In this podcast episode, we discuss how to make more money from your online store. Our featured guest on the show is Jatin Khosla, co-founder & CEO at konigle.com.
Topics discussed in this episode:
- Increasing profitability for online stores
- Common issues with online store profitability and share successful tips
- Seven critical areas that businesses must concentrate on to improve profitability
- The significance of automation, content creation, and effective inventory management in this regard
02:18 The importance of profit over sales
03:11 Effective strategies for ecommerce stores
05:29 The seven major factors for ecommerce success
10:45 The role of pricing in profitability
12:00 How Konigle helps improve profitability
15:08 Onboarding process and ideal customers for Konigle
Links & Resources
Shopify Apps: https://konigle.com/seller-tools
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Claus Lauter: [00:00:00] This is episode 269 of the Ecommerce Coffee Break podcast. Today I'm joined by Jatin Khosla, co founder and CEO at Konigle. com and we discuss how to make more money from your online store. So let's dive right into it. But before we get started, a big thank you to our sponsors for supporting today's episode.
Have you heard about PartnerHero? They're experts in support on the e commerce industry, known for their outstanding team building skills. Their main pillars, quality, people, and culture makes them a great fit for your company. Learn more on PartnerHero. com or click the link in the show notes. Are you feeling overwhelmed by marketing stress?
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This is the e commerce coffee break. A top rated Shopify growth [00:01:00] podcast dedicated to Shopify merchants and business owners looking to grow their online stores. Learn how to survive in the fast changing e commerce world. With your host Klaus Lauter and get marketing advice you can't find on Google.
to the show. Hello and welcome to another episode of the e commerce coffee break podcast. Today we want to talk about how you can make more money from your online store, specifically how you can be profitable. Now, a lot of stores make a lot of revenue, but when it comes to profitability, there are sometimes issues there.
So we want to dive a little bit deeper into that. And today I have Jatin Khosla with me. He's the co founder and CEO of konekle. com. Konekle is. Missions is to help anyone to participate in the internet economy profitably. So let's dive right into it and welcome them to the show. I judge on how you today.
I'm good. How
Jatin Khosla: about you?
Claus Lauter: I'm very well. Thank you. Profitability. That's something that people have sometimes problems with having that as a main focus as a main KPI, [00:02:00] specifically as e commerce makes it very easy to start a business. And then you need to keep an eye at the end of the day with all the spendings and everything you have to still be profitable.
Now you're working with a lot of businesses. What do you see are the biggest issues and problems when it comes to run a profitable business online? Transcribed
Jatin Khosla: I think the most important thing that we kind of forget is that a lot of people in the world have been made to believe that increasing sales is the paramount goal of a business, to the point that if you look at SEO data, people asking the question, how to increase sales versus how to increase profit is almost like seven times more.
So it's something that people have been made to believe that they need to focus on. We believe this C is not correct. So that's where this problem starts with. And since we work with like thousands of Shopify stores on our platform and we see that stores that really do well are the ones that are really particular about simple things, like for example, when I am [00:03:00] importing inventory into my Shopify store, I am making sure that I am converting the cost of the way bill in the proper currency conversion factors.
Because they want to be absolutely sure that their costs are perfect because if they are using cost plus pricing when they price their products, they're doing a good job. These are the best stores that consistently make great profits and obviously increase profits over time. These stores, the ones that do really well, also focus a lot on like how they are acquiring their customers.
They don't go on a get rich quick scheme of like, okay, let me run Facebook ads. It's like you write something and you are an example of it, right? Like you travel the world and you host the show. So what they do is they spend time to write genuine, authentic content, [00:04:00] where they tell how their product is going to be useful.
So then they get even more qualified people with a very low customer acquisition cost. And there are countless such examples that we see of the best stores, what they do. These are the best things that we see across like, and I can go on. There are a lot of examples that I have, but these are just two things that I kind of can share at the moment.
People have been made to believe that increasing sales is more important than looking at profits. And then they don't sweat the details. And typically some very senior COO at a big retail firm once told me that retail is detailed and that's where the margins are made.
Claus Lauter: I think that's a very good point.
And the saying retail is detail makes perfectly sense. I think where a lot of people struggle with is all the moving parts they have in their business. And it's about pace, as you said, and just getting the sales numbers up. I'm a big fan of the Pareto principle, the 80 20 rule. So focusing on the 20 percent that make 80 [00:05:00] percent of your revenue and so on and so forth.
So really diving deep into that. If somebody starts working with you or you work with customers, where's your starting point? Where do you get started to find out what really makes them profitable or where they lack the focus to make it profitable?
Jatin Khosla: You're right. There are a lot of moving parts in any business and you're right that the Pareto principle holds true.
So typically what we've realized by seeing so many e commerce businesses are good and bad and in between. That there are seven major things that any business should be focusing on. Those seven things are basically the, which give you the 80 percent of the impact. And the seven things are essentially, let's start from the least impactful to the most impactful.
So the least impactful. So number one is preventing dead stock. I cannot tell you how many people I have had these email conversations with that I bought stock. And I have not been able to sell and I have to do this fire sale to like kind of lose money. [00:06:00] And yes, dropshipping was in vogue for some time, but at the end of the day, I feel that businesses that are really doing something like real businesses have real inventory.
So preventing dead stock is like a huge challenge. And then people come in and like, say, Oh, you need to have a fancy inventory management system. You need to do inventory forecasting. But I feel more than anything else. I think one needs to have a very good count on like how much inventory do I have and at what rate it is selling.
That's about it. These are the two things that really matter. Again, on your 20 percent principle, right? These are the two things to focus on. Ability to reduce costs. And we are very big fans of automation. Like automate what you can. Reduce costs in terms of like unnecessary overheads that you may have.
That's a subscription that you are using, which you don't need. I think it's not used in like six months. Our examples of it. Ability to increase average order value, like being able to create bundles on your [00:07:00] website and being able to push that through. Reducing customer acquisition cost. I think this is one of the most underrated things.
Every website should be publishing content. Every business is a media business. And your content should be authentic right from I see so many times like somebody starts a website and then then they hire an agency to write to SEO for them or to write content for them. I think it has to come from the founder.
It has to come from the person who's doing this. It is so important. I can like kind of later tell you a bit more about how we acquire our customers. And that's like something which would be also helpful for others. Ability to focus on improving conversion. Now, improving conversion is first, I think people should get traffic and then focus on improving conversion.
But I see people going the other way. People first try to improve conversion and then try to like go for a website. And then they will be thinking of A B testing, then doing these things, which are like overall the two most important things that I see is [00:08:00] number one, ability to increase lifetime value. So we actually did a study on like millions of orders where we found that Less than 20 percent of stores actually get a second order from the customer base.
And basically for a store, less than 0. 4 percent of your customers will actually place a 10th order. And a store that gets a second order has their lifetime value almost four times of any other store. So, ability to increase your lifetime value is again super important. And one of the easiest tricks to do this is to have an automation where you offer a discount for your second order.
When somebody places a first order, I mean, this is like a no brainer, everybody should be doing this. And then there are other tactics where you kind of engage people, send them newsletters, like kind of keep them warm so that they come back and buy from you. But the most, most important factor that we've understood to improve your profitability is the ability to have pricing power.
Now, what does that mean? It means that you should be in a position to increase your [00:09:00] prices without losing out on a lot of sales. We in fact, see that 1 percent increase in your pricing for our stores as anywhere between 5 7 percent improvement in their profitability. And there has actually been a study by McKinsey as well, they did on public companies, which says that it has an 8 percent impact.
So it holds true ability to offer promotions, ability to do price skimming, ability to gradually discount your products if they're not selling well, it is the biggest lever that people have. And we see, and we find people focusing the least on it. And this is being recorded at the time of around Black Friday now in 2023.
And what we see is like everybody giving promotions without even seeing whether they're losing money on a product or not. It's like this point blank for everything has to be on sale. I think ability to develop this, like this pricing power in your business is the biggest lever to be able to make yourself profitable.
Claus Lauter: And now a quick break to thank the [00:10:00] sponsors of today's episode. As a prominent player in the e commerce support arena, Partner Hero specialize in delivering personalized customer experience solutions. With a clear focus on helping you not just meet but exceed your goals and requirements, they have become experts in e commerce support.
Their commitment to tailoring solutions to your unique needs ensures that your support experience is nothing short of exceptional. Partner Hero is more than a CX company. They are your partner in success. Visit their website and learn more on partnerhero. com Are you feeling overwhelmed by marketing stress?
Say goodbye to pressure and meet your new secret weapon, a remote marketing assistant. Easily scale up your business, boost productivity, and reclaim your time. The game changer? Get your own marketing wizard at half the cost. Visit smart ecommerce marketing. com and discover the magic. Check out the link in the show notes now.
Well, there was a whole master class in there and I think people have to listen twice to that because these seven levels that you just went through, there's so many golden nuggets in there. They're all true. I completely agree to them. Price thing. I think you're 100 percent spot on on that [00:11:00] one. I have seen that with coaching clients as well.
When I asked you, so how did you come up with the price and say, yeah, I was just looking up my competitors and it was like, why would you do that? So obviously you have to have a good product. If you have a cheap product sourced from wherever, then you might have problems. But if you have a good product there, most likely you can increase your price.
And obviously it was that have a better profit margin and do that in little steps. So I have done this with plenty of customers. And so just. Do it by 0. 50 or 1 and see if people still continue buying and they were surprised because people were and say, Oh, I didn't know that this price to work. So I mean, I think that's a very, very good point that you made there that the pricing there is a much higher flexibility there than just going downwards with discounts.
You can go upwards and people will still buy now. You offer a lot of apps and services on helping with increasing profitability. Where do you start with the clients? What's the first thing you look at and
Jatin Khosla: implement? Let's talk about like Shopify stores, because we also have integrations for other [00:12:00] platforms.
But purely from like, let's say, take an example of a Shopify store, and we focus, start from like pricing, and then we go down. And all the seven things that I told you, we've got like automations built into our Shopify app that can help with all those seven things, any Shopify store. So say, let's start with the example of increasing lifetime value.
So we have an automation which will automatically like create segments of customers who have not bought, remind them, place a second order. All of that is done by a click of a button. Step one, making sure that you do not sell at a loss. If your cost information is in place, so we make it easy for people to input the cost information to have proper currency conversions from their purchase orders to their selling price, we have automations.
Like, so for example, this is actually a real story. When we started our app, one of our early customers actually reached out to us. When we started, we initially had an app for people to be able to change prices in bulk, and then actually [00:13:00] run a promotion on Shopify and we would revert the prices. We have like very comprehensive filters and everything, but then this customer actually reached out to us saying that, Oh, I changed prices from your app, but I sold things at a loss and your price fluctuated from your app.
When we went back, we actually discovered this problem, which not a lot of people know of. Actually, when you sync dropshipping products from other platforms, your prices keep changing all the time. And a lot of these stores actually are selling at loss so many times and they only realize towards the end when they have next sold an item and it's already gone.
And that's when we build this, another automation where we made sure that your prices can be locked. So the only place you can change the prices is via our app. And if your prices are changed by some external source, we actually revert your prices back. And we ended up saving like thousands of dollars for a lot of merchants just by this.
I'm still so amazed that so many people just don't know about it. It's a big problem. We always see this. We [00:14:00] actually also did another study on this. And we realized that huge percentage, double digit percentage of stores actually suffered with this problem all the time. And then as you rightly said, right, like if a product is selling well, then you should be increasing your price rather than reducing your price.
So we have got an automation for this as well. We have a dynamic pricing automation. To your point, like somebody who wants to understand your competitors. So we have a competitor price monitoring feature. So we've tried to build in these automations that end up. I think it's a really great tool to kind of plug in and kind of help any Shopify store to be on top of their game with respects to improving their profit margin.
And what gives us the most pleasure is that out of seven out of 10 stores that come on board, eventually actually end up improving their margins when they use all these tools. That's what like kind of pushes us, that's what helps us keep building.
Claus Lauter: Quite right. The prices are changing all the time, depending on what kind of payment system or payment method they use.
They have a different percentage there, what you get to the payment [00:15:00] process and so on and so forth. When it comes to pricing, there are so many moving parts in there. And as I said, a lot of merchants completely lose track of that. So your apps help with that. How does the usual onboarding process look like?
Jatin Khosla: It's quite simple, like people just go to the app store or come to our website and install the app. So the first most common use case that we have from most of the people is like the ability to be able to run promotions because we've got like comprehensive filters. We actually also have an email software built in where people can actually reduce their price, schedule a price change, and then send out email and SMS to their segments, customer segments.
So we will be able to like inform them of their promotions. And while all of this is happening, we take care of everything in the backend. Like, Oh, if a product is already at a discount, we will not discount it further. All these small, small things that all add up to your margins eventually. And we make sure that at the right time, your products will work back to their original price.
So you're not selling at a discount forever. So that's the starting point. Then [00:16:00] gradually when you're using the app, you will be nuts to use our different other automations that can implementally improve your margins. Also, now what we're also seeing is, so if you go to pony. com, we publish a lot of content that we tell people about best practices, how they can like kind of do things.
So we see a lot of people coming in specific use cases. And then as they install the app and coming from there, so our app automatically kind of shows them that automation first that they're looking for. So it's, it's a very intuitive, like self onboarding flow. It's not very complicated actually.
Claus Lauter: Who's your perfect customer?
Are there any specific industries or verticals on Leash that you work more with than with others?
Jatin Khosla: We are in, uh, more than 35 different industries and in over 90 countries now. So it's quite spread out because these are like fundamental principles of commerce that we are targeting. So it's not like dependent on what you're selling.
It's essentially how you're selling and we [00:17:00] focus on the how rather than what. So yeah, it's like usually anybody could potentially use it, but we've got a lot of merchants in the fashion space. We've got a lot of merchants in a lot of a lot of industries. Fashion, fitness, like supplements. And because fashion is also big like ladies fashion shoes.
Basically anybody who cares about pricing, cares about profit margins, cares about improving lifetime value of the customers can use us.
Claus Lauter: Okay. That should be pretty much every business because these are the key principles of every business. As you mentioned. How does the pricing work? What's the
Jatin Khosla: pricing structure?
So for Shopify merchants, it's priced at like 19 a month for using our app, you get all our features. Like if you brought a certain tier in terms of using your emails and SMS, then we kind of reach out to you to kind of figure out like a good plan for you. But pretty much anybody and everybody of store of like any significant size can use a site at like 19 a month.
Claus Lauter: Okay, that's very straightforward. Before [00:18:00] we come to the end of our coffee break today, what's one final thought that you want to leave our listeners with?
Jatin Khosla: I would strongly urge everyone who's trying to do e commerce to think and ask the question, how do I increase my profit margins rather than how do I increase my sales?
I would like to reiterate the internet is a miracle. You can set up a store, sell stuff, write content, make money. And to make real money. You need to really focus on the fundamentals of selling fundamentals of commerce and always keep asking yourself, how do I increase my profit margins? It's not bad to increase profit margins.
Claus Lauter: Yeah. You can make very fast money on the interwebs, but you can also lose it very fast. I think that's if you do it wrong, where can people find out more about you
Jatin Khosla: guys? Yeah. So folks can come to our website, twanigal. com K U N I G L E. com and sign up and go to the Shopify app. I can install. Okay. You can find a lot of content on our [00:19:00] website on how to excel at commerce.
Like different tactics, what we are seeing from case studies, we publish a lot of content. So yeah, if you visit our website and spend like two minutes, it won't be a waste, even if you don't end up installing it.
Claus Lauter: Well, I will put the links in the show notes as always, then you just want to click away and I would.
Recommend all listeners to go to the website. There's really a lot of content. I've been there and you will be more than two minutes in that website. I can guarantee you that. Thank you, Justin, for your time today. I was really a pleasure to talk to you. And there's a lot of good golden nuggets in this interview.
Thanks so much for your time. Thank you. Thank you so much. Hey, Klaus here. Thanks for joining me on another episode of the E Commerce Coffee Break Podcast. Before you go, I'd like to ask two things from you. First, please help me with the algorithm so I can bring more impactful guests on the show. It will make it also easier for others to discover the podcast.
Simply like, comment, and subscribe in the app you're using to listen to the podcast and even better if you could leave a rating. Secondly, please take a moment to check out today's episode sponsors. They [00:20:00] play a crucial role in keeping the show and our newsletter available to you for free. Thanks again and I catch you in the next episode.
Have a good one. Before you leave, don't forget to visit the sponsor of today's episode. Are you feeling overwhelmed by marketing stress? Say goodbye to pressure and meet your new secret weapon, a remote marketing assistant. Easily scale up your business, boost productivity and reclaim your time. The game changer, get your own marketing wizard at half the cost.
Visit smart ecommerce marketing. com and discover the magic. Check out the link in the show notes now. Have you heard about PartnerHero? They're experts in support on the e commerce industry, known for their outstanding team building skills. Their main pillars, quality, people and culture makes them a great fit for your company.
Learn more on partnerhero. com or click the link in the show notes.
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