468: Ecommerce Is Changing And This Is The BIGGEST Opportunity For 2023 – Family First Friday

Welcome to Family First Fridays, where there are no guests, just me and the microphone, where I teach you how to start a business or side hustle from the perspective of a father with two kids. And as you can guess, these Friday episodes are inspired by my Wall Street Journal best-selling book, The Family First Entrepreneur, which is a book that teaches you how to start a business that actually frees up your time instead of stealing it. And right now, I'm giving away $690 in free bonuses when you grab the book, so go check it out over at mywifecutterjob.com slash book. Now, if there's one thing that I can say about e-commerce and selling online, it's that it's constantly changing. And if you don't keep up, you'll get left behind. Now, e-commerce has revolutionized the way we shop and do business, and today, online shopping is pretty much the norm. So in this episode, I'm going to highlight and explain the latest developments in e-commerce and how they're shaping the future of shopping. So change number one, there's going to be an increased focus on personalized experiences. Now, what does this mean exactly? It basically means tailoring the shopping journey for each individual shopper based on their preferences, behavior, and purchase history. Now, this can include product recommendations, special promotions, custom product offers, and other stuff, whatever you can think of. Let me just give you a couple examples on how we do this in our store to illustrate some of my points. Now, first off, we primarily use email marketing to segment our email list on autopilot. And at a very basic level, we segment all of our customers based on what they shop for or bought and only send relevant products to them. For example, we wouldn't want to send out an email promotion selling dresses for our mail customers. But then what we do is we place our customers into several different buckets. Now, the first bucket are those people who are on the list that haven't purchased at all. And for these people who haven't bought it all yet, we tend to send deeper discounts just to get them to open up their walls. Because I know that if they make a single purchase, it's going to be way easier to get them to buy again. So we basically put out all the stops for these visitors just to get them to buy anything, even if it's something really small. Now the second bucket are people who purchased just once, but haven't made their second purchase yet. And for this group, they already know and like our brand, otherwise they probably wouldn't have opened up their wallets in the first place. And for this bucket, they've already bought from us once, so we don't overly discount because it's probably not going to be necessary to get them to buy again. Instead we try to get a second sale by cross-selling or offering special perks like a loyalty program or with some very light discounting. And according to studies, getting a customer to buy a second time is 65% easier than getting that for sale. And why is this second purchase important? Because it establishes a pattern at that point. It indicates customer satisfaction and loyalty, leading to potentially more repeat purchases and a higher likelihood of customer referrals. Now this next bucket of customers are what we call brand enthusiasts. These are people who have bought more than once, purchased somewhat regularly, but they don't spend that much money. And for these people, our goal is to get them to up their average order value. So sometimes we'll create special bundles for these customers based on what they bought. We'll also email these folks more often because they clearly like our company and probably don't mind getting extra email. We'll tease special perks and we'll cross sell products based on what they bought. So here's an example that I always give in my workshops. We saw matching cocktail, tea, and dinner napkins in our store, and if a customer buys cocktail napkins and not dinner napkins, we'll send them an email automatically to encourage them to buy the matching set. If someone buys a particular style of hanky, we'll provide automatic recommendations for other hankies similar to the one that they bought. And basically, we want our brand enthusiasts to spend more money each time. Now this final bucket of customers are most valuable and we refer to them as our whales. I think I stole the term whales from my good buddy, Drew Sonaki. Now these are the customers who buy often and spend a lot of money. And for our store, our whales are event and wedding planners. And for these folks, we treat them like royalty. Instead of excessive discounting, we give them exclusive perks. For example, we'll call our whales on the phone, offer them a dedicated rep who will personally handle their orders. In addition, if they have any requests, we'll see if we can custom source product just for them. Because these are our best customers and we want to keep them happy. Now, if all this segmentation sounds a little bit intimidating to you, it can all be automated, except for the phone call part, by using a tool called Clavio. Clavio knows which products customers looked at and what they bought. It knows their purchase frequency, their average order value, which allows you to predict their lifetime value. And once you create your customer segments and your automated email sequences, this all literally happens on autopilot. Now personalized shopping experiences are where it's at if you want to excel in e-commerce. Now another trend is the continued rise of SMS marketing. Last year, 62% of customers subscribed to receive techs from businesses and this is growing at 12% year over year. Now most consumers are actually subscribed to receive techs from one to five businesses for shipping notifications, special offers, and promo codes. Now you might be thinking to yourself, and this is mainly for the people listening who haven't adopted SMS yet. I would never subscribe to a business for techs, but I'm willing to bet that you've interacted with a business via SMS already in some shape or form. What about the last restaurant that you ate at? Did they text you a reservation reminder? Did they then follow up later with a text to remind you to come back? SMS literally has the highest open and click through rates of any advertising medium, with 98% open rates and 36% click rates. Now from my own store, I'm getting between a 15 to 20% click through rate, and I'm getting 10x the engagement of email. 61% of customers want the ability to have techs conversations with businesses as well. And in fact, most people actually prefer techs over a phone call. Personally in our store, we don't like phone calls. We'd actually much rather deal with text messages any day of the week. Right now, only 55% of businesses are using text message marketing, but it's growing at 27% year-over-year. And if your business is not utilizing text, then you're going to fall behind. Another trend is omnichannel shopping. Basically, what this means is that you want to be everywhere. And I know for a fact that a lot of you guys listening to this are either selling on Amazon eBay, Etsy, or your own online store. In order to maximize your sales, you'll want to be selling your products in as many places as possible. Some of you guys are probably hearing this and thinking to yourself, I only buy an Amazon, so why shouldn't I focus on Amazon? And my answer is, you should never create strategies based on your own behavior. Because here are the facts. Some people prefer to shop on Amazon. Some people like shopping at boutiques. Some people like going to the mall. Everyone has different preferences and circumstances, and you'll get more sales if you sell in more places. If this all sounds intimidating to you, there are many tools and plugins that will help you do this. For example, there are a series of plugins that will allow you to instantly list products from your Shopify store on Amazon, and eBay, and even Walmart, at the push of a button. And the inventory is automatically synced as well. Now, here's something else that you need to be aware of. 70% of the shoppers on Amazon will actually Google the brand first before making a purchase. And because Amazon has become this breeding ground of counterfeit merchandise and cheap Chinese junk, people actually double check the website. And this is why having your own website is so important today as well. So what's funny is that whenever I talk about the need to have your own website, I always attract a bunch of trolls who claim that running a website is too hard, and that selling on platforms like Etsy, Amazon, or eBay are just way easier. And it's true. Selling on established marketplaces like Amazon, eBay, or Etsy are easier to get started. But listen closely, when something is easy to do, it will attract a ton of competition because there's no barriers to entry. So you have to adopt a completely different mindset. Instead of always going for what's easy, why not try for something a little bit harder? Because if it's harder, then less people are going to do it, and you have a better chance for success. So bottom line, selling on Amazon, eBay, and Etsy gets harder and harder every year. And on Amazon especially, there are tons of people out there to sabotage you as well. And so you absolutely need to own your own website that you control 100%. Now I'm not saying, just to be clear, that you should stop selling on third-party marketplaces, but don't limit yourself to a single platform. Sell in as many places as you can, and don't just limit yourself to your own home country. Consider offering your products internationally as well. Now often, what you'll find is that products that are competitive in the United States, for example, are actually much easier to sell in Canada or Australia. And for some reason, we get a lot of customers in Australia who don't even bat an eye at really high shipping costs required to ship there. Now this next trend isn't really a trend, but the reality is that the world today is mobile first. If you look at my traffic stats from IECommerstore, 76% of my visitors came directly from a mobile phone. And to be straight up with you, that number is actually low compared to my friends and colleagues, because a good chunk of my clientele is actually over the age of 55. If you look at my blog over at mywifequitterjob.com, 68% are from mobile, but despite the disparity in stats, people are still designing their websites for desktops first. I've been running my online course over at profitableonlinestore.com for over a decade now. And part of what I do is give website critiques for the students in the class. Now would say probably seven or eight times out of ten. Students don't even bother trying to shop on their own site on their phone. Mobile commerce is where it's at. It's been like this for years now, and it's only going to get more mobile going forward. So if you're putting up your IECommerstore right now, design it for a phone first and desktop second. I actually do most of my shopping on my phone now, and so will most of your customers. They're here just a couple of quick tips. People hate having to type on their phones, so any service where you can automatically import data is crucial. For example, PayPal will import the customer's address so they can check out in one click, and make sure you implement this. Now this year is also going to be the rise of social e-commerce. I shouldn't say rise, it's already happening. Social commerce is the act of using social media platforms like Instagram and TikTok as a direct sales channel. For example, if you go on Instagram right now, you'll often see these little bubbles next to products where you can click and buy directly on the platform. In fact, 35% of Instagram users will make a purchase on the platform this year. TikTok offers a similar shopping feature and drives a ton of sales for e-commerce sellers. And I looked it up. Here are just some crazy stats on what TikTok is doing for e-commerce. Two out of three users are likely to buy something while on the platform. 50% of TikTok users have bought something after watching a TikTok live. TikTok users are as twice as likely as users of traditional social platforms to recommend a product or service that they found on the app, and 1.5x more successful at convincing others to try the product or service. A colleague of mine literally makes millions of dollars every year selling katana swords just on TikTok alone. Now Amazon introduced a service called Amazon Live where you can sell products live on the platform, and it's killing it. My friend Tiffany Ivanovsky makes tens of millions of dollars every year selling live on Facebook. Her shop is called Emma Luz-Boutique. Go on Facebook right now and watch her in action. She goes live literally every day. This year is also going to be the year of AI, and here's how e-commerce merchants are leveraging artificial intelligence. Now, we talked about providing a personalized shopping experience already, while stores are using AI algorithms to analyze customer behavior to suggest products that are relevant and personalized to every customer. You've probably seen this in action. In fact, since I'm an old Chinese man now, I've been getting more ads for hair loss and ED. In my store, I use customer service chatbots that provide a first line of defense for support questions and assistance for customers. For example, in our store, this is probably true for most stores. The number one and number two at most ask questions are, where's my order? When will it chip? Well, it makes sense to use a robot to answer these questions automatically, and on our store we use a chatbot, which automatically queries our database and provides shipping and tracking info for our customers. There goes 70% of our calls right there. We also use AI to optimize inventory management. Since we imported from different countries, the lag time to getting product can often be two to four months, and this takes planning, which is actually not one of my best character traits. Not a big deal, AI algorithms can help predict demand and optimize your inventory levels to reduce waste and improve efficiency. AI can also help you price your products. There are pricing split test programs that will automatically adjust your prices to find the sweet spot for profitability for the products that you sell. And then finally, AI is already helping sellers create effective marketing and advertising campaigns. Right now, we're using Google Performance Max campaigns where you literally just feed Google your products, and that's pretty much it. And based on its AI learning algorithms, it automatically shows your products to interested parties, and you do nothing. As an engineer, I actually hate the lack of control, but it actually works pretty well. Facebook has similar technology called advanced shopping campaigns. You just give it your catalog and does the rest, mostly on autopilot. I've been getting a three X return ad spend so far with these campaigns without having to constantly refresh my creatives. Now this final trend is direct mail marketing. Now there's a saying in business, which is what's old is new and what's new is old. And direct mail or postcard marketing is actually making a huge comeback. Now if you're my age, and I'm going to date myself here, remember back in the day, when you used to receive Valpax or envelopes full of coupons in the mail, all that died down for some reason when email marketing and other forms of advertising came out. Well now that email and PPC ads are getting saturated again, direct mail is proliferating. Here are just some interesting stats about direct mail marketing. 70% of consumers say that direct mail is more personal than online advertising. 54% of consumers actually want direct mail from the brands they like. 42% of recipients read or scan the direct mail they receive. And direct mail response rates are 5 to 9 X higher than other advertising channels. And 62% of consumers who reacted to direct mail actually made a purchase. We recently ran a postcard marketing campaign that you do a 16.47 X return on investment that you can find on my blog if you just do a search. So bottom line here is e-commerce is constantly changing and you have to keep up with the trends. Now that you know what's in store for this year, and hopefully you like this Family First Friday episode, make sure you go on my podcast page over at mywifequitterjob.com slash category slash podcast and check out my other Family First episodes.