Forget complexity.
Let’s get simple without getting simplistic.
Three ecommerce formulas to rule them all … ripe with raw honesty about what happens when you break them.
📊 Sean Frank reveals the “math” of being a merchant
🤑 Cody Plofker with how to unlock a new profit center
🗞️ Five headlines in trending consumer news + a bonus
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Cody Plofker
Jones Road Beauty, CEO
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Turn Your Confirmation Page into Your Newest Profit Center
It’s a common ecommerce headache you can probably relate to … shrinking profit margins.
Using AfterSell’s Network Offers, Jones Road Beauty saw eye-opening results:
- An incredible 11,803% monthly ROI
- $1M+ in total revenue generated
- $0.40 of incremental profit per order
- $56,000+ in pure contribution dollars
And zero negative impact on customer retention or repeat purchase rates.
Network Offers unlock a new profit stream for you.
- Tailored relevant offers
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- Premium brand network
Align with top-tier companies to enhance your brand’s perception while earning revenue.
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Generate profit from every accepted offer – no inventory, no overhead, no extra work.
Don't let shrinking margins hold you back. Network Offers turn your confirmation page into your newest profit center.
The Math of Ecom, 3 Rules (FORMULAS) & When It Breaks
What we do isn’t special, hard, or unique.
The second oldest profession on earth is merchant. Instead of traversing the landscapes of Eurasia, bringing spices and silks to foreign lands …
Ridge sells mid-price, accessible luxury goods to the masses via Meta and Shopify.
I love what I do because I love cool new things. I am a driving force for new products at Ridge because it’s what I like.
So, while what we do isn’t unique or hard — I find it fulfilling.
It’s an old, simple tradition.
But what happens when people try to outsmart the industry? What is the math of being a merchant?
- MSRP > COGS = Profit
- Offer + Attention = Sales
- Consumption = Frequency
RULE 1: MSRP > COGS = Profit
Rule one is so obvious it hurts.
Sell things for more than they cost to make.
Why is it even a rule?
Because there was an era when it was ignored.
Casper had negative gross margins; Blue Apron had negative gross margins. They were literally selling dollars for 90 cents — with more steps.
Ten years ago, both those brands were DARLINGS. They took VC dollars and lit them on fire to chase market share.
But there are NEGATIVE NETWORK EFFECTS in consumer.
Google and Uber can get to 80-90% market share because they end up being utilities.
Consumer seems to top out at 20%.
Coca-Cola has 20% market share for soft drinks in the US. Add in all its sub-brands (Sprite, Diet Coke, etc.), maybe 35%
The greatest consumer brand of all time doesn’t have a monopoly.
VC brands tried to break a rule.
And they paid for it.
RULE 2: Offer + Attention = Sales
Rule two is how marketing works.
You need some sort of offer, and you need some way to get attention to make sales.
Facebook is just an attention machine.
You trade dollars for impressions — the first widespread, low-buy-in, easy-to-use ad platform.
No spend commitments, no account reps or onboarding.
Permissionless attention.
The merchants of Babylon needed the marketplace, the town square, the booth. The brands of the post-WW2 era needed TV and radio and department stores.
We just need a credit card.
But Facebook or a tradeshow booth does the same thing …
Get attention on an offer.
“My thing does X and Y for you. It does it better than Z! Here’s how much it costs.”
Ads aren’t anything without offers.
But an offer isn’t just a discount. It is the problem your product solves. And it is why that solution is more valuable than the money in someone’s wallet.
Problem, solution, offer, ads … attention.
In that order.
RULE 3: Consumption = Frequency
You cannot change human habits.
Why are beverage companies so valuable?
Because you drink them.
Every human drinks a half gallon of SOMETHING per day.
If you can be a regular part of that daily habit, your purchase frequency shoots up.
And if someone buys from you more frequently, you are more likely to spend more to reach them.
The cycle continues!
You spend more and more to acquire customers that are theoretically more valuable to you over time …
Oh wait, we have heard this one before: ECOM 101.
Every brand is different.
If you sell wallets, your frequency is low, once every 5–10 years.
If you sell subscription medicated soap that helps with dry skin, your frequency is probably high.
Everything has a consumption timeline. If you know a thing or two about accounting, that’s called depreciation.
A Ridge wallet depreciates after five years.
That bottle of soap? 30 days.
Strip out the pretty colors, the landing pages, and the influencer endorsements — what do you get?
- TAM = size of opportunity
- Higher AOV = lower conversion rate
- Lower conversion rate = more expensive attention
More expensive attention means higher CACs. Which in turn means you need a higher LTV to offset.
Furniture is a great example. High AOV, low LTV, but big TAM. Lots of competition.
Home saunas? High AOV, low LTV, but smaller TAM. Less competition.
Human consumption is a mostly solved market.
It’s why TRENDS are a good thing.
Candy is medium TAM, low AOV, high LTV. Candy is a 100% solved market — until trends offset that balance.
Freeze dried is a trend that is growing fast. Healthy candy is a trend that is growing fast.
Catching a trend breaks the math and makes things work in your favor until the trend passes …
Reflections on Ridge and Trends
Why did Ridge work? Medium AOV, low LTV, big TAM. On the surface, I would give Ridge’s thesis a 5/10.
Good, not great, and not worth trying.
But what worked in our favor?
The trend of digital advertising.
Building Ridge today would not work because attention costs 10x what it did a decade ago.
The business model of medium AOV + low LTV doesn’t work when you break rule two.
200 million people came on the internet, shifting all their watch time from TV to social media, and we were an early advertiser.
It’s a switch that happens maybe once every 50 years. We got super lucky to be there.
Plus, we were in an ignored category.
Fashion houses took men’s accessory sales for granted.
They were husband gifts, sold through the wife as an upsell. Ignored category, cheap attention, big enough TAM. That’s what made me a winner.
That wouldn’t work today.
The modern version of Ridge would be …
- High AOV: Jewelry or watches
- Big TAM: Women’s first, men don’t care enough
- Sold on subscription: Shrinks TAM massively but makes LTV actually work
For credibility, we’d build with designers directly or stylists.
I’d sell something like a themed box for $100 that changes every month (frequency) with pieces of jewelry worth $300-$500 (offer) … but costs $20 to make (profit).
Otherwise, you will just lose money in the auction.
Ad costs have 10x’d in 10 years.
Has your AOV 10x’d?
Content Creation & Brand Storytelling with Colin Landforce
Is Meta Still Incremental? Matt Bertulli on Paid Media & Scaling Beyond Facebook Ads
Curated by the editor of CPG Wire, this week’s five biggest consumer-news headlines.
1. OLIPOP Valuation Surges to $1.85B: CNBC
Better-for-you soda maker OLIPOP raised $50M in Series C funding, and its valuation jumped to $1.85B. J.P. Morgan Growth Equity Partners led the round. 2024 was a banner year for OLIPOP, with sales surpassing $400M and the company achieving profitability.
Drew Fallon wrote a great thread on what’s next for OLIPOP — an IPO does seem like a plausible outcome.
SNEAK 👀 PEEK Speaking of Drew …
2. Shelley Sullivan Sells Stake in MCoBeauty: Twitter
Shelley Sullivan — the founder of Australian beauty juggernaut MCoBeauty — sold her remaining 50% stake in the company for over $500M AUD. Founded in 2020, MCoBeauty became the fastest-growing beauty brand in Australia by “duping” popular products from pricier brands.
The company’s revenue jumped from $10M AUD in 2020 to over $260M AUD last year.
3. Rarebird Raises $1M, Relocates HQ: PR Newswire
Rarebird, a producer of paraxanthine-infused coffee products, secured $1M in funding from 43North, a startup accelerator based in Buffalo, NY. The alternative coffee startup also relocated its headquarters to Buffalo earlier this year and will open a roastery there in the near future. If you want to learn more about paraxanthine, Wired wrote a great primer.
4. Unilever Plans to Acquire Wild: The Industry
Unilever is reportedly close to acquiring sustainable personal care brand Wild for upwards of $280M. Wild first hit the market in 2019 with a refillable deodorant line before expanding into body wash, lip balms, and other personal care categories.
The company is backed by JamJar Investments and did nearly £50M in revenue in 2023.
5. Floyd Mayweather Launches Supplement Brand: PR Newswire
Boxing legend Floyd Mayweather has entered the supplements conversation with One of One, a new performance nutrition brand. One of One, which Mayweather developed alongside Magnum Nutraceuticals and WME, launched with a range of seven products. The brand is expected to make its retail debut in the very near future.
Finally, we’ve got an embarrassment of riches coming at you in the next month:
- Master of Margins, Metab Bhogal
- Empress of Email, Karly Craig
- Prince of Purses, MacCoy Merkley
And our long-awaited, much-requested, all-in-one ecommerce stack resource is underway. If you missed those …
We had every Operator review and rank the platforms + partners their brand uses.
Just reply: “Send ‘em all, Aaron!”
I’ll drop you links to the original versions.
With thanks and anticipation,
Aaron Orendorff 🤓 Executive Editor
PS (Disclaimer): Special thanks to AfterSell for sponsoring this week’s newsletter.
