eCommerce is in a precarious position...

I fear we have some rough days ahead.

Let me show you why, with the help of aggregate financial data from 500+ 8 Figure Stores, courtesy of my friends @FinaloopTeam and @IrisFinanceCo

If you're busy right now, bookmark this because its about to get DENSE!!!! First let's level set the median financial state of these brands:

2024 Results from @FinaloopTeam

~ 87% Net Sales
~ 55% Gross Margin
~ 27% Contribution Margin
~ 8% EBITDA

At glance THAT's NOT TOO SHABBY. Profitable!

But come deeper down the rabbit hole with me.

CEO's you need to become OBSESSED with understanding your P&L.

Here are 5 red flags to send back to your accountant to fix... 1. A single "sales" line item

You want to see gross sales, discounts, taxes, shipping revenue, returns and net sales.

Don't accept a simplified version.

Hesitant to spend $10k/month to hire someone for incrementality testing?

Here is a first principles framework for understanding incremental impact, based on seeing lots and lots of test results.

I'll explain... There are 2 KEY FACTORS to identify when thinking about incrementality.

On the X Axis we have your optimization setting.

On the Y Axis you have your targeting exclusions.

How to create a PEAK moment in eCommerce.

The 5p framework

Product, Place, People, Press, Partners.

Here is an example of this in real life... First if you haven't watched my video on 4 peaks theory, stop and do that now so you know what on earth im talking about...

buff.ly/45Ge3RF

This is the most powerful woman in consumer product that no one talks about.

Here is why she might hold the key to getting capital back flowing into our industry... This is Lizanne Kindler the CEO of the Knitwell Group.

KnitWell Group's portfolio of brands generates around $6 billion in annual sales, making it one of the largest specialty apparel companies in the United States.

They are closing in on Tapestry, Ralph Lauren and Levi's

Over the last 5 years I have run CTC

Fully in person

Fully remote

and now Hybrid

Here is what I learned about running a company in each setting...

The biggest difference is how information moves.

In person its osmosis.

Overheard conversations, word of mouth, company gatherings.

Shopify's stock is getting crushed.

But I think the market misunderstands their real opportunity.

This is my belief about what Shopify's future really is... and why it is CRITICAL to our industry. At the core of the eCommerce business model is the ability to produce a set of units at a clear cost and sell them at a higher cost.

That sounds simple but it's actually incredibly complex.

CTC just had our best quarter ever.

It came just 18 months after our worst.

If you run a service business I hope to save you a lot of pain and failure by sharing mine.

Here are 5 things that led to a dramatic turnaround despite a worse macro environment. 1. Product/Market fit.

I have been leading boot strapped businesses my whole life. We think like boot strappers and market like boot strappers.

Profit has always been the focus of our service.

This was the wrong message for the last era, I failed to understand that then.

But in THIS moment, it's everything. All of our methodologies and systems have been a preparation for a moment when business objectives would change to a focus on profitability.

Takeaway:
Press hard to understand how your offering UNIQUELY matches the present need of your customers.

CTC has been responsible for delivering tens of thousands of ads a year for over a decade.

Here is the creative strategy process we have built.

You won't be surprised to find that it begins with clarity of the financial objective and flows out from there.

It goes like this... Step 1 Set the financial goal and media budget

Retention model + Spend/aMER model set both

Growth strategist sets the channel allocation and efficiency expectations based on whatever measurement you want.

Only NOW do we have the necessary constraints to build a creative plan

Anyone wanna bet I can increase your monthly email revenue next month in one thread?

Here's how to do it: Right now for February determine how much email/sms revenue you need to generate.

Whatever number you get add 10% to it.

Got your number?

Offer > Audience > Angle.

Its the perfect creative ideation framework.

Struggling to come up with new ways to approach the account?

Here's how you can use this rubric to come up with unlimited ad concepts. Start by holding 1 constant.

Choose your best offer:

For the sake of this example we will use the Bambu Earth ultimate mini kit...

We sold over $100M worth of silicone wedding rings in 4 years with QALO.

We did it primarily with product on white ads like this one.

No fast edits, crazy hooks or fake UGC.

Here's how we made this ad so successful without touching the ad account... I believe the job of a direct response ad is to get the customer to buy RIGHT NOW.

But in order to do that you have to till up the soil a bit.

You need to prepare them to purchase. That involves surrounding them with signals that this is the product for them.

1/ You have heard me say you should never turn off a Facebook ad.

But what about an entire ad channel?

Many brands come to us wondering about Pinterest, Snapchat, Tik Tok and other media channels.

So how do you know if an ad platform is worth it?

Let's get nerdy... 2/ While we believe that your aMER should ultimately govern your media budget there is an important question to be answered about the allocation between channels.

Here's where Statistical Hypothesis Testing steps in - an advanced math concept comparing data sets.

My tweets often have slightly unintended consequences for me that im learning to navigate.

But 1 I am aware of is that it puts us on the hook to deliver a service consistent with what I'm saying publicly.

Here is how we are trying to improve our organizational integrity... First let's define "organizational integrity".

I believe this is the alignment between a businesses stated beliefs and behaviors.

The connection between the promise we make publicly and service you receive.

There have been times where this has gotten too low for us...

We sold over $100M in silicone wedding rings in 4 years at QALO.

FB ads were a huge reason why BUT there is another, easy to overlook reason why all our campaigns were so successful... Campaign briefing.

We planned four major campaigns a year (4 peaks theory anyone?) and gave ourselves a TON of time to plan for the execution.

I would start by coming up with a "theme" for each campaign and then let @sadielewandoski work her magic and bring it life.

How @thesamparr sold me on Hampton and why I think it’s going to be a rocket ship…

(And it’s not because the product is awesome… yet) Ive been a Hampton member for 6 mths and its been great

Were still building trust and it isn’t life changing yet. The slack is noisy and it’s hard to keep up

But I have learned a lot from watching @thesamparr build and I believe it’s gonna keep improving

Here are 3 reasons why

We have swung the pendulum way too far with the "branded search" hate.

Here are 5 brands with holes in their funnels RIGHT NOW because they aren't dominating their own branded search terms. American Giant giving up value real estate in the Shopping feed to a major competitor in Custom Ink.

How much of your budget should be spent on search?

Well that depends on which of these four quadrants your brand exists in...

Let me explain 🧵 Google search opportunity exists post-intent, meaning that something has to prompt a user to create a search query in order for your ad to be shown.

Your job is capture as much of that demand as currently exists for your brand and category.

I start getting interested in an ad platform when I see the drop ship arbitrage crowd start going hard…

Something might be brewing on Twitter

My feed is JAMMED with stuff like this: 🐊

https://twitter.com/ravitystore/status/1595681515597623298

Today we crossed our first $1M month for @bambuearth.

We’ll do it with ~20% EBITDA and 80% free cash to profit.

But 12 months ago we were weeks away from running out of cash and under extreme debt pressure.

Here’s what changed… First @JoshRodarmel deserves a ton of credit. Not many people know Josh but he has been my partner in CTC and 4x400 for over a decade. Crazy life circumstances forced him to step back from running 4x400 for a few years but in Jan he came back.

There have been a lot of questions about whether or not the triple whale data report is accurate.

I believe it's absolutely right.

And here is what I believe is contributing to the pending implosion it describes... First, if you haven't seen it, this is what I am referring to:

https://twitter.com/rabahrahil/status/1593693447415701504?s=20&t=cbD3XRvnRNIQJnvQMm_7QA

TLDR; Spend up 54.6%, GMV -22.6%. Blood bath.

Now here is why I believe it is happening: