especially in the face of economic challenges. Reflecting on the previous year's data, it's clear that these shopping holidays have a profound impact on the retail landscape. Despite the economic downturn in 2022, Black Friday and Cyber Monday continued to generate substantial profits, demonstrating their resilience and the unwavering consumer appetite for deals and discounts. In 2023, it’s not just consumers dealing with rising costs From rising supply chain costs, and shipping rates, to increasingly expensive COGS, it’s not just consumers that need to watch their spending this year. Ecommerce businesses are up against a ton of expenses that are threatening to chip away at their profits this upcoming BFCM. That’s why in this article, we’re sharing 12 key profit-optimization strategies for eCommerce managers to put into play this BFCM to maximize each and every profit opportunity and help increase your bottom line. What do Black Friday, Cyber Monday look like as the world heads into a third year of the recession? Economic downturns equal less spending and more saving, right? Not so fast. In 2022, people around the world spent more than $40 billion online on Black Friday. While 71% of consumers say they spent more or the same amount on Cyber Monday 2022 than they did the year before. In 2022, retail sales grew during the holiday season by 4.8% YoY and analysts predict a 4.5% growth in sales for 2023. Source That’s good news for online merchants as it tells us that shoppers shopped smarter, not less, a trend that’s set to continue in 2023. With people spending less throughout the year, many shoppers will be saving up to buy what they need when the Black Friday deals roll out. 12 proven profit-optimization strategies to level up your profitability this Black Friday, Cyber Monday You might see 8 figures in sales this BFCM and still not make a profit. It can be tempting to zero in on growing sales on Black Friday, Cyber Monday — funneling money into ads, sales sequences, and influencer marketing campaigns. But a huge spike in sales doesn’t always mean a healthier bottom line. While sales-focused strategies and overall revenue are important as you can’t have profit without sales, they can’t come without profitability-focused strategies that help make sure you stay in business survival and business health much after this Black Friday. That’s why these strategies should be a key part of your definitive success criteria for 2023. With more consumers and eCommerce businesses becoming conscious about how they can cut back their spending, optimizing your profitability should be the main focus of BFCM strategy for 2023. Let’s dive in. Offer popular profit-friendly discounts Focus on your VIPs — not just customer acquisition Focus sales efforts on your most profitable marketsDrive profit from enhancing LTV with your customer data-baseImprove your profit for Ad Spent (POAS) Ratio and CAC Hook new visitors with profitable loyalty-building discounts Drive sales with profitable product bundles Use BFCM to shift excess stockPromote your most profitable shipping methods as an incentive to push profit upSwerve losing money on product returns by predicting their likelihood Uncover and optimize your biggest expensesPromote the most profitable payment method that also cultivates loyalty 1. Offer popular profit-friendly discounts As any eCommerce store owner knows — BFCM is all about driving sales through discounts. But if you’re strategic about your approach to discounting and create them with profitability in mind then you should see more money in hand at the end of the BFCM sales. To discount strategically, you need to put focus less on profit margin metric and more on contribution profit, customer acquisition, and the number of orders generated. Check out your past discounts and look into the discounts that brought the highest contribution profit. You’ll also want to see how many new customers they brought and consider their lifetime value and AOV. Wise Advice: To bring in more sales and drive cash flow, pair your discount pricing strategies with less-margin-depleting hooks like free gifts or tiered discounts. 2. Focus on your VIPs — not just customer acquisition While many eCommerce companies focus on customer acquisition during BFCM, research shows that just 19% of first-timer BFCM customers stick around after shopping with a business during the sales. Now, we’re not saying it’s impossible to turn these new customers into repeat purchases, but that’s one for a different strategy. For a successful BFCM, your VIPs are where it’s at. VIPs spend 5x more and order 2x more during the holiday sales. While acquisition is key for growing your customer pool, you should put the first focus on your VIP customers to maximize your Black Friday, Cyber Monday profit. Your VIPs, the ones that spend the most and come to your store again and again, should be one of your biggest targets for BFCM because they’re already fans of your products. You know what they like and their purchasing patterns, and on top of that, you don’t need to work so hard to get them to buy. The success rate of selling to a customer is 60-70%, compared to 5-20% when it comes to selling to a new customer. And because you’re not spending more on advertising to reach new audiences, focusing on your VIPs is a smart way to leave you with more money in hand this BFCM. Putting the right strategies into play to make your VIPs feel valued and drive LTV So, how do you hook your VIPs this BFCM? First, build buzz with targeted SMS and email marketing campaigns that feature sneak previews of your upcoming BFCM sales. Personalize these campaigns based on their purchase behaviour. Show your VIPs some love by: Dropping added perks like private collection, double loyalty points on their BFCM shops, or special VIP gifts Giving them that extra small discounts that’ll make them feel special and will drive more orders Holding exclusive early-bird specials on their favorite products Remember: increasing customer retention by just 5% can increase your profits by 25-95%. Do this by sweetening up their perks beyond what you’re offering your other customers. Source: Really Good Emails 3. Focus sales efforts on your most profitable markets One way to max your profits this BFCM is by optimizing your marketing efforts for POAS (aka Profit on Ad Spend). Unlike ROAS (Return on Ad Spend), POAS factors in your profit margins for each product sale. To optimize your POAS, zero in on the countries that have the best contribution margins when it comes to shipping packages. Even if these countries have low order counts and there for brought in lower contribution profits, you can potentially drive more profit by upping your marketing efforts for these regions. Wise advice: for a double win on profitability — combine this strategy with bundling popular and profitable products (more on this later). 4. Drive profit from enhancing LTV with your customer database VIPs are one of your most important audiences to target on BFCM — but they’re not the only ones. You need to step up your customer marketing across BFCM. So, how do you improve CLTV to drive profitability? That's easy, you need to make customers feel special. One of the best ways to do that is by rewarding them for their loyalty. Research shows that unique offers can have a huge impact on positive brand associations in the long run. Customers who received a $10 voucher had a 38% spike in their oxytocin levels (that’s the feel-good bonding hormone) — helping them form stronger connections with a business and maximizing LTV. This year, ‘Black Friday creep’ is predicted to continue with many retailers planning to grab more of the market share by hosting pre-Black Friday sales as early as October. How do you capitalize on the early BFCM excitement and boost LTV? Get ready for the shopping season early by offering loyal customers a 24-hour flash sale a month early, giving them the opportunity to grab what they want before it sells out. Amp up the excitement for your flash sale using pop-ups and banners across your site, dedicated newsletters and SMS campaigns, and social media campaigns Then, maximize customers’ LTV by: Offering them customer-only vouchersGive your customers same-day shipping for freeOffer them exclusive deals on products that you won’t offer to new site visitors Offer loyalty-boosting early bird sales that combine personalization and exclusivity Make sure your VIPs are in on these benefits — along with the ones we covered above. Wise advice: to maximize your LTV and repurchase rates, tailor your BFCM offering to different customer segments with different psychographic profiles and shopping patterns. What you’ll offer shoppers who seek innovative trendy products, you can’t offer to bargain hunters. 5. Improve your Profit On Ad Spend (POAS) Ratio and CAC BFCM marketing tends to decrease Customer Lifetime Value because of the epic discounting and increase CAC because of the epic competition driving up ad costs. What’s an eCommerce business to do? To max profits, you need to optimize these factors. Increase new BFCM customers’ CLTV: Upsell them in your order confirmation emails. Encourage them to buy more from you by letting them know they can add more products to their cart without paying more for shipping.Leverage the shopping rush by sending them a discount on their next purchase that they need to use in the next 24 hours Customers love interactive content, they love it even more when it comes to them! Which doubles up as a sneaky way to find out more about them. Send your new customers a short and fun quiz to understand their product preferences, shopping habits, and lifestyle, and use the results to personalize your future offers.Send new customers product education emails showing them how to get the most out of your products. Shoppers want to connect to the people behind the brand. Are you big on sustainability, worker’s rights, or “clean products”? Share your values and become their preferred place to buy from.Make the buying experience flawless — make them remember you for their next purchase, by dropping in coveted free samples or cool freebies.Use UGC video ad solutions such as Uplifted to showcase real customer stories, adding a touch of authenticity to your campaigns. As at least most of your site offers strip discounts, you need to work hard on your upselling strategies. To manage CAC, bring in some tactics to help motivate consumers to fill up their carts. Increase BFCM cart size: Offer total look special BFCM dealsPersonalize your upsells by suggesting your most profitable products. Ones that, after deducting all expenses, give you the highest contribution margins or contribution profit in hand. Offering tiered discounts or applicable volume discounts is another winner hereUse steeply discounted products to hook customers and present them with full-priced items or items with less stip discountsDon’t forget to offer a minimum cart threshold higher than your AOV to unlock free shipping 6. Hook new visitors with profitable loyalty-building discounts To hook your BFCM visitors, optimize your homepage and special event landing page to showcase your most popular products and products your customers previously looked at, and match these items with the discount that shows the highest repurchase rate and LTV. Review the discounts you've offered throughout the year, with a focus on last year's Cyber Monday sale. Offer the discounts that led to high LTV and repurchase rates at relatively high-profit margins or AOV. 7. Drive sales with profitable product bundles Everyone pushes their best sellers on BFCM. Spoiler: these aren’t always your most profitable products. While you can hook consumers with your top-selling products, you need to choose the products that have the biggest positive impact on your bottom line. Bundles are psychologically enticing because they increase customers’ perceived value — they feel like they are getting more for less. “Save with sets”: Glossier You can optimize your profits and increase your sales by offering tiered spend rewards to customers who hit a certain spending threshold. Don’t just offer a 15% discount to consumers who spend $100. Offering a tiered discount should be strategic as well. As goes for everything in marketing strategies, personalization is where it’s at. To personalize your discounts, create smart segments of customers based on their average purchase spend and match your offering to their usual cart size and push them up. Balance their budget limitations with increased spending incentives but remember, check your discount rates’ impact on your bottom line so it won’t start to negatively impact profitability. 8. Use BFCM to shift excess stock Much of your BFCM profit-optimization strategy can be driven by shifting excess stock. An oversized inventory can weigh down your cash resources. From inventory space to insurance — these hidden costs can be unexpected drains on your company’s profitability. As Dany Couillard, Director of Business Restructuring at BDC, says: “This is little-known, but every dollar of inventory that a company holds over its ideal level generates 20% to 30% of additional costs.” Identify products that would perform better with a discount or sale, this includes products that have been on the site for over 90 days, have a higher days-to-finish inventory than the shop average, and don't yet have a discount. You can also use these products as a hook to increase your AOV by offering them as a free gift when customers hit a certain spending threshold. This strategy is also a great approach for optimizing your profitability in the long run by improving customer satisfaction—90% of customers say that a free gift increases brand loyalty. 9. Promote your most profitable shipping methods as an incentive to push profit up Free shipping had the biggest influence on buying decisions during Black Friday — holding 49% of the sway on consumers' buying decisions. While 32.7% of consumers say they plan to shop in-store to skirt shipping costs and delays — meaning free, fast shipping is more important than ever. How can you give consumers what they want and still increase your profits? Every online store knows to set a minimum cart threshold to increase AOV. Note: According to data, the perfect threshold for free shipping that’ll nudge your customers to spend more without putting them off is no more than 20% higher than your average AOV. But you aren’t everyone. You want that extra profit-maximizing edge. Then check the carrier’s highest contribution margin shipping method and offer it free in as many locations as possible Wise advice: Also consider your carrier's AOV, LTV, and repurchase rate. Promoting carriers with these metrics in mind will boost your profits. Metrics like High AOV, LTV and repurchase rates highlight which carriers your customers trust. By choosing the carriers that are a go-to option for customers, you’ll build a more loyal and trusting customer base, which means good things for your profitability. If you know this shipping data ahead of time, you’re already way ahead of your fellow store owners for the BFCM rush. 10. Swerve losing money on product returns by predicting their likelihood Many consumers go big on Black Friday and Cyber Monday — only to regret their impulse spends later, with 1 in 3 consumers returning what they buy during the sales. No matter how many sales you see during Cyber Week, product returns will have one of the biggest impacts on how much money you’re left with weeks after the sales end. One way you can deal with returns is by analyzing which products in your store have the highest return rates and avoid stipping discounting them as they come with added costs. As well as working out which products have the highest returns rate, see if you can spot trends in your product returns. For example, maybe there’s a connection between product returns and a specific location or shipping method. Optimize and adjust your BFCM strategy accordingly. Wise advice: Bringing buyers as close to the real buying experience as possible won’t just impact your return rates, but also increase sales and customer satisfaction. If a customer selects “didn’t match description,” as the reason for their return, there’s a 66% chance they won’t buy from you again. Don’t let that happen. 11. Uncover and optimize your biggest expenses What were your biggest expenses on last year’s BFCM? For this year to be a success, you need to understand which expenses were the biggest drain on your business and know how to optimize them for 2023. Review your most costly expenses and see where you can save. From utilities to processing gateway fees, there are many expenses to consider that could be impacting your profitability. Review your main expenses and see where you can make changes this year. 12. Promote the most profitable payment method that also cultivates loyalty As a profit-first focused business you want to foster loyalty by as many methods as possible. This strategy leverages your payment processors. See how many fees you’re really paying for each processor, and how much you pay Shopify. Wise Advice: make it easy to hit “pay.” Add as many payment methods as your customers use — think: Buy Now, Pay Later; split payments, and accelerated payment methods like Apple Pay, Google Pay, PayPal, or Shop Pay. How to effortlessly maximize on Black Friday Cyber Monday profits Black Friday and Cyber Monday are all about driving sales for many eCommerce businesses, but it’s easy to get caught up in zeroing in on customer acquisition and sales without taking the time to optimize profitability. Selling more on Black Friday, Cyber Monday is great — but not if you’re left with less money than you make. Put these strategies into play and go all in on maximizing profits on Black Friday Cyber Monday 2023. You can use your own profit analysis methods or use our ready-made reports to identify exactly what is hurting and what is contributing to your profitability without a hitch. Prepare your eCommerce site for potentially your biggest shopping season yet, get more control over where your money goes, and optimize your eCommerce site for profit first. Request a demo | Free Trial
Profit optimizationHow Modkat Achieved a Clear and Comprehensive View of Their True-Profit Modkat, a small business for cat lovers, started its journey with a clear mission - blend style with functionality. With their award-winning cat litter box designs, Rich and Brett had an all too familiar eCommerce growing pain. Like many businesses venturing into eCommerce, Modkat was dealing with multiple sales channels – Shopify and Amazon, across different regions, and achieving a holistic view of their financials was challenging and time-consuming. We had an overall sense of our numbers, but never had a clear view of cumulative numbers from all sales channels... there was never one collective place to view all of our platforms together". Brett Teper, co-founder The need for an integrated solution became more apparent as they had to struggle each week with manually manipulating spreadsheets and dabbling with different platforms, which took about 5-10 hours at least. And above all, working with spreadsheets didn’t allow them to handle their financial complexities and couldn’t offer the comprehensive insights they craved. “We tested a bunch of tools but the data was incomplete and their interfaces were so complicated and hard to look at. I'm a designer, I need to see data in an easily digestible way", Brett recalls. Modkat wanted a straightforward, visually appealing platform that would unify their data and provide them with insights into their overall financial performance and the profitability of each store. The Solution: Empowering Modkat's Multi-Channel Ecommerce Success with Simplified Eye-opening Financial Insights With multiple Shopify and Amazon accounts across different regions, Modkat found its match in BeProfit. The platform's ability to aggregate data from different accounts within each sales channel was a significant breakthrough. Adding to this, BeProfit's capability of integrating marketing platforms, advertising numbers, and 3PL logistics data made the solution invaluable. That was the first time I was ever able to see those numbers… It was really enlightening to see some of that information." Brett Teper, Co-Founder Compare Shops Feature by BeProfit A Simple Onboarding Journey BeProfit’s onboarding was "dummy proof", which suited Modkat’s desire for simplicity. The team was readily available, providing solutions and adding capabilities to their product based on Modkat's feedback. Seamless Integration BeProfit filled the void in Modkat’s data comprehension by integrating smoothly with its existing tech stack. As a tech-heavy eCommerce business, Modkat needed a solution that could handle multiple data sources and platforms without compromising accuracy or speed. BeProfit met this need by constantly developing more integrations and capabilities to serve the dynamic needs of businesses like Modkat. The Results: Becoming Masters of Their Financial Data with 90% Less Time Spent on Analysis Now Modkat is able to collect, view and compare data dynamically across all channels. BeProfit became their go-to platform for understanding their business and seeing their full financial picture, in real time. Modkat gained the ability to see their business costs and understand where they stand in relation to industry benchmarks. It gave Modkat the confidence of being on the right track, knowing they’re making the right choices. Profit Optimization in No Time Modkat now saves precious time (5 to 10 hours a week) by using BeProfit’s ready-made reports to guide them with their business decisions, making every decision data-backed, and pushing for more profits. "BeProfit is like a Shopify dashboard for your whole business. The analytics in Shopify has always blown me away and been super helpful to us. And I find BeProfit to be very similar if not way more advanced than Shopify's analytics. And being able to trust it like I trust the Shopify dashboard is just awesome for me." BeProfit's Dashboard Exceeded All Expectations For Modkat, BeProfit not only met but exceeded their expectations. It instilled confidence in their numbers and provided invaluable historical data, showing the story of their business. I'm most surprised by how much the numbers don't lie... I'm blown away by how accurate it is." Brett Teper, Co-Founder
Business metricsThe 4 Main E-commerce Business Models for Building a Successful Online StoreRunning your own online business can be highly profitable, but it is not as simple as building a store and hoping for the best. You still need to have a set of business goals that will make your e-commerce store successful. That's why, in this post, we will cover the four main types of e-business models and how they can help you build a successful e-commerce business. What Is an E-Commerce Business Model? An e-commerce business model is a company's plan for how it will monetize selling products or services online. There are many ways to do this, but some common e-commerce business models include selling goods directly to consumers, selling goods to other businesses, or providing digital services. The defining difference between e-commerce and digital marketing is that digital commerce includes all forms of electronic communication, such as social media, text messages, emails, etc., whereas e-commerce only includes transactions that take place on websites. In addition to understanding the basics of an e-commerce business model, it is also essential to familiarize yourself with the available development platforms. Read the following comparisons to learn more about the three most popular e-commerce platforms: Wix vs. ShopifyWix vs. WooCommerceWooCommerce vs. Shopify Maintain a Profitable Edge You can now automatically calculate profits from multiple sources, saving time and effort. Analyzes results to ensure consistent, accurate profits.Keep track of data points from multiple sources at once.Both desktop and smartphone versions are available. Regardless of the e-commerce business model you adopt, the BeProfit analysis dashboard was designed specifically with the goal of making your life easier. The 4 Major E-Commerce Business Models There are many types of e-commerce business models. With examples, we cover the most popular ones here. 1. Business-To-Consumer (B2C) Business-to-consumer refers to transactions in which a business sells its products or services to consumers. B2C is the most common e-commerce business model, and, therefore, many online niches fall into this category. They often use digital marketing for their e-commerce business success. Example of B2C Think of a clothing, entertainment, and household supplies retailer like Walmart, which sells products to individual consumers online. The main advantages of B2C include: Potentially endless customer base.Greater potential for sales and profits. The disadvantages of B2C include: Competitive business niches.Difficulties presented by customer service and return policies. 2. Business-To-Business (B2B) A business-to-business e-commerce model is one where a business sells its products or services to other businesses rather than to consumers. This model is generally associated with high-end, high-priced products or services in industries in which the bulk of the revenue is generated by business purchases. The business-to-business model generally ends at the purchase stage—the company sells its product to another company, which then sells it to its customers. Another subsection of B2B is business-to-government (B2G) Although business-to-government e-commerce models are often grouped together with the B2B business model, instead of a business supplying another private business, they sell goods and services to government organizations. This can include anything from office supplies and technology products to complex consulting services. The B2G e-commerce model has become increasingly popular in recent years as governments seek to find ways to reduce costs and streamline operations. There are several benefits that businesses can experience when selling to governments through the B2G e-commerce model. First, businesses can enjoy increased visibility and access to decision-makers within government organizations. Additionally, businesses can benefit from cost savings associated with streamlined procurement processes. Finally, businesses can also benefit from opportunities to build long-term partnerships with government organizations. Example of B2B and B2G Think of an online retailer like Amazon that uses the B2B and B2G e-commerce business model. Amazon.com sells various products and services to businesses, including books, software, and electronics. In addition, Amazon has developed several web-based applications specifically for government entities, such as Amazon's Web Services (AWS), GovCloud. The main advantages of B2B or B2G include: Larger orders.Fewer transactions.Shorter cycle times. The disadvantages of B2B or B2G include: Limited customer base compared to B2C.Potentially higher customer demands, like product customization and pricing options. 3. Consumer-To-Business (C2B) A slightly less common but no less effective strategy is the consumer-to-business e-commerce model. C2B involves a consumer selling their products or exchanging their services directly with businesses. This generally occurs without the need for a middleman, such as a manufacturer or a wholesaler. Example of C2B Think of an online review website like Yelp or a social media platform like Facebook where consumers leave customer reviews, participate in company surveys, or even share product-focused social media content as an influencer. This is done in exchange for some kind of perk like the chance to win a prize, receive a discount, or be awarded a free product. The main advantages of C2B include: Affordable or free advertising.Potentially limitless brand awareness. The disadvantages of C2B include: Unpredictable outcomes.The potential for negative responses. 4. Consumer-To-Consumer (C2C) C2C, also referred to as peer-to-peer (P2P), is an e-commerce business model where a consumer sells their products or services directly to other consumers. It contrasts with business-to-consumer, where the focus of the business is selling products or services to consumers. C2C is a very popular e-commerce model as it allows business owners to broaden their customer base and reach a larger audience. Example of C2C C2C websites are often referred to as P2P selling platforms. The concept is very similar to classified ads, which are often posted locally at a neighborhood or community level. Think of something like Facebook Marketplace, which is essentially a sub-platform of Facebook's main platform—a place that connects consumers with other consumers. Facebook makes money from the buyers and sellers viewing on-site ads, and the consumer gets the benefit of connecting to another consumer who either wants to buy or sell secondhand goods. Leveraging this business model is a great way for businesses to increase their profit margins by growing their brand awareness. The main advantages of C2C include: Potential for high margins.Low to zero manufacturing costs. The disadvantages of C2C include: Highly competitive market.Increased potential for scams. Another "Fast-Growing" Business Model Direct-To-Consumer (D2C) In this post, we've outlined the four most common and most successful e-commerce business models—but know that there are more than just four. For instance, D2C, or direct-to-consumer, is now becoming a very broadly used e-commerce business model. D2C cuts out the middleman and allows a manufacturer to sell directly to a consumer. Regardless of which e-commerce model you choose to roll with, just be sure to clearly understand your business goals and which direction you'd like your online store to be heading. You should also take into consideration that you will have to address some of the challenges associated with e-commerce. Example of D2C D2C brands like Warby Parker and Harry's have disrupted the traditional eyewear and razor markets by cutting out the retail middleman and selling products directly to consumers online. The main advantages of D2C include: Control over brand messaging.Direct access to customers and their buying behaviors. The disadvantages of D2C include: Increased liability.Complex internal management. A great way to boost direct-to-consumer profits is through the use of advertisement. » Need help with ad management? Read our beginner's guide to effective advertising in e-commerce Selecting the Best E-Commerce Business Model There are a few key things to keep in mind when selecting the right e-commerce business model for your company. The first is deciding if you want to sell directly to consumers, businesses, or governments. Each e-commerce model has its own set of pros and cons, so it's essential to select the right model for your business. Here are a few things to consider when choosing an e-commerce model: What are your business goals? Analyze the market to better understand which e-commerce business model suits your business best. What is your target market? Define who they are, what they want, and how to reach them.What products or services do you offer? Decide this early on and market it appropriately.What is your budget? Set realistic budget goals, and stick to them as closely as possible.What is your level of technical expertise? Decide where your specialties lie, what you'd like to tackle yourself, and what work would be better outsourced to outside contractors. Once you've landed on a decision for each of these key considerations, you'll need to decide how you're going to reach them by choosing the correct e-commerce business revenue model. Is your new business model going to use an existing platform like Amazon or eBay, or are you going to build your own website? If you're going the self-hosted route, make sure to have a solid understanding of web development and e-commerce platforms. That way, you can create a site that's both user-friendly and profitable.
Profit calculationNet, Gross, & Operating Profit Margins: What Is High?Two popular metrics commonly used to gauge the success of a business are profit margin and net profit. And, while net profit is great at reflecting how much profit is generated from revenue, for some applications, it's arguable that a business's profit margin is a more valuable metric. This is because profit margin allows you to gauge how efficiently your business is running overall. Understanding these metrics—involving income, revenue, and profit—and the benchmarks of each of these can provide insight into a business's overall profitability. » Book a demo with BeProfit and learn how to calculate profit and other metrics with just one tool Difference Between Net, Gross, & Operating Profit Margins These three metrics are commonly used to analyze and measure the income of a business. All three metrics differ based on industry and business size and are typically not stagnant. To help you better understand the differences between the three margins, consider learning more about: 1. How to Calculate Net Profit Margin Net profit margin is a measure of profitability. It's calculated by determining a business's net profit as a percentage of revenue. Net Profit Margin = [(Revenue - Cost) / Revenue] x 100 For example, in e-commerce, the average net profit margin is 0.64%, whereas the average total market net profit margin is 7.77%, as reported by NYU Stern School of Business. But this can fluctuate depending on a number of factors, such as the number of sales, merchandising costs, and product prices. Another way to look at net profit margin is by using a net profit margin ratio. The net profit margin ratio is just another way to measure a company's profitability. Net Profit Margin Ratio = Net Income / Revenue This ratio tells you how much profit a company makes on each dollar of sales. Simply put, a high net profit margin ratio means that the company is making a lot of money on its sales. In contrast, a low net profit margin ratio means that the company is not making as much money on its sales. 2. How to Calculate Gross Profit Margin The gross profit margin differs from the gross profit and is expressed as a percentage. Gross profit margin is the percentage of revenue that remains after paying the cost of goods sold (COGS). The average, per NYU Stern School of Business, sits around 33% for all industries, and 42.78% for e-commerce, particularly. Gross Profit Margin = [(Revenue - COGS) / Revenue] x 100 This calculation is useful because it measures the efficiency of the business's operations, provides a benchmark for measuring other business expenses, and shows changes in gross profit margins over time. Thus, e-commerce businesses prove to be excelling at managing operational costs efficiently for a maximal gross profit margin. If you find your gross profit margin is low, however, you can look into reducing COGS, including lowering shipping costs or cutting out unnecessary expenses like excess staff or unneeded operational costs. » Need help managing expenses? Keep track of your e-commerce business expenses 3. How to Calculate Operating Profit Margin Operating profit margin (or return on sales) is the ratio of operating income to net sales. This is usually expressed as a percentage. Operating Profit Margin = (Operating Profit / Revenue) x 100 The operating profit margin ratio is used to determine how well a company can cover operating costs with revenues. In other words, how effective a company is at generating profits from its sales. This is a useful performance indicator when making comparisons to similar companies. The average total market operating profit margin is 13.52%, with the e-commerce industry at 5.85%. This can change drastically based on net sales or even streamlining operational processes to lower costs. » Find out how to calculate gross profit percentage Easily Track and Analyze Your Profits View and manage your profit trends on one dashboard. Provides a complete business and financial overview.Access to real-time data and custom reports.Link multiple platforms and shops for an aggregated view. BeProfit's app makes it simple to track and analyze your profit margins, saving you time and effort. Benefits of Knowing Your Profit Margins The ultimate goal for a business is profitability. If your sales are up, but your margins are down, you may need to take a deeper look at how you're running your business. A business with a good profit margin is able to remain afloat during tough times and capitalize on opportunities, such as seasonal marketing strategies, to help boost sales. A high-profit margin means that the company is making enough money on each sale to cover its costs and generate a positive return on investment (ROI) for continued growth. A high-profit margin also sends a positive signal to potential investors, lending credibility and stability to the business. » Learn about effective cost leadership strategies to help improve profitability Limitations of Profit Margin Calculations To calculate a profit margin, business owners need to calculate total revenue and total expenses. This can be complex. Research and development (R&D) costs are expensed in the year in which they occur, while depreciation expenses are spread out over the life of the asset. Profit margins also don't always consider changes in sales volume. If a company doubles its sales volume but keeps costs constant, the profit margin doesn't change. If a company reduces its sales but also lowers expenses and increases prices, its profit margin will increase. Calculating profit margins is not an exact science, and the outputs, while helpful, should be considered an estimation. » Discover how to perform a profitability analysis for your e-commerce store Knowing These Margins Can Help Improve Profitability Because margins can fluctuate and depend on a number of factors, knowing the benchmark values can provide an estimated guideline to assess your business. Ultimately, a good profit margin is essential for maximizing company growth, understanding how other successful businesses in your industry are performing, and achieving optimizing your processes. If you have low-profit margins, tracking these same metrics on all-in-one platforms, like BeProfit's, can offer useful insight for making sales strategy adjustments, operational optimizations, and improving revenue management.
Profit optimizationHow Suntouched Double Their Profits and Cut Expenses in HalfSuntouched is a fast-growing eCom brand that specializes in hair lighteners. Founded two years ago by Charlotte St-Germain, Suntouched has expanded its online presence from Shopify to Amazon, reaching customers in the US, Europe, and Canada. One of Charlotte's biggest challenges was managing cash flow. She used to ignore the numbers and focus on the products, but as the business scaled up, she realized she needed to track her return on investments, especially for paid advertising. She wanted to know how much she was spending and earning on each channel and campaign. That's why she decided to look for a solution that could help her optimize her cash flow and gain more visibility into her financial performance. She wanted a tool that could simplify her accounting, automate her reporting and provide insights into improving her profitability. If I had to sum up BeProfit, I would say this tool is a must-have for any founder trying to scale and make the right business decisions for their brand’s profitability." - Charlotte St-Germain, Founder & CEO of Suntouched Making Short-Term Decisions Based on Inaccurate Data Charlotte admits that juggling endless tasks as a solo eCom founder can be draining — and that finances are her least favorite responsibility. Early on, she got away with very basic startup analytics to stay afloat. Soon enough, the company’s reliance on inaccurate financial data led to premature expansions, rushed decisions, and a dwindling financial runway. They wound up expanding the team too soon based on Shopify sales numbers, rather than true gross margins or net profit. Her brand’s challenges with nailing profit margins eventually led Charlotte to BeProfit. As a solo founder, you take care of everything, and finances are just not my favorite aspect of the job. It got to a point where, although the sales were coming in as our top line increased, we didn’t know where the money was truly going.” From Data Confusion to Data Visibility The Suntouched team tried a handful of analytics tools, such as Triple Whale, but found these were ultimately incompatible or overpriced when the brand needed to be cutting costs. Fortunately, Charlotte was eventually connected to BeProfit by friends in the eCom founder space. “They just sounded so happy with the real-time insights,” she explains. From there, BeProfit and Suntouched hopped on a call, tailoring the platform to meet the brand’s unique needs and omnichannel setup. After an easy sync with their commerce and ad profiles, Suntouched was ready for more data visibility and accuracy than ever before. The team at BeProfit has been super responsive and optimized everything for my brand’s needs. I’ve received really amazing support in our experience together.” Suntouched has leveraged BeProfit to dramatically boost profitability — in three steps: Gaining an accurate & comprehensive view of current finances Before BeProfit, Charlotte received monthly P&Ls, which were often confusing and inconsistent, from her accountants. Now, Suntouched has seen “a huge difference” in data accuracy. As a result, the brand has been able to come to terms with the reality of its finances. Despite believing they were profitable, BeProfit shed light on the fact that Suntouched had been in the red for several months and unfortunately needed to reduce the size of their team. “It was so hard,” Charlotte emphasizes, “but it showed me the resources we had to work with and helped us spend within our means.” Slashing Expenses After teaming up with BeProfit, Suntoched has gained a clear, accurate view of its finances. Suntouched has more than halved its expenses for a roughly 60% reduction. They save anywhere from 5–10 hours per week of manual data analytics labor. Reduced expenses and data-informed budgeting have doubled their profits. I expected BeProfit to give me a stronger understanding of my basic numbers. What actually happened is it completely transformed my business for the better.” Identifying profit centers to allocate runway accordingly Suntouched turns to its profit analysis dashboard to know its numbers and make the highest-ROI decisions on a daily basis. For instance, if returns are climbing for one social channel, Charlotte will ping her buyer to start scaling that creative. Or, in another instance, Charlotte was surprised when BeProfit demonstrated that Amazon was the Suntouched team’s greatest profit driver. While the brand’s top line is higher on Shopify, factors like cheaper ad spend mean they receive ample organic traffic and sales on Amazon. As a result, Suntouched used the data and put more funds toward maximizing that profit center (as opposed to focusing on Shopify for ultimately fewer returns). Saving time & money Thanks to BeProfit’s dashboard, which provides a centralized look at all of your real-time eCom data, Suntouched can easily view their Shopify, Amazon, and ad performance on one screen. No more switching between endless tabs, sales channels, and ad managers to understand your net profit, revenue, gross margins, and much more. “It’s a huge time-saver,” says Charlotte. In addition to time and effort, Suntouched also saves on people's costs. Previously, Charlotte had to hire staffers to manually manage financial data, and delays in communication led to delays in course-correcting their spending. Today, Suntouched can instantly view its data and make informed, profit-driving business decisions. I definitely use BeProfit on a daily basis. When I open my laptop [or phone], I go to my dashboard right away. It’s made a huge difference in terms of just knowing where to put more funds and focus.” Growing with Their Financial Partner Looking forward, Charlotte has an impressive vision for the growth of Suntouched. And she anticipates scaling with BeProfit as her financial partner all the way. She calls the platform “a layer of security” for her company, always keeping operational costs lean while opening up Suntouched to maximum profit margins.
Business data analysisShipping Analytics: Benchmarks and Insights for E-Commerce SellersShipping costs can have a significant impact on an online merchant's profits. In this post, we take a closer look at the cost of shipping across different industries, providing insights into the average shipping cost per order, shipping costs out of total revenue, and customer charge rates. We also analyze the most popular shipping platforms used by online merchants and average delivery times in the U.S. The Impact of Shipping Costs on Your Revenue At BeProfit, we believe in identifying what's eating your profits in each area of your business and optimizing accordingly. With our powerful Shipping Analysis tool, you can gain insight into shipping operations, carrier performance, and shipping methods to optimize your shipping strategy and increase your gross margin. » Learn how to maximize your profits by improving your shipping strategy—Book a demo Shipping Benchmarks and Key Insights Knowing and understanding the importance of key shipping benchmarks and insights can help you optimize your profits regardless of industry. The Cost of Shipping in E-Commerce Shipping costs can make or break an online merchant's profits. Let's take a closer look at the average shipping costs, shipping costs out of total revenue, and customer charge rates across different industries. Home and beauty products have the lowest average shipping cost per order at $6.03, while electronics have the highest at $10.60. However, in terms of shipping costs out of total revenue, clothing and fashion top the list at 12.73%, while electronics have the lowest percentage at 3.18%. The customer charge rate for the electronics industry stands at an elevated 118.95%, implying that they impose a higher shipping cost on their customers than what they incur. In contrast, the home & beauty industry has a customer charge rate of merely 65.10%, indicating a negative profit margin for shipping. These numbers highlight the importance of understanding shipping costs in relation to your industry and business model. While it may be tempting to charge your customers more for shipping, it's essential to find a balance between affordability for your customers and profitability for your business. By analyzing the data for your industry, you can make informed decisions about your shipping strategy and optimize your profits. Which Shipping Platforms Do Online Merchants Prefer? Choosing the right shipping platform can be a game-changer for online merchants. Let's delve into the shipping platforms used by merchants using BeProfit. Shopify Shipping is the clear leader, with a whopping 85.81% of merchants opting for this platform. ShipStation comes in second with 5.38%, followed by Shippo at 3.1% and ShipBob at 1.63%. Other platforms, including Shiphero, Easyship, Shipping Easy, Shipmondo, Shiphawk, and Shipwire, are each used by less than 1% of merchants. Average Delivery Time According to PrettyDamnQuick, a provider of checkout-to-delivery management platforms for e-commerce businesses, the average click-to-door time for U.S. brands is 4.87 days, including non-business days. This metric represents the time it takes for an e-commerce order to be delivered to the customer's doorstep from the moment the order is placed. By revealing this data, e-commerce businesses can use it as a benchmark to measure their shipping efficiency and identify areas for improvement in their processes. Shipping is the final touch to a perfect customer experience that will make or break your customer loyalty and retention. These three shipping factors are a trifecta: 1. Win customers in your local geography first - offer local customers personalized shipping options such as 'same-day or next-day delivery.' 2. Use a multi-carrier platform - customers desire a variety of shipping options, such as 'Free,' 'Express,' and 'Overnight,' to give them control and flexibility over when they'll receive their order. 3. Show a precise delivery promise in checkout - Include specific 'Arrives By' dates on each shipping option so customers know when they will receive their orders." - Avi Moskowitz, CEO at Pretty Damn Quick Streamline Your Shipping Performance with BeProfit's Shipping Analysis Tool Efficient shipping is a crucial aspect of any online business. With BeProfit's Shipping Analysis tool, merchants can now track and analyze their shipping performance with ease. Our powerful tool allows merchants to gain insight into their shipping operations, identifying areas for improvement and tracking new customers. By analyzing their shipping data, merchants can optimize their shipping strategy, save time and money, and increase customer satisfaction. The Shipping Analysis provides an intuitive interface that displays essential shipping metrics, such as shipping costs, carrier performance, and shipping methods. Merchants can compare shipping data across different carriers and methods, helping them make informed decisions about their shipping strategy. » Make the most of your shipping operations by booking a demo with BeProfit Bring Your Company Up to Its Full Potential Our analysis of shipping operations for online merchants has yielded some important benchmarks and insights. These include: Shipping costs vary by industry, with electronics having the highest average shipping cost per order at $10.60 and home and beauty products having the lowest at $6.03.When looking at shipping costs as a percentage of total revenue, clothing and fashion have the highest rate at 12.73%, while electronics have the lowest at 3.18%.Some industries, such as the electronics industry, charge their customers more for shipping than they incur, with a customer charge rate of 118.95%. In contrast, the home and beauty industry has a negative profit margin for shipping, with a customer charge rate of 65.10%.The most popular shipping platform among online merchants is Shopify Shipping, with 85.81% of merchants opting for this platform.Delivery times vary by carrier and method, with the benchmark being 4.87 days in the U.S.BeProfit's Shipping Analysis tool can help merchants streamline their shipping performance by providing essential metrics and insights, such as shipping costs, carrier performance, and shipping methods. With powerful insights and intuitive metrics, our platform can help you streamline your shipping performance and take your business to the next level.
MarketingThe 6 Best Plugins to Enhance Your WooCommerce StoreThere are hundreds of different plugins available for the WooCommerce e-commerce platform. This makes it attractive for developers and entrepreneurs alike. Aside from that, two of the main reasons many startups go with WooCommerce is that it's free and easy to use. To make WooCommerce even simpler than it already is, certain plugins help to automate a range of the platform’s different features. The thing is, some plugins are definitely worth your time while others should really be left on the shelf. To help you decide, we’ve listed the best paid and free WooCommerce extensions currently available. Why Plugins Are Beneficial for WooCommerce The best WooCommerce plugins are easy to integrate and use. They also improve the platform's functionality and make it easier for users to find and purchase products on your site. There are several benefits to adding a plugin to your WooCommerce store, and these include: Improving your online store.Integrating new features.Collecting customer data automatically.Automating product delivery to customers.Increasing revenue and profit.Giving customers a seamless, high-quality experience.Making it easy to add additional products to your WooCommerce store.Increasing customer satisfaction. Plugins are one of the main advantages of e-commerce. If you want to see a full breakdown of this, visit our post on the advantages and disadvantages of e-commerce. 3 Must-Have Free WooCommerce Plugins for WordPress 1. Affiliates Manager WP Affiliate Manager is the best WooCommerce affiliate plugin, helping users to manage affiliate marketing programs on their websites. It makes managing an affiliate program more streamlined and less time-consuming, enabling you to focus on other aspects of your business or on your customers instead. 2. Abandoned Cart Lite for WooCommerce The Abandoned Cart Lite for WooCommerce plugin is the best WooCommerce abandoned cart plugin. It is a great way to get more of your customers to check out and complete transactions in your store. Using automated messages and targeted promotional offers, this tool helps you identify customers with abandoned carts and entice them to complete their purchases. 3. WooCommerce Shipping The WooCommerce Shipping plugin is the best shipping plugin for a WooCommerce store. With this extension, you’ll be able to access discounted rates of your USPS account, allowing you to print shipping labels straight from WooCommerce’s dashboard. 3 Best Paid WooCommerce Plugins for WordPress 1. WooCommerce Subscriptions Pricing: $199/year WooCommerce Subscriptions is one of the best subscription plugins available. The extension enables you to manage your e-store more effectively by allowing users to create and manage products with recurring subscription-based payments. A great way to boost your subscriptions is by using email marketing. 2. All in One SEO Pricing: Basic Plan - $99/yearPlus Plan - 199/yearPro Plan - 399/yearElite Plan - 599/year All in One SEO Pack is the best WooCommerce search engine optimization (SEO) plugin you can get for your WooCommerce store. Boasting over 2 million+ WordPress installations, it is the most comprehensive SEO tool that will help even the most SEO-green users improve their search rankings without having to learn and understand the intricate and often confusing aspects of Search Engine Optimization. 3. Monster Insights Pricing: Plus Plan - 99/yearPro Plan - 399/yearAgency Plan - 799/year MonsterInsights is one of the top WooCommerce plugins currently available for WordPress-based stores. It offers detailed Google Analytics reporting to help you better understand your e-commerce data. You can easily view detailed product statistics, including best-selling products and those all-important customer cart details, all from inside your WordPress dashboard. This means you can carry out more hands-on analysis to make the best-informed business decisions for your store - boosting sales with ease! Can You Have Too Many Plugins for Your WooCommerce Store? The more plugins you use, the bigger the chance that you will experience issues. When you use too many plugins, you will probably see your site’s performance decrease. Additionally, you could find that you are having issues with conflicting plugins that can bog down your site and affect page loading speed. As a rule of thumb, aim to have no more than 20 plugins installed at one time. That way, you’ll avoid any potential issues that may arise, keeping your site running smooth and at lightning speeds. If you’re still tossing up whether to use WooCommerce or Shopify for your e-commerce website, why not check out our WooCommerce vs. Shopify post where we break down everything you need to know about choosing between the two platforms.