So, welcome to our e-commerce case study. We at ASK Academy seek to help
as many Jamaican business owners as possible. That's why we made this case
study of a real-life Jamaican business that we helped to sell their products
online and to scale their business.
So we're going to go through the problems
that they faced and the solutions that we implemented so you can have a
real-life walkthrough of our process and our behind the scenes.
So first, we'll go into the status quo of the business.
So, what their revenue is, what problems they have,
why they actually came to us. Then we'll go through the challenges where
we'll actually structure and define the problems that they're having in their business.
Then we will go through the solutions and strategies that we
implemented and then the results as well as the outlook of what should happen
next in the future for this business.
And if you stick till the end we'll actually
show you how you can scale your business too.
So, now we're going to go into the status quo of the business.
This will help you to know how to relate to this case study,
and of course, it possibly will not be a
one-to-one representation but you can pick and choose what is actually
relevant for your business.
So let's refer to the business from now on as Company X.
And company X sells
self-manufactured consumer products.
In terms of their business structure, it is owner operated.
So, the owner is involved in the daily operations of the business.
They've been in business for four years and they make on average a revenue of 1 million
Jamaican dollars per month.
They have two full-time staff members and in terms of
their sales channels:
They rely mainly on third-party retailers such as
Supermarkets, Fontanas, and other stores.
And they also sell through
craft shows and through social media.
In terms of their financial situation when
they came to us they thought they needed funding or capital to be able to finance
their business growth.
And their goal, when they came to us, is:
To grow their market share.
To grow their revenue and to grow their businesses profitability.
Remember, company X wants to achieve two major goals:
To increase their revenue and/or market share.
And number two:
To increase the overall profitability of the business.
And what you can see here, is a summary
of the problem analysis that we did.
Of course, we did a much deeper deep
dive that you can see here but we want to keep it as easy as possible for you
to understand what are the key main or main key factors that prevented
Company X from actually achieving their goals.
So what you can see here is that
we broke it down into the three major sales channels.
And into the two main KPIs
that we focused on after the analysis.
Meaning we focus on the
revenue share and the profit margin of each sales channel and then we have a
quick pro and con of each sales channel.
And then after all we will have a quick
summary to summarize what are the next steps we should do to actually
achieve the goals.
So we're going to talk about the first sales channel:
The third-party retailers.
Meaning: The Supermarket's The pharmacies etc.
We can see that the revenue share makes or
attributes with over eighty or 80%.
Is by far the biggest part of the revenue share of all
the sales channels.
And we can see that it comes with a profit margin of 15%.
So therefore what we can see is that especially at the beginning of
selling a product or starting a business it can makes sense to use that sales
channel because you can use an existing infrastructure to sell your products
through an existing retailer.
And you can use their existing marketing.
But on the other hand:
You kind of pay for that with a low profit-margin,
because we have that middleman
and no direct acces s to your customer.
There is that middleman between you and the end consumer
in that scenario Company X was kinda highly dependent on this sales channel,
because of the amount of the overall revenue,
the eighty percent, and
of course that low profit-margin.
So when we then have a look at the
second sales channel:
The craft shows, that was kinda positive because
even if they've only had 15% of the overall sales, they came with a
higher profit margin of 30%, because we don't have that
And every time Company X did that kind of craft show, they
had a really high sales volume, a really spike in sales, but because of the
nature of that particular sales channel,
because it was seasonal
after the craft show, the sales went down again and flatlined.
Therefore we had
these spikes of high sales, of high-volume and afterwards: crickets.
Then the third sales channel:
The direct to consumer or the e-commerce channel.
Meaning every time Company X sold something through their social media
presence or through their website.
At the time we started working with them that
only was 5% of their overall sales was direct to the consumer,
but it came with a nice profit margin of 60% in that case.
So, the overall sales channel had a really high
profit margin because you have directly access to the consumer you cut out the
middleman and is easy to scale.
But on the other hand it also comes with
a handful of problems and of downsides.
On the one hand it's always kind of
complicated to capture online payments as a Jamaican business
because of the current banking situation in Jamaica.
And when we talk about new media:
E-Commerce, online, digital in general,
that can, or is often perceived, as a complicated topic
for a lot of business owners,
for a lot of people.
And therefore they hesitate to invest time and money
in the initial set up that is necessary
to actually run an e-commerce sales channel.
So, overall summary:
What where the problems Company X
was facing that prevented them from achieving their goals?
So their high
dependency on third-party retailers with relatively low profit margins
and no direct access to consumers resulted in two things:
First of all, it kinda made it hard to scale.
And second of all: It resulted in a low overall profitability
of the business.
So now that you know the problems
Company X was facing,
now let's talk about the solution that we actually implemented
to reach the main goal.
Which was to:
Increase revenue and market share.
And of course, the overall profitability of the business.
And to get there, we agreed
to focus on one thing,
and that is to grow the revenue share
of the e-commerce sales channel.
Because as you just saw,
that by far has the highest profit margin.
But on the other hand the lowest revenue share,
therefore there's the most growth potential.
So what we did,
we basically implemented four simple steps
or four different categories that I'm going to explain really quick right now
and then we're going to dive into each step.
So first of all, what we did to
actually get awareness and
to get people to know the brand and the product
was that we run social media ads on Facebook and Instagram
to drive people to the new online shop
where we then showcased the product and offered
the people to place their order.
And then, in the next step, we focused on the payment part.
Meaning how to capture the payments up front before we then in the final
step actually produce and deliver the product
and everything around the fulfillment.
So let's talk about the details,
why actually did we choose to
run social media ads?
So first and foremost:
Of course, we get the most
reach with that media channel,
because let's face the truth:
Everybody is basically on social media.
No matter if it's Facebook, Instagram, YouTube, LinkedIn,
you name it.
But almost every business can find their ideal customer
on social media nowadays.
And therefore that gives you also great
opportunity to scale the business long term because here you basically can
reach every market worldwide.
And because we don't had that big of a
marketing budget, therefore we could not afford to waste
a lot of money with traditional media.
capabilities of Facebook and Instagram really helped us here
because we could really focus only on the people only on the customers that
are highly likely to buy the product.
And that also gave us
the option and the capability to actually track the results of the
Because we could immediately see,
all right what was the
return on the marketing campaign
on the budget that we actually spent on these ads.
And therefore overall it was a very or it is a very cost effective way
to get the attention, to get awareness to the product and that's why in the first
step we selected or we choose social media ads in the first step of that
new marketing and sales process.
And then in the second step we drove them to
an online shop that we set up basically from scratch so that people
first and foremost can see the product and can get information about the
product and then in the second step of course place their order.
And of course the big advantage here and with an online presence is that you
basically can sell 24/7 all the time you don't have to rely on opening hours of a
And of course we or Company X had the ambition from a long-term strategy
perspective to scale also into the international market therefore if you
have the ambition to sell internationally it definitely definitely
needs an online shop or a website to actually be scalable and enable people
from overseas to get the information about the product and actually place the order.
So that was one part so to actually enable people to a place order
online, but the second super important part here was more from an operational
perspective meaning it helped us to automate a lot of the processes that
were done manually.
Meaning bookkeeping, inventory, stock. All the nice
things that every business likes to do on a daily basis and of course yeah
things like shipping labels gonna be printed automatically, the receipts
are automatically sent to the customers and things of that nature.
So a lot of this
stuff that is done by an accountant or that is done manually right now could
be automated when we used an online shop.
And as a platform we used Shopify in that case.
Then next step, third step:
After someone actually or after the
customer actually placed their order,
now we come to the important part:
How does Company X actually capture the payments?
Because what we often see is that a lot of Jamaican businesses
really struggle with getting paid.
So capturing the payments was an
super important part we needed to focus on to actually optimize the
complete sales process.
So what we did to get a better cash flow was that we focus
really on capture the payments before we actually start the production or
start with the fulfillment to get that better cash flow.
And we definitely
had more you basically have different options to capture the
payments for example the most important part or the part that we always
recommend is to capture the payments online.
Meaning enable the customers to
directly pay with their credit cards or maybe with PayPal.
Or as a second option,
to wire the money in the bank account
because we know especially when it
comes to banks in the Jamaican market it can be kind of tricky to
enable online payments.
But that was the important part when it actually
comes to capturing the payments that you capture them upfront before you start
production and if possible to capture them online.
And that was what we were
able to implement in Company X case here.
And then in the last step, we talked about,
we focused about the actual fulfillment of the product.
So meaning, we got the order, we captured the payment, and now as the
last step we actually start talking about the supply chain management.
Meaning we need to make sure that when all these new orders coming in we
actually have the capacity and everything in place to handle all the
new orders and actually produce enough of the product
and ship it to the customer.
Therefore and we focused on the supply chain management,
we made sure that there is enough production capacity in the business
to fulfill all the incoming orders.
That the infrastructure of the
logistics part is set up,
meaning that the product can actually be shipped
or delivered to the customer directly.
And at the end of the day the most
important part here is that you build your own customer base.
Because now you have the name,
the address and the contact information of the customer and
compared to the channel before,
the third party sales channel where you sell
through maybe a supermarket or things of that nature.
And now you get all the
customer data, all the customer information and actually build your own
brand and build your own customer base.
So let's recap really quick what we did
to actually increase the revenue share of the e-commerce sales channel and to
increase the overall profitability of the business.
We set up social media marketing campaigns.
We run ads on Facebook and Instagram to actually drive people
or to make people aware of the product,
to make people aware of the brand,
to drive people then to an online shop that we set up to showcase
the product and to enable people to place their order 24/7 and
basically from everywhere in the world.
Then we focused on how to capture
To capture the payments online and upfront before we actually
start the production and the fulfillment process.
And just one important thing,
all this of course took ... was not done in a day...
all the implementing or to plan and implement the whole process
took around six months.
Just to give you a little idea
how much time you actually need to plan
when you want to set up and implement
a marketing campaign or a sales process
So now we're going to go through the actual results that Company X got.
So the first thing is that they now have a scalable and automated sales and
So remember in the previous stage where we went through the
marketing and sales process and made it an automated ecommerce process by
firstly having social media ads so that the target market could actually be
aware that the company one exists, and the products that they offer.
Then they would be able to go to the online shop.
And as the customer goes to the online
shop, they're able to actually choose between a variety of products that
Company X offers.
And then they're able to actually order it online,
then pay for it online and then receive their product delivered.
And so that as a result,
allows for scalability rather in these processes.
And then also in terms
of all the mundane tasks that were automated.
Such as bookkeeping, inventory
management, receipts, shipping labels...
All of these things that people had to do
before the staff members had to do.
And it took a lot of time and a lot of money
to invest in this section of these mundane tasks.
Now they are automated and
therefore the staff could actually focus on other aspects of the business.
And then in terms of the payments being captured o nline now, and being captured
upfront, this allowed for a better cash flow for the business.
And therefore as
well in terms of the initial ad spend for the social media ads that was invested,
we got an 807% return on adspend.
So now let's dive a
little bit into the numbers.
What does ROAS actually mean and how do all
these results actually reflect in hard numbers, in hard business results?
So what you can see here is on the one hand
a comparison: the e-commerce sales channel and on the other hand the
To give you a comparison of these two main channels.
So when we talk about "Return On AdSpend" or about ROAS,
what we mean by that is,
in that example we take Company X,
for every $100 that we spend on ads,
that we spent on ads on Facebook and Instagram in that case,
we made $800 back
in revenue, in sales, in products sold.
So we kind of simplify the
numbers a little bit here, to make it easier to understand.
So again, of every $100 spent on an advertising campaign
we made $800 in revenue back.
And then remember we have that 60% profit margin
because we don't have a middleman.
And that means we have a profit of
$480 at the end of the day for every $100 spent in ads.
So we can say we have 480% ROI meaning return on
investment and the investment in that case would be the $100 in the marketing,
in the ad campaign.
And now when we compare that to the third-party retailer,
of course it's kind of apple to orange comparison here because we can't
really track the return on adspend.
Because we don't really have the tracking measures.
But assuming we would run a campaign on Facebook, Instagram, TV
whatever it would be to make people aware of the brand and the product and
then hope that they go into a supermarket, pharmacy, or into a store and
buy it there.
Assuming we would have the same return on adspend, the same
performance of the campaigns, even if we can't track it, then we have the
difference now in the profit margin.
Because we have that middleman the
supermarket between Company X and the end consumer and therefore we only have
the 15% profit margin which results in that case $120 in profit.
Meaning when we set that in relation to the $100
that we invested initially in that ad campaign then we have an return
on investment of 120% in that case and if we
compare that to each other we see that the e-commerce channel outperforms the
third-party retailers by far.
Just if we have a look at the numbers, the ecommerce
profit is like three times higher than the profit
from everything that Company X sold
through supermarkets pharmacies you name it.
So now we're going to go into the outlook of Company X.
So the first thing is that they now have a scalable
and profitable sales channel in
this ecommerce sales process.
This allows them to have more capital to actually
invest in their business growth.
Exactly, and that means now they have actually
everything in place.
Meaning, on the one hand, the infrastructure,
meaning the sales channel.
And on the other hand the capital, to actually grow their market share,
which was one of the initial goals.
And of course with the website with the
online shop they also now have the option to,
if they want,
start selling internationally.
And at the end of the day, maybe the most important part is
that they now are able to build their own customer base and actually have
direct access to the consumer.
Built their own brand and not for someone else
and are actually able to grow their business long term
from a strategic perspective.