Shopify 101 Part 7 (Final)

Opossum back with the seventh and final part of the Shopify 101 series. If you missed the first, second, third, fourth, fifth, or sixth part, check those out first.

If you want to dive further into each category in this series, Shopify has great resources to help you learn everything. Much better than most platforms.

Subscriptions

If you have a product that can be a subscription, you should 100% focus on this. Focus on getting people into a habit using your product however you can.

This is the ultimate customer retention strategy.

If you can figure out how to do this correctly through your email flows and incentives, you’ll drastically increase your lifetime value. This isn’t just about increasing the lifetime value of your customer. It’s a strategy that can lead to a lot of growth.

1. The more you can retain your customers, the greater the lifetime value.

2. The greater your lifetime value of your customer, the more you can spend on new customer acquisition.

3. The more you can spend on new customer acquisition, the bigger you’ll grow.

4. The bigger you grow, the more profit you’ll have.

5. Go back to #3

This is the cycle that customer retention enables and subscriptions enables a higher customer retention rate.

Starting out, you’re likely going to want to use Appstle as your subscription app just based on cost and functionality.

Loyalty

I may get some hate for this opinion but I don’t care. Do not worry about building a loyalty program until you’re much bigger.

Yes. It’ll help you retain customers which will help you grow much faster. BUT it’s not worth it until you’re bigger. If you’re doing less than $100k a month, you have bigger fish to fry like getting eyeballs on your product and building your infrastructure for growth.

Think about how many stores you shop at per year. Now think about how many loyalty programs you’re *actively* involved in. Now remove travel like hotels & airlines. I’m guessing it’s less than 5% of the stores you purchase in.

I’m not saying it’s not worth it for a business. I’m saying it’s not worth it for a business that’s your size, yet. If you execute a loyalty program decently, it’s going to increase your revenue by a few percentage points. Huge when you’re selling $100M a year. Miniscule when you’re selling $10k a month.

When you do ultimately implement a loyalty program, I have one piece of advice for you. Stay away from loyalty apps that charge based off of number of orders or transaction fees. Paying 1%-2% of your revenue to have a loyalty program is absolutely asinine. Stick with a cheaper solution that charges a flat monthly fee like Joy or Appstle.

Taxes

Anybody that has been in ecommerce from 2018 to now hates talking about this.

Ecommerce used to be fun. You could sell all over the country and never had to worry about sales tax unless you had a physical location in the state…until South Dakota v. Wayfair, Inc.

Long story short, you have to pay state taxes everywhere you sell *once you hit nexus*. Stealing from Stripe below.

Sales tax nexus is a term used to describe the connection between a business and state or local government that triggers the requirement to collect and remit sales tax. It is the minimum threshold of activity that a business must have in a state before it is obligated to collect and remit sales tax in that state.

So what do you have to do to hit tax nexus in a state and when do you have to file?

It depends on the state… All 50 states have different nexus limits, filing requirements, filing timelines, etc.

50 state registrations, 50 filing timelines (monthly, quarterly, or yearly), 50 rules to monitor, etc.

It’s a nightmare.

Shopify helps a little bit but you’re going to need a 3rd party service once you get big enough that you start hitting nexus in multiple states. Lets go through a few things here.

Economic Nexus

First if you have a physical location in the state, you have nexus and have to pay sales tax in that state. This includes your DC, a physical store, and where you’re HQ’d. Next is where it gets complicated.

Every state has their own rules for when you hit nexus. It’s generally something like this.

• $100,000 in sales in a year. Easy enough. You could get to a few million in revenue before you have to worry about this problem.

• OR 200 transaction in a year.

That OR is a problem. Some states use AND. Some states don’t have a transaction limit, only a sales limit. They’re all different. Which creates 50 different issues.

You’re guaranteed to start hitting nexus in some states by the time you get to $50k a month though.

Registration & Timelines

So when exactly do you need to register and file with each state? NO ONE KNOWS! It’s a mystery because 50 different bureaucracies love to keep you guessing.

I’m kind of joking. Some states are clear in their requirements and some states aren’t. But you know…there’s 50 of them so not easy to keep up.

Once you actually hit nexus, you have to go register with the state individually. One by one. With 50 different logins. With 50 different times you have to file. Some monthly, some quarterly, etc.

How Shopify Helps

Barely.

To be fair, it’s not really their job. What they actually do is keep track of your sales and the nexus rules and tell you when you’re about to hit nexus.

If you go to Settings → Taxes and Duties, you can see everything laid out. It’s actually pretty nifty and if they didn’t do this, most ecom owners would be uncompliant on accident.

Once Shopify tells you you’re close to hitting Nexus, that’s when you better figure out a solution because you’re going to have to start collecting and paying sales tax soon.

Getting a 3rd Party Service

“Opossum. What’s the best 3rd party service to use?”

Don’t know. They all have their downsides. Could be cost, could be the work that you have to do, could be the ambiguity of it all. I’ll give you two pieces of advice.

1. Go talk to an accountant that has some experience here.

2. Here’s your options and I’m not advising one way or another because I’m not advising you on tax issues.

   1. TaxJar

   2. Avalara

   3. Accountant. I’m repeating it for a reason. Go at least talk with one.

   4. Numeral

Miscellaneous

There’s a bunch of stuff that doesn’t fit nicely into the rest of the guide, along with other questions that I received that I think are important to touch on. I’ll briefly go through them here to wrap up this series.

Sitemaps

Your sitemaps are going to be located at this location.

https://yourdomain.com/sitemap.xml

Which will then lead to your secondary sitemaps.

https://yourdomain.com/sitemap_products_1.xml?from=some-unique-number&to=some-other- unique-number

https://yourdomain.com/sitemap_pages_1.xml

https://yourdomain.com/sitemap_collections_1.xml

https://yourdomain.com/sitemap_blogs_1.xml

You could then have more sitemaps because you probably have multiple blog URLs.

GTIN

If you manufactured your own product, register for a GTIN immediately.

A Global Trade Item Number is the Social Security number of your product. A unique identifier that is encoded in the barcode for scanning and other purposes.

Want to get into retail and don’t have one? Not happening.

Want to have any shot at ranking on Google shopping? Not happening.

Want to send your product to Amazon for FBA? Well. You can do this but they’re going to charge you to place labels on each and every one of your products since you don’t have a barcode on your product.

Go to that link above and pay the roughly $100 a product to register your product.

Any way to stop all the people who find my contact form and spam me offering their SEO services?

Nope. You still want your customers to be able to contact you right? If you have access to the backend service of a website, you can stop this. Unfortunately and fortunately, Shopify doesn’t give you access to this. This is generally one of the benefits of the platform to not have to worry about the backend processes.

On Shopify, there’s only a few things you can do if you have this problem.

1. Remove your contact form and replace it with a sentence saying “contact us at customer-support “at” yourdomain.com”. This will stop some of the automated bots that are leaving you messages. Don’t recommend this as a lot of your customers are too stupid to actually put the email together and email you appropriately. They’ll then go on and leave you bad reviews because you never answered them when they emailed the wrong address.

2. Have your VA filter all of your emails and delete them if they’re getting that bad.

3. Create a filter in your mailbox filtering out common words like “SEO”, “Marketing Service”, “Dear Sir”, etc. and check on this filter once every few days.

4. Deal with it.

Materials Inventory

If you’re one of the select people that make your own items, here’s an app that will save you a lot of time. You line up your raw material in your inventory with how much of it is needed to make a finished item.

As you push through sales, it’ll help you not run out of raw material to make your product.

Setting Up Canonical Tags for Products in Multiple Collections

One reader said this was a huge issue. It’s not. Shopify does this for you. It would be insane if somehow Shopify didn’t think to do this.

Use Link Direct Trace or a ton of different extensions to see that the canonical tag is already placed.

App for processing actual exchanges in a touch free way as opposed to manual workarounds in Shopify?

First, you shouldn’t automate this process until you’re getting a lot of returns. Not because you shouldn’t save yourself time, but because you need the experience dealing with customer issues to dial in your processes and product.

That being said, if you’re selling clothing or similar products, you’re going to have a lot of returns. If you’re selling supplements, comparatively, you’ll have a lot less.

Search “exchange” on Shopify apps and pick the best app that fits your budget, aesthetic style, and needs out of the top ten results.

Can I use Shopify for my blog and add affiliates to the site?

You can. I don’t know why you would though. You’re generally going to make more money trying to sell your own product vs someone else’s.

In the off chance that that’s not the case or you can’t make the product, sure. Another option is to go the Shopify Collective route and sell other stores’ products on your site.

What are the bare minimum requirements financially to get started?

There's no blanket answer here. Are you selling cars or $0.50 erasers? Do you want to grow slow or fast? Organic or paid ads? How good are you at social media?

I’ve seen some do it and be successful with $10k and I’ve seen people that need $100k to get it right and get off the ground.

Note that $10k is very low and they only succeeded because they already had an audience. They would have grown much faster if they would have started with $50k or more.

How To Find Suppliers?

• Thomasnet.com

• Alibaba.com

• Google.com

• ImportYeti.com

• Data-axle.com

• Junglescout.com

• Go to Walmart or order your competitors’ products online and see if you can track it down from their packaging.

Then start dialing and emailing. Over and over and over again.

Recommended Stack to Start?

Really going to be dependent on your needs but there’s not a lot that you need to start. Recommended stack would be:

• Good (paid) theme. You can test most paid themes for free to see if it has the functionality that you need.

• 1 bank account. You don’t need to add PayPal, Amazon Pay, etc. Just start with a simple checkout.

• Klaviyo or an email sender. You can skip this in the very beginning. Once you start getting traction, this is going to be a must.

• Appstle or another subscription app if your product can be a subscription.

• Shop Channel app. I suspect that the Shop Channel is going to be more and more important over time.

• Shopify Email app. Used for your transactional emails.

• Judge.Me product reviews app or another good product review app.

• Google & YouTube app. Easy GA4 implementation and easy way to replicate your products to Google Merchant Center and Google Ads.

• Minimal pages to start.

  • Privacy Policy, Refund Policy, Shipping Policy, Terms of Service

  • About

  • Contact

• Some graphic design skills or a cheap overseas graphic designer.

• Printer, boxes, bubble wrap or paper, packaging slip sleeves.

• Capital and/or marketing chops for advertising.

Wrapping Up

This wraps up the Shopify series. While it was fun, I hope I never have to write a 7 part series ever again.

---

If you’re subscribed to this newsletter, you need to keep in mind why we’re here.

Your boss and company, no matter how nice, doesn’t care about your future. Nobody outside of a few family members and select friends care about your growth and your future.

You are the only one that can save yourself and make your life what you want it.

Single player. Just you.

This Substack is here to help you build a business and build the life that you want. I’ve laid out the basics to understand, analyze, & grow most any online business.

The best way to learn how to do this as fast as possible is to start from the beginning of the Substack. That and follow me on Twitter & Instagram.

---

Disclaimer: Nothing written here should be construed as legal for financial advice of any kind. These are opinions and observations, written by an anonymous cartoon Opossum, built up over years working in e-commerce & affiliate marketing.