how much profit does shopify take

so how profitable is an automated,shopify store really look in today's,video we're going to be going over the,mechanics of how ecommerce works and how,profitable shopify stores can really be,for clients and investors okay so first,things first let's go over the mechanics,of how you know ecommerce works how does,online money work so let's take an,example with amazon because most people,shop there a lot of people shop there,but they're always looking for cheap,products just to get them quickly right,it's a different type of persona and a,different type of customer journey than,going to amazon but if you go to amazon,typically you're buying you know,toasters things like that you're looking,for a cheap product and you're trying to,get it as fast as possible because you,probably need it now okay so with amazon,people that sell on that platform that,are doing drop shipping typically find,that same toaster on walmart and then,just have arbitrage between it meaning,if they sell it on amazon for 25 bucks,and they found it for 15 they're making,10 in gross profit now amazon does take,15 off the top of all sales so after,that fee then you're left with your net,profit okay as long as you got the,products of the customer you're,typically left with about anywhere,between five to ten percent net profit,with an amazon store now the game with,amazon is to continuously drive up more,and more sales because amazon's taking,care of the traffic for you so you're,just ranking and hoping to list better,in the platform so that way you can get,more sales when people buy them okay,with shopify it's a completely different,mechanic because you're not depending on,someone else to drive you traffic okay,you as a shopify store business owner,have to drive your own traffic now in,order to get attention on these apps,like facebook instagram tick tock,youtube you have to create custom,content,and that content has to be good enough,in order to capture their attention get,them to stop what they're doing and then,actually go buy the product that you're,selling right and so with shopify the,mechanics really are first you have to,build out the store and create a brand,okay that's the most important part,because you can't be an amazon business,or a catalog business similar to how,amazon stores run because they're just,going to go to amazon for those products,right you want to build a niche branded,store that is in a specific industry in,a specific vertical that you can create,custom content around so that's number,one number two is when you're running,campaigns when you're running ads on,facebook tick tock instagram etc those,have to be actively managed i always,compare it to a hedge fund actively,managed hedge funds are very very,similar to how media buyers typically,are with ad accounts just how you have,to study the markets move money around,and see how things are actually,performing to then give your investors,the best returns that's exactly what,media buyers do they have to monitor the,campaign they have to cut the losers,they have to scale the winners in order,to make that store or order to make that,shopify store very profitable okay and,so to the extent that you have custom,content to the extent that you have,operating capital and to the extent that,you have a great media buying team,that's working for you that will,showcase and really indicate how,successful your shopify store is going,to be right you can't just throw up an,ad click go and just let it sit and hope,that it scales out and that it wins,right there's ad fatigue there's you,know adjustments into the platforms,there's different formats that are,needed when you find something that's,working you want to double down and,reiterate and create more creatives,around what's actually working so those,are some of the mechanics just on the,marketing side of shopify you also have,the operational side which is the order,fulfillment the tracking and having,other mechanisms in place with email and,sms to update your customer see amazon,takes care of all that you're able to,you know have amazon send out the,customer service emails you're having,have amazon take over you know the,fulfillment emails and the orders that,are actually going out with shopify you,kind of have to build that out it's a,little bit more plug and play with all,the different apps and so there are,software expenses that go into shopify,plus having all these apps installed in,order to make that customer experience,really really solid that's really really,important because when you go to any of,these shopify stores that you're buying,products from you want to make sure they,have a great experience you want to be,able to have that traffic come back to,you and repeat by all the time and the,way that that works is by providing a,great experience from the get and so if,your store doesn't have the right,infrastructure if it doesn't have the,right things in place then it's going to,be a janky store and people are going to,be able to sniff that out remember these,purchases are actually people people,that are looking at your store to see if,they're legitimate or not and you know,people are going to spend their hard,earned money with you so making sure,that your store looks legitimate is,legitimate i should say and actually has,that thought and care put into it for,their experience is very very important,so those are some of the additional,things you got to think about when,having a shopify store versus an amazon,store now the profitability really comes,down to how efficient is the marketing,campaign and how much can you actually,drive the value of your products up so,let's take the same example with amazon,if i'm selling a toaster i can only,really sell that thing for so much i'm,not going to sell a 500 toaster unless,it was signed by the original guy that,made toasters or something right there's,no rarity factor or no value that can be,perceived in a toaster really at the end,of the day so i can only probably sell,that product for 20 25 maybe 30,right but if i go look at shopify i'm,not going to be selling a toaster number,one i'm going to be selling a product,that i can actually drive perceived,value up in so what may i sell i may,sell glasses i may sell a fishing,product i may sell camping products home,goods i may sell you know other products,that are anywhere between that forty,dollar price point all the way up to,four hundred 400,and the reason for that is so i can have,enough profit margin to pay for ads from,facebook tick tock etc right you have to,be able to dial in a cost per,acquisition cost in your product so a,lot of products that you buy now,whether it be from you know nike,lululemon or any one of these big brands,they factor in their cost per,acquisition right now those are massive,brands they've been around for a very,very long time and so their cost for,acquisition is relatively low but they,also spend billions of dollars per year,on marketing with top celebrities and,things like that right but if you are,building a brand and you're scaling it,up,you have to,reinvest into content figure out how,much it's going to cost you in your,store to have a person transact with you,and that really comes down again to the,marketing the content and the experience,and the brand that you are creating that,you're providing for your store for your,clients so now that we understand the,operations a bit deeper with shopify,compared to amazon and even other,marketplace selling what does the,profitability typically look like so now,that you understand the mechanics of how,e-commerce works let's go over the,profitability for about fifty thousand,dollars in sales with amazon you're,going to get docked about 15 because,that's amazon's feed then you have your,cost of goods sold and you're typically,left with about five to ten percent,profit margins on that fifty thousand,dollars in sales that's what i,experienced it's typically the average,with people with amazon and so,getting 50 grand in revenue and only,generating about two grand in profit,isn't probably the best model it is,decent for cash flow but for me,personally i want to have a little bit,higher cash flow uh and a little bit,less capital exposure so for that i go,to shopify and with the shopify store if,you do about 50 grand in revenue you're,looking at about a 20,margin because i only got to spend maybe,15 20 grand on ads to generate 50 000,revenue then the product costs are,probably gonna cost around 20 to 25,grand on that so i'll make five to ten,thousand dollars just on 50 grand in,revenue and the cool thing about that is,now that i have that customer they can,repeat purchase for me over and over and,over so let's say i even just broke even,on the front end and i made zero on the,first transaction with that customer if,they buy from me 30 days later if i paid,50 to get that customer for example and,i broke even i made zero money but they,bought for me again and i made 20 bucks,on the next product well i spent 50,bucks to get 20 bucks in net profit and,so that's the beauty of working with,shopify because you have more leverage,because amazon you have to depend on new,purchases every single time where,shopify you get new purchases and you,get profitable new purchases and then,you get profitable upsells and repeat,purchases from them over and over and,over and so that's why all the,mechanisms that go into building a,shopify store are more important because,there's just more leverage and more,profitability in running a shopify store,than an amazon store so i hope that,provides a lot of value in understanding,how profitable a shopify store is,compared to other models out there and,look we build out shopify stores for our,clients all the time we get them up to,kpis and we scale them using facebook,tick tock instagram ads and all that,stuff we do a completely hands-free for,our clients so if you want to learn more,about that link's going to be in the,description and we're just looking for,great people to work with in order to be,able to scale out our shopify portfolio,so with that being said have a great one,guys be great i'll see the next video,you

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