Discounts are the biggest line item on your P&L that nobody approved. Kurt and Paul answer the discount questions merchants keep asking, then lay out the Black Friday plan.
Discounts are the biggest line item on your P&L that nobody approved. Kurt and Paul answer the questions merchants keep asking, then lay out the Black Friday plan.
Part one is a mailbag pulled from r/ecommerce, r/shopify, and the Shopify Community: the Combines With checkbox that wiped the profit on 60 orders before lunch, influencer codes showing up on Honey, welcome codes reused by new Gmail accounts, and the eternal free-shipping-or-20%-off question. Part two is what to fix in September, and what three consecutive Black Fridays of gift-with-purchase data say about thresholds, gift size, and who actually takes the gift.
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Hosts: Kurt Elster and Paul Reda, co-owners of Ethercycle, a Shopify-exclusive agency, and makers of Promo Party, a gift-with-purchase app.
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The Unofficial Shopify Podcast is hosted by Kurt Elster and explores the stories behind successful Shopify stores. Get actionable insights, practical strategies, and proven tactics from entrepreneurs who've built thriving ecommerce businesses.
Paul • 00:00.001
This episode is brought to you in part by Swym. Here's the thing about wishlist apps. Most of them just sit there. A customer saves a product, and then nothing happens. Swym actually activates that data. When someone wish lists a product, you could trigger price drop or back-in-stock alerts and feed that intent directly into Klaviyo or your CRM. You're not guessing what people want because they've told you. Plus, customers can share wish lists for gifts, and your team can view them to offer personalized service online or in-store. And unlike card abandonment, wishlist data is permission-based. These are people raising their hands saying, hey, I want this. Just not right now. Swym 's been around for over a decade. It powers 45 ,000 stores and installs in about five minutes You can try it for free today at getswim. com slash Kurt. That's G-E-T -S-W-Y -M. com slash Kurt. Alright, so back uh in August on this show, we discussed, we did an uh a report on AI in which we discovered chat GPT referrals to Stores were like 0. 1%. Since then I've
Paul • 01:27.400
other than to one of our clients, apparently, as we just learned.
Paul • 01:30.200
I did I would like to issue one exception. There are What I'm learning is certain verticals do better. And there's two I found. If it's like real tech, you're looking for parts, car parts, boat parts, computer parts, then there's a a better chance. That it it does the recommendation in which the person's like, I need to find this part. And if you'd happen to be the guy who has the part number in like the title Then it'll turn around the chat GPT will turn around and be like, I found the part, here you go, you can buy it here. And then the person lands on the product page, buys it, and that's the end of it. Great. You know, so there we did find one and that it was three percent of store revenue was ChatGPT. And the other one I had some listeners email, which of cour I'm always thrilled when, you know, people reply to my newsletters or DM me. Uh I two people were like, hey, I'm seeing more than that. You know, well like getting a few percent, like 10,000 a month, through Chat GPT. Both of them sold sheets, like bed sheets. That's what's that's weird.
Paul • 02:30.320
That's very weird to me.
Paul • 02:31.920
I you know, I bet she uh linens are exp are they're expensive. They seem like they cost more than they should to me. And I don't want to buy bad ones.
Paul • 02:40.520
Well, th that's true, but they're also like kind of a commodity good. Like once we establish, like, you know, material and thread count. Who cares what the rest of it is?
Paul • 02:51.000
I just uh I guess in that category there's enough people who just want the robot to tell them which one to buy.
Paul • 02:57.400
I would like to know what the source of that knowledge is. Like where did it get like the good bed sheet? Data.
Paul • 03:08.540
That we could do an entire episode and try to figure that one out.
Paul • 03:11.500
Like, Kurt, you have some thoughts on Trying to feed data to AI agents? Tell me how that's going.
Paul • 03:19.720
Okay. I really I want uh even though that like we did a whole episode in the which we're like, hey, there's nothing really here yet. I don't I don't think that's gonna be the case forever. I think like it is inevitable that you know ChatGPT, Google Gemini, etc. It's just another search engine. So this is to me, this is just an SEO task. I can optimize for an AI chatbot. That's an SEO task. Shopify gives us the tools for it and they keep evolving the tools. But there's one tool, one feature that I've set up two weeks ago, this thing straight up doesn't work to the point where and You know, I've complained about it. I'm like , you've kept a running tail.
Paul • 03:54.820
Like every two days you're kind of like, still doesn't work, still doesn't do anything.
Paul • 03:58.820
So what you could this is the idea. Yeah uh chat GPT, hey find me this bed sheet, it queries Shopify directly. It can do that. Uh through it could ask qu Shopify catalog directly, and then Shopify catalog returns, hey, here's the product listing. You know, title price, photos, description. In your agentic dashboard in Shopify under sales channel, under your the agentic sales channel in Shopify. On the right rail, there's a little card that you could click on and it'll pop open a window that says, hey, did you want to remap title description? And I think there was something else. There's like three fields. It's title description. I forgot what the third one was. you can remap that to a meta field, which means instead of the ChatGPT getting only for the bots. Only the robots see it. Yeah, okay. It does not appear on the front end of the website. It is purely robot ass shopify catalog directly. Hey, I got a question, you know, about this product. Or like, hey, I need to see these products. And then it returns here's 10 with the info. Normally it's just gonna give like whatever the title and description in the store is, that's what it's giving back. this feature called uh catalog mapping sh uh lets me just have an arbitrary one instead. I was like, oh man. 'Cause there's all like, you know, we'll have a product like Harney and Sons T. We have all these meta fields that are like, here's the brew time for the tea, here's the ideal temp time for the tea. It's not in the description and because ChatGPT is never isn't necessarily visiting the webpage, it's not gonna see it. So my solution was, hey, I can write all that stuff into a meta field and make like a a very info-dense description meant for a robot to read. Like it doesn't care about my prose and tone of voice, just give it the facts. Great, amazing optimization idea. Thank you shop for the tools. The problem is I cannot actually verify it works. Well, I could I could verify it does not work. It does not do anything. It is straight up like appears to be a placebo no op feature.
Paul • 05:57.860
So the so the bots are not reading the special bot feed. They're reading the standard Shopify feed?
Paul • 06:04.020
No, not even that. Okay. They are using the special bot feed. Or at least I can query the special bot feed myself and see that it never uses my custom mapping ever.
Paul • 06:13.660
Oh wow. Okay. So you're like you're you're full on checking the actual feed.
Paul • 06:18.380
Oh yeah, hell yeah, check my work.
Paul • 06:19.860
Like the J like it's like a JSON or an XML feed or or I don't know if you know what it is.
Paul • 06:24.580
I would assume it you know, actually I don't, but I I'm just making a CLI query.
Paul • 06:28.980
Yeah.
Paul • 06:29.460
And then it comes back, you know, with the answer, and I can see that it is byte identical. It never changes from before I made this change.
Paul • 06:35.460
And you went on the back end and changed it and it it's different on the back end, filled out differently, and then when you go Check the command line to see it spit doesn't spit it out.
Paul • 06:44.000
Yeah. So I go, alright, I got an idea. I'm gonna I'll just do it in a different store. Maybe I missed something. Same thing. So now I got two stores with this implemented. It has now been f 13 and 14 days respectively. Zero changes. So I'm like, what the heck is going on here? And you know, Shop Fight of their credit, I had two separate executives, you know, one reply to me on Twitter and one DM me, and they're like, hey, you know, we'll look into this for you. Sorry. You know, they're prompt about it, but it's still it never actually got fixed. So like that makes me suspect like there there is some bigger issue here that we don't know about. Or, you know, it's just not being prioritized. But I had a guy DM me, he goes, hey, I submitted a tick and he had his ticket ID. He's like, I found this exact problem three months ago. Three months ago. And he's like, they never fixed it. That's unus it that is so unusual for Shopify.
Kurt • 07:34.100
Yeah, that that is.
Paul • 07:34.900
It's like that's why I'm like, hey, there's something there's something prov there's a blocking issue preventing this and we don't know what it is. I'm willing to give them the benefit of the doubt.
Kurt • 07:43.460
Yeah, my thought is is just, you know. There was an internal push to make sure that that
Paul • 07:49.840
appeared. Did it that get done? Oh look, I see it on there, it's done. I'll quit being a pain in the ass to you about it. And they never checked or cared. about hooking it up on the back end. It was someone someone was demanding that and then it was just kind of like, okay, yeah, sure.
Paul • 08:06.820
Well even like getting to it, it's not the easiest. It's not obvious where this lives.
Paul • 08:11.940
It's weird that they made it client facing but didn't actually implement it on the back end.
Paul • 08:18.060
Yeah, that would be a little bit more.
Paul • 08:18.700
That's like the backwards way of doing things.
Paul • 08:21.020
That's how it appears, but I don't know. I'm sure there's a reason. We just don't know what it is. Um, it's just unusual. And I was disappointed because I was like, wow, because I mean so much of this this AI optimization work is people just making stuff up. A lot of it is just like it's it's the new fake work.
Paul • 08:39.400
It's the new SEO. Yes. It's all the bullshit SEO agencies were making up 15 years ago. Oh, it's so important. You gotta do this so important.
Paul • 08:45.940
Yeah.
Paul • 08:46.340
Yeah.
Paul • 08:46.740
And I you know it's like, wow, I found something like this is bleeding edge. This would actually work. You know, like this has potential to make more sales. And I can't get it to work. It's so frustrating.
Kurt • 08:58.260
But only if you're selling sheets.
Paul • 08:59.779
Only if I'm selling bed sheets and OE parts. Oh my gosh, quick addendum here after we went and and talked through trying to get this agentic mapping feature to work that I was very excited about on day 19, day 18 or 19. It finally updated. So there is a delay. In the help docs, it notes that there's a delay. It just doesn't tell you how long. And so for me in this instance, it was about two and a half weeks. And so I'm going to try it. on some new stores, see how long it takes to update, and keep track of whether or not this has an impact on referrals or purchases from LLMs like ChatGPT. So I just wanted to include that, you know Shopify's off the hook here. It does work. But all right, you know, I did not, God help me, I did not want to talk about AI again. No, I
Paul • 09:47.640
I'm sick of it. I want to blow my brains out hearing you talk about it.
Paul • 09:50.840
The AI hype machine makes me crazy. Uh so I wanted to go you you know in August.
Paul • 09:56.760
So we're talking about discounts. Yes. Q4, baby. Q four? You're thinking about Black Friday right now. If you're not Just like AI, if you're not thinking about Black Friday right now, you're gonna get left behind. Oh, you're gonna be left behind. You're gonna be left behind. You're gonna
Paul • 10:07.020
you're not gonna make it.
Paul • 10:07.660
You' gonna make it. You're gonna be out of business by December first if you don't think about it right now and get it done right now. I would stick in every moving boxes now. Yeah, right. I mean yeah Do do the going out of business sale now. Uh so Everyone's gonna be doing discounts. Everyone's gonna be figuring out how to optimize their sales for the next couple months. This is our busy season. We are gonna absolutely be banging for it has been busy. Yeah, it's it's already been busy, but I mean historically September first to December first, we're just like got our hair on fire. We're like, ha ha. Um and then after December 1st, no one calls us ever again. Which sucks. But it's kinda also kind of good. We just kind of take December off mostly.
Paul • 10:48.180
And they come back in January.
Paul • 10:49.380
I know they do come back in January. January. But yeah, so everyone's losing it, so we're gonna give you all of our thoughts. We got some questions that people were asking. We're just talking discounts.
Paul • 10:58.640
Uh alright, so I want to open with or break this into two parts. Part one, mailbag. I found some threads on the internet. People on the c people on that internet ask a lot of questions and they got a lot of opinions. But uh our first one and he posted, I lost two thousand dollars in margin this morning, the combines with checkbox is a UX nightmare. I alright. This is a common problem. It has solutions. Also, I don't I just don't think it's a UX knight. I think.
Kurt • 11:30.339
I mean there's a checkbox.
Paul • 11:31.540
Yeah. And it does what it says.
Kurt • 11:33.300
Don't click it.
Paul • 11:34.339
If you don't want things to combine. So what this guy
Paul • 11:36.500
does default to not check.
Paul • 11:38.899
Does it default to not check? Yes. Alright, so this dude made like fifty different codes.
Paul • 11:44.980
Yeah, and they weren't one time use. And they weren't one time use.
Paul • 11:47.460
Dynamic.
Paul • 11:48.100
Or not dynamic.
Paul • 11:48.900
And he clicked like combines with on a bunch of them. And so people got free shipping and 20% off. And if they bought a bundle, they got a discount that he had a script set up and he had 60 orders that made zero profit. It's like
Paul • 12:03.259
Uh that's on you. Don't do that. Yeah, well but and even when you check that that combines with checkbox, it tell it's like, hey, this is gonna combine with X number of discounts And like when you're do when it's product and order, when you combine those, it's like, hey, that could lead to excessive discounts. You really need to check it. UX nightmare. It straight up tried to stop you.
Paul • 12:28.880
Yeah.
Paul • 12:29.519
But a but okay, so we're like ripping on this guy a little bit for not taking personal responsibility on this one, but this is a common problem.
Kurt • 12:37.759
Yeah.
Paul • 12:38.540
You know, I also I think it's easy to avoid with a little bit of extra work, and that's the thing that stops people.
Paul • 12:45.500
Yeah, well, uh first of all, the Shopify added this feature in July. They added the checkbox. where you can combine discounts across like product a a single product could have multiple discounts applied to it.
Paul • 12:57.560
Well we had this this for a while. They expanded how it worked in July, but for the life of me I cannot remember What expanded?
Paul • 13:04.460
I think it might have expanded. I think it might have like somehow applied to the same order because they were very much like now applies to the same product.
Paul • 13:12.640
Yeah, every time I had to make discounts, I would go through the there's a help doc on how discounts combine. And then it has a table of like here are the different scenarios and how they combine. And you know, I really I wish I'd looked it up but like some of the limitations of the floor.
Paul • 13:27.459
We had to learn all of this very deeply in order to put together our app promo party pro available at all fine app stores everywhere. Uh by that you mean the shop five stuff. Just one. The best. Uh so yes. So and we dealt a lot with that checkbox. We have to include that checkbox like combines with other discounts and that sort of stuff.
Paul • 13:47.480
But yeah, I I bring this up just this is a real common problem and I think a a a straight up thing you should consider as part of your budget as a cost center are discounts. Like no one puts anywhere near the amount of attention into how much they're giving away in discounts as they do on like, you know, what their their ROAS is in meta. And that's a missed opportunity because it's real tough to control that, you know, your return on ad spend in these channels, discounts you could control. Like that's a hundred percent you down to that that stupid combines with checks box that messed you up. But anyway, I mean I think that leads into the second question I got here is uh from Shopify Community Forums. this year. My influencer codes are on Honey. How do I stop it? Honey being that PayPal's uh browser extension that'll just try it. It'll just try coupons for you.
Kurt • 14:40.899
Yeah, yeah. Or like any of those websites
Paul • 14:42.660
that'll have like
Kurt • 14:43.300
coupon codes. Um and
Paul • 14:45.680
vibe coded one. It didn't work well.
Paul • 14:48.880
Um also so influencer influencer codes. That's the code you gave to the influencer to get the product.
Paul • 14:55.760
Alright, so I tell someone, hey, you know, go. You're gonna make st you're gonna post on on TikTok about this and we're gonna give you a coupon code and then you can get a commission off those sales. And you're using the coupon code to track it. Because that's easier than like, you know, I gave you a link.
Kurt • 15:12.380
Track the attribution and all that sort of stuff. Yeah, that's brutal.
Paul • 15:15.100
Yeah, there's just, you know, a million ways that that link breaks and you lose the attribution. Coupon code, no problem. You know, I could just say that out on a podcast. Uh perfect. But I mean the moment it's out there, either the influencer is shady, it just goes straight to distribute this to coupon sites to get free attribution.
Paul • 15:29.920
Yeah, I was just gonna say if he's getting if the influencer is getting a cut of the sales off of that code. Then it's in their best interest to just give this spread this far and wide immediately.
Paul • 15:42.860
Support for this episode comes from Zippify, makers of shop rank. Consider this. AI may be hiding your Shopify store and you wouldn't even know it. Today more than 800 people use large language models like ChatGPT and Gemini to shop for their products. And those AI engines are deciding who to recommend. The question is whether they're picking you or your competitor, the trouble that most Shopify stores. have errors they may not be aware of. Missing alt text, weak descriptions, JSON schema that is simply wrong. AI sees those errors and moves on without a second thought. And there goes the sale. Now you could do something about it. Shop rank checks your product catalog against seventeen critical factors that can keep you from appearing in AI search. But unlike other audit tools, which only tell you what's broken, ShopRank fixes it for you. Automatically. No tech skills required. ShopRank gives you your store's AI visibility score in under 60 seconds. Evan helps you improve it for free. You can see your AI score right now by visiting zipify. com slash AI. That's zipify. com slash AI. Do take a moment to do this today before AI gives away any more of your sales. So this is a variation of the same problem as before. And it's like you need control over the discounts. You gotta audit the discounts. I think the answer is single-use coupon codes. Like you don't have Single use coupon codes don't leak because they are one time use only and that's the end of it. But I can't shout them out.
Kurt • 17:15.400
Yeah, that doesn't work for this use case though.
Paul • 17:17.960
No, uh but I think you know you can't You can't do this and then also be mad that they're on coupon sites. Cause either the influencer did it or the stupid app just someone innocently used the code because you offered it to them.
Kurt • 17:32.740
And the app scrapes those. Yeah.
Paul • 17:34.580
I suspect.
Kurt • 17:35.980
Well the thing is, okay, so let's do it. It only works a hundred times or whatever. Or alone it, you know, and that's the that's how you stop it. You know, he gives
Paul • 17:47.340
the influencer gives it out to their audience, but it only works for a hundred people and then it stops working. Well, the influencer is not going to want to do that because that puts a ceiling on how much money they can make off you.
Paul • 17:57.600
But also adds it creates scarcity. Does create scarcity? Hey, first a hundred.
Paul • 18:02.880
It still limits their revenue. They're not gonna like that. So I think the real answer to this is You have to make sure you're still making money on the order that uses the code.
Paul • 18:19.019
I think a lot of people don't realize how much margin they're giving up to these coupons.
Paul • 18:22.620
Yeah, I think that's what it is. Like you need to have a healthy enough margin that you're happy giving up 10% of it or whatever. in to this code and then you know what just let the code run infinitely because you're getting way more orders and still making money off of it.
Paul • 18:37.600
And on you know on this one I'm not paying For I'm not paying like a meta cost. Yeah.
Paul • 18:43.200
Yeah, there's no ad spend on it if it's, you know, if the it's if it's the influencer is just getting comped. But
Paul • 18:50.059
yeah,
Paul • 18:50.779
the answer to that is not one-time code. That doesn't help. Putting a limit on it is probably might limit you to how hard the influencer is gonna want to help you. So maybe yeah, you just have to make it small enough or make it, you know, make it for a free gift. Make the code not be for the order itself, but the code gets them a free gift or something like that.
Paul • 19:13.559
Make the code Hmm, I hadn't considered that.
Paul • 19:18.159
Yeah.
Paul • 19:18.799
Okay. That would work You know the other one if like I think the other problem here is when I have to make a coupon code for someone, like I'm in someone else's store and I it's not a single use one time use code, I will always, always set an expiration date on it. Even if I think this code is going to be used for an extensive amount of time, I will set the expiration date to 12 months from now. Because otherwise, no one ever audits their own discount codes to see what's actually costing the margin Because they just make it and forget about it. But in you know, in Shafa you can see your reports. You can figure out like, okay, this is which coupon codes are in use. And I don't know. I think it's I just think this is a cost center that everybody got used to and is ignoring.
Paul • 20:05.660
Yeah, I feel like people don't want to do the grunt work. of clearing out all the old old code garbage that they have.
Paul • 20:14.539
Well, because especially like so then the catch is you use single-use codes, you end up with Potentially a million codes. Yeah, you're just generating codes all day long. And then you gotta go through and like kill all the old ones to make space. There's a limit. You could hit a limit on how many codes you could generate.
Kurt • 20:31.679
Lifetime?
Paul • 20:32.480
Yeah.
Kurt • 20:32.960
Oh, that sucks.
Paul • 20:34.080
Well, and then you delete the old ones. Oh, you do
Kurt • 20:36.240
okay. Then you could clear it out.
Paul • 20:37.919
Yeah. Yeah, but I believe it's a million total. It's been a while since I've run into it, but it was um unharney. They had they hit the limit. All right. And it was because we have Klaviyo is running one-time use codes all the time. But um okay, so then Shopify Community Forums, another post I found. Or no, I'm sorry, R slash Shopify, which truly Based on my experience with R slash Shopify, the Shopify subreddit, it's I assume it's not official. Um you have to have a head injury to post in that form.
Paul • 21:12.460
I would just Only because you get downvoted. There's nothing you get downvoted and you're like, these guys are idiots. Shut up. I'm leaving. That's you.
Paul • 21:22.140
I'm taking my ball and going home. They don't even know I'm a big deal on Twitter. I have a podcast, you guys. I have a podcast. Uh you gotta have a head injury to post in this thing. Oh my god. So anyway, I posted there today my my issue with the agentic mapping and then immediately got downvoted. You're just mad. One comment reply in which the person clearly did not understand what I was talking about.
Paul • 21:48.260
You're just mad they don't like you.
Paul • 21:49.539
Yeah. Uh so someone was
Paul • 21:51.700
mad. Uh people make new accounts to reuse my welcome code. How do I stop them? Don't stop them. You offered it! You don't. You can't. I've I got three emails going on gruv right now Using that free using that free discount code.
Paul • 22:05.860
The Blu-ray Shopify store run by Universal Media Group.
Paul • 22:08.500
Yes, exactly. And also now Shout Studios.
Kurt • 22:13.060
We have no connection to them whatsoever. I just want them. I want them as my client.
Paul • 22:17.300
Yeah, I mean that that's life, bro. The people are just gonna do that. Because I mean if they make a new email, how are you gonna know it's someone different? The email is free. Yeah.
Paul • 22:25.860
Right? Versus you're like, hey For however long it takes you to make a new email, we're gonna give you X amount of off the purchase you're gonna make anyway.
Paul • 22:34.880
Yeah.
Paul • 22:35.280
Alright, I'll make the damn email. I personally don't bother with this. Uh I'm more, but I will try and find or even sometimes even guess at coupon codes.
Kurt • 22:44.440
It's always welcome ten.
Paul • 22:45.559
Yeah.
Kurt • 22:45.960
It's like nine times out of ten, welcome ten will get you something.
Paul • 22:48.200
Yeah, welcome ten, welcome five. Ten though, like I'm not getting out of bed for that. I need 20%.
Paul • 22:54.760
I'll do it if it's f if I'm buying it anyway.
Paul • 22:57.240
Okay. Yeah, why not save the money? Uh but yeah, I'm straight up you can't. The best part was the like the top reply, top comment on that thread. When somebody goes, oh, I just raised my price ten dollars and my welcome discount is ten dollars. Solved. Yeah. Okay, yes, you're right. Unit economics, you this sounds flippant, but no, you're correct. You solved it. That like sounds like you nailed merchandising there, man.
Paul • 23:22.620
I mean still, yeah, you just can't you can't stop people from making new emails to get your f your give me your email discount. Just not not a thing.
Paul • 23:32.679
I do think, you know, we've been I've been consulting on a a project on a uh consumer electronics brand. And it's it's it's several hundred dollars, but then it's perpetually on sale. Like I can always find it, find a coupon code, find it for a hundred bucks, a hundred and fifty bucks off, where it's just permanently on sale. You can't do that anymore. Like that'll get you a class action lawsuit.
Kurt • 23:56.020
Yeah.
Paul • 23:56.660
If for deceptive pricing, you're training customers that it's deceptive. Like I don't love it either. If it is like, oh retail four hundred, you know, but Uh today only 150. And you see these on those like stupid Good Morning America type shows. Steals it deals. You know, they're like, this Invict a watch was $8,000. Now 57 cents. No, it was always 57 cents. I at that point, like what just put the real price on it. I think people are getting more sophisticated too. Well, yeah, I just
Paul • 24:27.120
have it there as like a stupid tax of, you know, some people might pay the higher amount. That could be. It but it just makes your it just makes your whole deal seem
Paul • 24:36.580
It cheapens everything.
Paul • 24:37.460
It cheap I mean I could talk about this brand with you for the rest of the show because I got thoughts about that. those guys because I think their product is way overpriced. And I every time I complain to you, I'm like, why are they selling this for this much? This is so overpriced. It's crazy. And you always are like, well, actually it's not that much because they immediately give you $150 off. And I'm like, that's even dumber.
Paul • 24:57.740
I know. Yeah, if it's permanently on sale, guess what? That's not the price. That's just deceptive marketing. So, yeah, that is how I feel about it a little bit. But in this case, it's a you know, it's largely like welcome offers, which that's different. Welcome offer, you're saying, hey, you gotta be a new customer. So it is not always on sale, but obviously we have all figured out like, hey, you know, a Gmail address is free. And that's our issue. Uh I think we have some stats on this.
Paul • 25:26.720
Uh next up, free shipping or discount codes. Which is more profitable? It depends. Are you shipping refrigerators? Are your discount codes 90% off? It depends.
Paul • 25:38.700
It was yeah, this was in a Shopfire community forum post um from you know a few days ago. It was free shipping your discount codes, which is more profitable. Yeah, it depends, man. Okay, yeah. Anything depends what it is. But which is more profitable? I think for most stores the answer is probably just based on like the st the stats we ran. You're gonna give up less margin on a free shipping coupon or threshold. Like what's again, I don't know what we're shipping, but okay, most people aren't Shipping oversized goods on like, you know, LTL less the truckload. They're shipping stuff that at most is a few pounds in a small two medium box or if I'm really lucky padded mailer. And so like let's just assume free shipping, I'm giving up, you know, my the That shipping cost. So I'm giving up eight or ten bucks, and maybe my average order value is what? Yeah, eighty bucks, a hundred bucks versus if it was twenty percent, that's we know that is the discount. Everybody discounts the standard is 20%. Unless it's a holiday, then it 's like welcome, 10 to 15% off. Standard discount 20% off. Oh, it's a holiday, 25% off. That's what you all went with. It's it is. That's the data. Um versus you know on free shipping, all right, I'm gonna buy three t-shirts. Three t-shirts plus tax gonna cost me almost a hundred bucks. And then I We buying your shirts, man. Yeah, if you look at what like just a print on demand t-shirt's gonna cost you thirty bucks.
Paul • 27:12.560
Oh my god.
Paul • 27:13.440
Yeah. Um so let's say I'm spending a hundred bucks on t-shirts and then they give me free shipping. Okay, that's ten bucks they gave up. So effectively 10%. I mean it's also this is not a tough you shouldn't have to ask this question. If you ask this question, you don't know your number. You don't know your unit economics. That's how econ businesses get in trouble. You know, that's the worst situation you can get into, and it happens more often than anyone admits, because it's so dumb they don't want to admit it, I suspect is Every person every order that goes out, I lost money on, but I didn't figure it out till after the fact.
Kurt • 27:45.360
You know, I was gonna hate on you for hating on all of these questions. All these question askers, but
Paul • 27:53.520
you're right. If you're asking this question, you're dumb. Because you know, you should know how much, well, if I offered free shipping, that means I'm going to lose X dollars. Well, if I offered a discount code that gave up the X percent, I will lose Y dollars. Like
Paul • 28:11.040
you should be able to do this math yourself. This a recurring theme on the show is the experienced merchants go, I figured out this concept. It's called contribution margin. Once I understood that, then suddenly I was really able to like make investment in the business at scale. And if you've even right now I'm like, man, what the heck's contribution margin? Okay, don't pass go. Until you could you understand that concept and you know cost of goods sold and you know what your contribution margin is. then you will like you will just feel much more confident in all of these decisions.
Kurt • 28:43.480
It's crazy how many people we talk to
Paul • 28:45.799
that are like Yeah, you know, I just need another eye on the business. Like, you know, I you know, they call us up just for like general consulting work, like not even work work, just to do like knowledge work investigating their store.
Paul • 28:58.720
Yeah, I need a fresh set of eyes to look at this.
Paul • 29:00.080
Yeah, fresh set of eyes to look at this. And then very quickly you're like, well, looking at this, this, and this Aren't you losing money on every order? And they're like, oh yeah, kinda. They end up either admitting it to you, or you end up uncovering the fact that They make like one dollar on every order or something like that. It's absolutely insane. Like, how do you not know that? How is that not the number one thing you know?
Paul • 29:32.060
I think you I I don't think it happens all at once. I think it's something that you end up sl gradually working yourself into. You know, as as numbers change as cost changes and like before you know it 'cause you weren't keeping track of those numbers 'cause like contribution margin, 'cause they were less important before, then you get yourself into trouble. Like you don't know what you don't know until it has bit you. And that's why you know I'm here saying, hey, if you have to ask this, just like please go back and make sure you could you understand your cost of goods sold and your contribution margin. Those are the two. Like if you could figure that out, life gets easier.
Kurt • 30:10.820
Uh and the secret hack we also discovered
Paul • 30:13.860
is just being like all free shipping on all orders over $100 is not the best way to Increase your average order value. The best way to do it is orders over $100 get this discount code that offers free shipping. I don't know why, but that weird little thing where we're giving you this gift of the discount code that offers free shipping. f makes people buy more than just having a regular threshold.
Paul • 30:48.340
Isn't that weird?
Paul • 30:49.220
That's so weird.
Paul • 30:51.140
Hmm. I don't have it, yeah. As far as the consumer behavior goes, I don't have an explanation for that one. Wrong address, wrong size, add one more. The same three emails every single day. and everyone is a ticket your team handles by hand. Read it, verify it, fix it in Shopify, email the customer back. Do that a few hundred times a month and you're paying salaries to be a manual order editing tool. Our sponsor, Cleverific, has been thinking about this for years. They've run order editing on Shopify since before it was a category. Now your shoppers can fix their own orders right on the order status page. Address, size, quantity, add-ons. No ticket, no back and forth, and everything writes straight back through Shopify. And here's what's new. Order upsells that build themselves. Cleverific reads your store's order history, generates post-purchase offers based on what your customers actually buy. And it works with the flows you already run. This summer, they'll even do the whole thing for you. Mention the unofficial Shopify podcast, and Clever Effect will handle the complete setup, order editing, post-purchase upsells, all of it done for you. plus a $500 upsell credit to get you started. So stop editing orders for your customers. Let them do it themselves and let it pay for itself. Clever effect order editing on the Shopify App Store. All right, so we covered discounts here. I still think you know the takeaway here is like, hey, just understand that 20% is kind of the the standard. And less than that is going to look like not a great deal. More than that will get people's attention. But and if you're doing a discount all the time, what's the point? That's kind of my my feelings on it. Um and just that discounts are like just such an incredible cost center for people that they they just overlook. They just go, uh, you know, everybody does it. No, I think that like an easy way to put profit back in your business is axe some of these these bad discounts. But let's we got Black Friday around the corner. What do you want for Christmas? I need a Christmas list from you. I can't what am I supposed to
Paul • 32:54.820
I have a Google Doc. It's a spreadsheet and I export my likes from Letterboxd because for some reason Letterbox tracks your star ratings on a movie and whether or not you like liked it as two separate elements. I don't know why. That's dumb. But that's the way it does it. So I export all my letterbox likes and I fill out all of my likes that I have on 4K Then I also have, is this movie on 4K? Period. Has it been released on 4K? Yes. Or has it been released on 4K? No. So I have all my letterbox likes. Yes, no, or owned. And so if you go on that sheet, the yeses that I don't own are things you could buy for me. I sent this to my wife. for my birthday next week. And a package came uh to our house yesterday and when I felt it I know the size of those boxes
Paul • 33:49.160
I know the size of the little It was suspiciously Blu-ray size.
Paul • 33:52.280
Suspicious it was suspiciously when you squeezed it, you know, you could tell the shape of those things inside of there.
Paul • 33:57.320
So uh
Paul • 33:57.960
I'm gonna be checking some things into owned, I know, next week.
Paul • 34:01.340
All right.
Paul • 34:01.900
How about that? There we go. Answer your question. That's what you get for asking me a question.
Paul • 34:07.179
An answer? That doesn't seem like a threat. So still Black Friday around the corner. How do we prepare? You know, what is what about it about I just go like, yeah, Black Friday's coming. Okay, now what? You know, what has changed here? And we had I learned from uh Casey, CMO at Ship Bob, in a interview a couple weeks ago that
Paul • 34:31.020
Are they ever gonna let you interview Bob? The the Shipbob? Yeah, Bob. Bob Ship.
Paul • 34:35.580
Bob Ship. He's very busy. I doubt I could get in with Bob Ship. At Ship Bob. But uh no. Yeah, we learned that it's like peek in bound season for them. So all right, that's where it starts. Your inventory should be getting stocked up at the moment. And then you know you got your planning. You know when your dates are, so you're gonna figure out your sales.
Kurt • 34:57.940
I mean, this is kind of a whole other episode of just being like, here's
Paul • 35:01.299
here's your Here's your game plan for the months of October and November.
Paul • 35:06.140
But it's just, you know
Paul • 35:06.940
, but here's some September things you should be doing.
Paul • 35:09.340
Yeah. And so I think the September things you should be doing, 'cause we I'm getting a lot of people reaching out and either they're like, Hey, you know, we've got a list of things we wanna fix We want to just we want to refresh this website uh or replace this theme and or my favorite just like hey you know some variation on you know maintenance audit or health check Okay, there are there's a list of things that are never bad to do on a website. It's I've for this year I've I've standardized that and it's like, all right. On a site, I want to know, have we filled in all our SEO info? SEO metadata? That's easy. Let's fill that out. Quick win. Alt text on images, that's SEO and Accessibility. Accessibility. You know, that's the common issue. We want the site to be um accessible and then so we take care of that we can take care of accessibility. I don't know that I would necessarily treat that as like, yeah, let's get ready for Black Friday. But never hurts to not have a whole bunch of uh accessibility errors on your website for reasons.
Kurt • 36:12.320
It's got a lot of crossover, because I mean the SEO and agentic and all that crap, what does that mean? It means the robots are reading the website.
Paul • 36:22.300
With accessibility, that's a big part of it.
Paul • 36:24.300
Yeah, and accessibility tools that when people are using an accessibility tool on your website. What is it? A robot is reading the website for them. A screen reader. So so there's a lot of crossover in that Venn diagram.
Paul • 36:35.060
Yes. So yeah, we get a benefit from all right. Fix accessibility issues. And like that's a standard. So you could test for it. It's great. Uh then how about performance? Years ago we used to We used to say F Google Page Speed. Like we rail against Google Page Speed. Because also we didn't have the tools at that time properly to deal with it.
Paul • 36:53.280
Well, it wa it was kind of both sides. It was, you know, Shopify wasn't perfect. And the themes were not great. And Google Page Speed was not great in terms of its measurements. And both sides of those got better. Shopify really cracked down on the theme developers. They changed
Paul • 37:12.079
they changed how you integrate apps.
Paul • 37:13.359
They ch Yeah, they changed how the apps worked, a lot of stuff.
Paul • 37:15.920
So yeah, they were like, hey, you know, they did the work. They provided tools and then Google got better with like, you know, page speed tools or core web vitals. And so now, all right, page speed score I don't pay attention to, but there are six metrics, core web vitals that are passfail for Google. according to Google, that's what we look at. And so that is a process now. I can figure out, hey, does your homepage, product page, collection page pass those six metrics? And if not, why? Yeah. It's been years now. We we have cracked this egg. We have solved this problem. Um and so yeah, do I've Sort out page speed, sort out accessibility, do an SEO pass. And that's really like that's mostly the catalog, less than the you know, the theme itself. And then, you know, maybe uh upgrades, fixes. you know, to the theme itself. But that's all just like the the same back end audits that I want to do for everybody Yeah, who's willing? I don't think it it hurts.
Kurt • 38:09.480
And also make sure you don't got any discount code leakage. Get the discount codes cleaned up before you start handing them out willy-nilly in November
Paul • 38:15.359
Man, should I start auditing discount codes?
Kurt • 38:17.280
You should definitely start auditing discount codes.
Paul • 38:18.960
Yeah, after like ra you know railing against it, I probably should. 'Cause oftentimes it's like people don't realize there's one that's like, man, you're just like handing out money.
Kurt • 38:27.920
Well, 'cause it's fire and forget for them.
Paul • 38:29.680
Yeah.
Kurt • 38:30.000
Like they had a reason to make the discount code. They set it up and they're like, great, that problem's solved. Goodbye. Like if they don't realize it's a tiny little leak in the boat.
Paul • 38:38.900
I did when I was running that discount report, then I broke that one down, that discount report, I broke it down further and was just looking at free gift with purchase. And we have one client in particular who always consistently runs free gift with purchase for Black Friday. Three Black Fridays in a row. And it was always a $50 , you had to spend $50 to get the gift. With this this brand, this store, three Black Fridays in a row, their AOV was almost always a hundred bucks. The free gift was fifty. You had to spend fifty to get the free gift. But the store still ended up at a hundred uh or ninety-eight, a hundred and one, and a hundred and eleven dollars. That's their AOV for three Black Fridays And so, yeah, okay, that's one store I'm looking at. But I had another one where they did a hundred dollar tier and the AOV ended up being 1. 2x and 1. 6x that two years in a row. And so I'm
Kurt • 39:35.660
calling that one and a half, we'll see.
Paul • 39:37.260
Yeah, averages out one and a half, roughly. Um so I think Free gift with purchase. Obviously I'm biased here.
Kurt • 39:45.580
I mean, yeah, that this was a lot of our topic on we're biased. We think people should we have an app that does free gift with purchase. But in order to support our app, why did we
Paul • 39:54.539
why did we make an app that does free gift with purchase? Because it is the thing we think is the best. If we thought Something else was the best way to do that.
Paul • 40:04.520
I thought there was a better promo. Yeah, like if I would have done that.
Paul • 40:07.080
Yeah, if we thought there was a better way to like get store owners to make more money, that's what we would have made our app with. But because we determined this was the easiest lever for store owners to make more money, that's what we decide to make our app about. And all we've done since then is publicly publish more and more data proving that we're right. Uh that feels pretty good. Yeah, I know.
Paul • 40:30.599
Imagine if it gone the other way. Like, uh
Paul • 40:32.440
oh. Yeah, oh no, why'd we make this app? Uh Here's an interesting thing. Let's talk about before you get into that. The gifts actually are bigger for returning customers and not first-time customers.
Paul • 40:49.100
Interesting.
Paul • 40:50.220
So in the data we have, new customers do not get the gift as much as returning customers do.
Paul • 40:57.900
Okay.
Paul • 40:58.299
They don't cross the threshold. And I understand this. Because the gift is giving you more of the store. New customers don't know that they want more of the store.
Paul • 41:09.619
I'm skeptical.
Paul • 41:10.579
Do you want the first date to be three hours or do you want the first date to be five hours? It's our first date. I don't want that to be five hours.
Paul • 41:18.240
Okay.
Paul • 41:19.200
Or it could be 12 hours. If it's 12 hours, you know something good happened. Uh What kind of store is this? Now we're talking about dates. I understand that new customers, it's like, well, they're gonna give you even more of this store. Don't you want even more? No, I don't know. I've never met this store before. I've never bought anything from them before, so I'm not going to commit to buying even more shit to get the free thing of the thing I don't even know I want. So that's interesting. That's probably where the free shipping over because I'm making I'm making our first date even more easier by adding the free shipping.
Paul • 41:59.099
Yeah, I'm yeah, I'm reducing one more objection.
Paul • 42:01.820
What I'm saying is I think free shipping over-indexes on first-time customers, whereas free gift with purchase, we've shown over-indexes on returning customers.
Paul • 42:12.080
I got okay. Free shipping. I'm a new customer. I don't want to pay the shipping. I am reducing risk by trying to reduce my total investment.
Paul • 42:19.760
Exactly.
Paul • 42:20.320
Into this first purchase. Yeah. versus return purchase now I know and trust the brand and I'm willing to spend more And the free gift with purchase is now enticing to me.
Paul • 42:31.720
To get more of the brand, yeah.
Paul • 42:33.000
Okay.
Paul • 42:33.480
Whereas I don't even know if I like you yet. And so free shipping makes it even easier. We're just going out for coffee, baby. I'll do free shipping. I'll be you'll be in and out in an hour.
Paul • 42:41.920
You know, that delivery really makes me seem like I should not get in a car with you. Hey, do you need a ride?
Paul • 42:47.840
I'm good. I will walk. I mean yeah, you just drive around in your ice cream truck in a panel in a panel van. Okay. Asking people if they want free shipping. Boy, this went sideways, Ronnie. Um Yeah, so can we like split that out?
Paul • 43:04.920
Probably.
Paul • 43:05.720
Probably.
Paul • 43:06.520
Yeah.
Paul • 43:07.000
Free shipping only for new customers? Maybe. Oh, that's that's diabolical.
Paul • 43:14.320
Yeah, you could do it. It's segmenting is tough because like when they land on the website, if they're returning, you know, like I may or may not have their email.
Kurt • 43:22.640
Or would they have to be logged in? You'd have to know.
Paul • 43:24.640
Yeah. Like Claviel might know, Shopify might know, but it could just as easily not know. That's what's tough about it. But that's where you do, like rather than free shipping as just a shipping profile rule, you do free shipping as a coupon code. And you limit it to new customers only. And then so if they want, they can get free shipping. But hey, I'm not giving them that like twenty percent off welcome offer that is worse margin. I'd be better with the free shipping one. Yeah. It's like, hey, new customers get free shipping. And maybe I do like everybody gets free shipping, but it's a much higher threshold for in normally and the new customers just have a lower threshold because I want to reduce the barrier to entry for the them, but I'm not giving up the margin. I'm not discounting the devaluing the brand.
Kurt • 44:07.400
Yeah, yeah. And I mean I like this approach. And the free gift, when you do the free gift, you're hammering that on your mailing list, which is obviously going to returning customers.
Paul • 44:17.980
Yes. Okay. No, I think we we figured out a strategy here. I like that. Yeah, some other tips had written down like, hey If you're trying to come up with a threshold, whether it's free shipping or free gift with uh purchase, I would do double your AOV. for free gift with purchase and for free shipping, I think it should be higher than you think. Like most people will do like, you know, 10% over Free shipping. That's often been my advice 'cause it's very safe. But now that I'm looking at these numbers, I'm like, man, maybe do it like free shipping, that threshold should be fifty percent over my AOV and my free gift should be double. That's scaring me. That's a lot. That's a lot. And this is like there you could test this stuff, but it's tough to test to split test free shipping.
Kurt • 45:08.900
And once again it all goes back to okay these new customers, where are these new customers coming in? Well, they're coming in from your meta ads. Well, how much are you spending on these meta ads? So then it's like you could gotta make it bigger in order to offset the cost of the meta ads that you're spending to get the people in the door
Paul • 45:26.420
Well, that's a lot of the reason looking at their their rising meta-add cost, that's where you see people start getting real worried about conversion rate. And concerned about average order value. AOV is the much easier one to control than conversion rate. You know, AOV, I can that's my offer is going to really determine that.
Kurt • 45:47.440
And you know, and uh, you know, we say this all the time. I'm just gonna quickly, the gift doesn't have to be a big deal. The gift is tchotchke level The gift is ten bucks. Like it is not a crazy thing.
Paul • 45:59.900
You're not getting a
Kurt • 46:00.940
you're not getting a whole new product that's something you would normally sell. It's just a little branded Tchotchki cute thing, something accessory.
Paul • 46:09.480
If my AO, yeah, my AOS. A hundred bucks, retail value on my free gift should be ten bucks, eighteen bucks at most. Yeah. Yeah, ten to fifteen is really would be the ideal range on a hundred dollar AOV And then like retail, not my cost of goods. And so, you know, there's a lot of things that fit into that. It just has to be, I think the tough part is it can't be just like some some junk. Ideally it's not junk we're overstocked on. It's could be. But it is often that is what it is. Uh in which case, you know, when I'm getting it free, uh now I'm more interested. Um But often it's like an item that has been selected for this purpose.
Kurt • 46:49.100
Yeah, optimally it's something that makes the thing they're buying slightly better.
Paul • 46:53.500
Yeah, some accessory. Yeah. Electronics is the easy one. Like, oh, you bought a camera? Okay. There's like a million accessories that go with that. Right. Um so like yeah, anything electronics, you can immediately think of like Some some accessory that goes with it. I don't know. I think my takeaway, and we're coming to the end of this, uh go audit your discounts.
Paul • 47:16.700
Yeah, you definitely gotta audit.
Paul • 47:18.300
I'd save you some money right now.
Paul • 47:19.580
You uh definitely need to audit all of your discounts and like the campaigns, the gift campaigns you've run. Like the things that you've done that have reduced your AOV. In order to get people in the door, free shipping campaigns, discount campaigns, bundle campaigns, all that sort of stuff, you need to audit those. And see, did that actually help me? Yeah, I sold more, like, oh, look how much revenue it put up. Okay, but was that revenue profitable or no? But they never take that second step. They just love that big revenue number. And then they never see if it actually made them more money or not.
Paul • 47:56.560
If you're bootstrapped, that's a real scary place to be. If I'm venture capital backed Then you can get away with that. Yeah, right. I'm guessing if you're listening to this show, you're not venture capital backed. Ooh, so we have all these reports published I've got the link in the show notes or go to ethercycle. com slash report. And it's there. I got uh the the AI Shopping report, I got the state of discounts report, and then we have a free gift with purchase report that really is like a dialed-down version of the disc full discounts report.
Kurt • 48:27.640
Read them. We're giving away from giving them, we're giving you knowledge for free. Beautiful.
Paul • 48:32.200
Alright, let's end it there. See you guys. Bye. Hey, before you go, I was hoping you would check out our new app, Promo Party Pro. It is what I want to be the single best, easiest way to run a free gift with purchase promo on Shopify. We just put it live in the App Store. We've got less than 50 users. We want your feedback. So if you need to run a free gift with Purchase Promo in the near future, install it, try it. There's a live chat. I check that all the time. And so if you have any issues at all, you know, or any suggestions on how we can make it even easier to use, let us know. We're happy to help. If you want to try it, search promo party in the app store. Promo PartyPro's the app. Give it a shot. It's got a free trial. Thanks