Prior to this period, we had steadily been increasing the importance of email marketing, and by April it represented 27% of our monthly revenue. We began to get a handle on the audience expectations, and luckily our best sellers came back into stock.
This created an ideal scenario where we managed to hit a new record of $388k in revenue. It wasn’t evenly spread either, as we have generated 25% of our monthly revenue in just three days.
However, this good fortune was short-lived. Once again, there was a supply shock issue in May. The problem was two-fold:
Supply Chains have been broken over the last year due to various reasons. As such, our clients have to order inventory half a year in advance.
Inflation is increasing the price of metals, which reduces the client’s profit margins.
In other words, they have a few difficult choices to make. They could order items in advance and hope that demand eventually meets the oversupply. Besides that, they could also increase the price, and hope that the community is somewhat price insensitive.
To also add complications, the company is also innovating. So they don’t just have the same products available but are adding new ones. In May they released a new product which luckily proved to be the new best-seller.
The problem is that there is a lot of uncertainty in their operations. If they expand too much, they might end up with a warehouse full of items they can’t offload, and especially with rising production costs that can cause severe cash flow problems, this can cause life-threatening business disruptions.
Unsurprisingly, June was a bad month because all of the best-sellers were completely out of stock by this stage. There wasn’t much to be done from a business development side, other than marketing a few new successful products.
Nevertheless, we tried to increase the profit margins to the best of our abilities. To that end, we have tested various new strategies, such as ROAS Value optimization which performed very well.
On a small scale, we also began to experiment with copy that our initial tests indicate performs well. In addition, we have found some video ads that seem to perform better than DPA Carousels. But more testing is required to determine this with any degree of accuracy.
We also aimed to improve optimization by increasing our tracking capabilities. So we introduced Hyros, an ad tracking and AI optimization tool, but we ultimately didn’t think it helped us scale and it wasn’t worth the price.
Not every avenue that seems promising will be worth it, and there’s no shame in withdrawing from a strategy that didn’t pan out. As such, in the last weeks of June, we moved to make decisions on Facebook again. Ironically, the shop performance actually improved!
Despite the supply-side problems with the best-seller items in June we managed to maintain over 75% of the revenues of May. We remain optimistic that in July it might be possible to scale up to $400k.