Ecommerce

Every time a card payment is processed, 𝘁𝗵𝗿𝗲𝗲 main types of fees are involved. Here’s a simple breakdown of the Three Core Fees: 1️⃣ Interchange Fee This is paid by your acquiring bank (or payment processor) to the cardholder’s bank (the issuer). It’s set by the card networks (like Visa and Mastercard; sometimes regulated), and is designed to cover things like fraud, credit losses, and infrastructure costs. 2️⃣ Scheme Fee Charged by the card networks themselves, this fee covers the operation of the payment system (“rails” that process the transaction). 3️⃣ Acquirer Markup This is the fee your acquirer or payment service provider (PSP) charges you, the merchant. It includes their costs, risk management, and profit margin for processing and settling the payment. The total cost a merchant pays is called the Merchant Service Charge, which is the sum of these three components. The Main Pricing Models: ► Bundled Pricing All fees are grouped into one flat rate. This is very common with small businesses. It’s easy to understand but doesn’t provide insight into what you’re actually paying for. ► Interchange+ The interchange fee and the acquirer’s fee are shown separately, but the scheme fee is typically bundled with the markup. This model offers some transparency. ► Interchange++ Each fee—the interchange, scheme, and acquirer markup—is itemized separately. This is the most transparent model and is favored by larger or multi-country merchants who want to track costs precisely. Who Chooses the Pricing Model? Most acquirers and PSPs decide what pricing model you’re offered. Unless you negotiate or have significant transaction volume, you’re likely to get bundled pricing by default. Larger or more experienced merchants who understand payments often push for Interchange++ for its clarity and fairness. Smaller merchants often aren’t aware that alternatives exist or find it difficult to compare offers. How Interchange Fees Vary Globally: Some regions (like the EU, UK, China, and Brazil) cap interchange fees to lower costs for merchants and stimulate competition. The US regulates only part of the system—such as capping debit card fees for large banks (the Durbin Amendment)—while credit card interchange remains uncapped and usually higher. Other countries, like India and Brazil, regulate interchange as part of broader financial inclusion goals. In markets with stricter regulation, merchants often benefit from lower, more predictable fees, making it easier to accept cards. Where fees are higher and less regulated, issuers can offer consumers more rewards (like cashback), but those costs are passed back to merchants—and sometimes their customers. Every model shifts the balance of costs and benefits between banks, merchants, and consumers in different ways. More info below👇, and I highly recommend reading my complete deep dive article about Interchange Fee and what factors impact the rate: https://bit.ly/44T4VJA

Shopify is wild: - Their core product team bans KPIs - They optimize for churn - They keep multi-year holdouts for every experiment - The product roadmap is driven not by metrics and goals but by intuition, taste, and a 100-year vision from Tobias Lütke - They now power over 10% of all U.S. e-commerce - Last year's GMV of $235B is equivalent to the economy of Finland I sat down with Archie Abrams, VP of Product and Head of Growth at Shopify—where he leads a 600+ person growth org across product, design, engineering, data, ops, and growth marketing—to discuss: 🔸 Why Shopify optimizes for churn 🔸 Why the core product team avoids metrics-based goals 🔸 How they structure their growth team 🔸 Why they keep multi-year experiment holdouts 🔸 The benefits of not having a CMO 🔸 Lessons learned about integrating sales into a product-led growth model 🔸 The power of discounting as a growth lever 🔸 Much more Listen now 👇 - YouTube: https://lnkd.in/gAazz3FM - Spotify: https://lnkd.in/g-D4wmrQ - Apple: https://lnkd.in/g9DKGtt4 Thank you to our wonderful sponsors for supporting the podcast: 🏆 Explo — Embed customer-facing analytics in your product: https://explo.co/lenny 🏆 Dovetail — The customer insights hub for product teams: https://dvtl.link/3Za7aa0 Some key takeaways: 1. Shopify optimizes for getting as many new merchants as possible to start businesses, even if many of them fail. This approach works because the few successful merchants generate enough revenue to make up for the many that don’t succeed. 2. Shopify has found that 30% to 40% of experiments that show positive short-term results have no long-term impact. Initial lifts can be misleading, and some of your “losers” might actually yield unexpected long-term value. 3. Adopt a “hundred-year mindset” in your decision-making. Stop chasing short-term wins that feel good now but might sabotage your future. Every decision should be about building a product or service that can withstand the test of time. If it feels like a quick buck, it probably isn’t worth it. 4. Don’t shy away from shipping experiments that may have neutral impacts. If your intuition suggests that an idea is beneficial, validate it by launching it. Just because the initial data doesn’t show a positive lift doesn’t mean it won’t create value in the future. Let the market respond, and be open to adjustments based on real user feedback. 5. Shopify’s growth team is divided into two main groups: Growth R&D (product, design, engineering, data) and Growth Marketing (paid acquisition, SEO, email, content). The company also uniquely includes customer support within the growth organization. This clarity helps teams align their goals and understand their unique contributions to the overall growth strategy.

I screwed over one of my top engineers when I was a Senior Manager at Amazon. He felt betrayed, found another job, and resigned. This is a dark spot on my career, so learn from my mistake. Here’s the story: I joined Amazon in April 2005. This engineer was a new graduate assigned to my team, which was a new team for a new project. Everyone on this new team was smart and talented, but this engineer was a top performer. Our project had a tight deadline, and he came to me and offered me a deal: he would do whatever was needed to ship the project if I made sure he was promoted as a result. Side note: This is a great piece of negotiation, and I encourage you to strike similar deals with your managers when you can. This engineer trusted me to follow through on the deal, but there was a problem. I had just come to Amazon from the startup world, where there was no formal promotion process. When we wanted to promote someone, we just gave them a new title and a raise. I had no understanding of Amazon's process, so I figured that when the project was over I would talk to my boss and get the engineer promoted. I never gave it another thought because in my mind it was as easy as that. The engineer kept his end of the deal, and the product shipped right around the time of Amazon's fall promotion cycle. The cycle came and went, and I could not get the engineer promoted. So, he left and told me straight up that it was because I did not follow through on his promotion. I am the bad guy in the story, and if I could change the past I would. But, for future managers and employees, here is what I learned. For Employees: 1) At large companies, it is common for new managers to not understand the promotion process. If you have a new manager, odds are it will slow your career progress. You can fight this by making sure they understand the complex process so that they can navigate it on your behalf. 2) Remember that your manager is a lot less focused on your career than you are. I meant no harm to my team member, but I was busy with the project and I was not a mature leader. His promotion was not top of mind for me because I thought my job was to ship software, not to grow the careers of my team members. I was incompetent but not malicious. 3) Make sure your manager really understands your expectations in a deal. This engineer expected to be promoted on a certain schedule. I was on board with promoting him, but I didn’t understand the specific timing he was looking for. For Managers: 1) Knowing the process matters! 2) Your employees cannot move up without your feedback and engagement. 3) Getting distracted from this element of your job has a direct, negative impact on your reports My mistakes cost my engineer his promotion and cost me a star team member. Fortunately, he has done very well at another large, famous company. I am glad my mistake did not get in the way of him having a successful career. Don't make my mistake! Comments on what else to do?

💡 Amazon earnings have been reported this week. Is #eCommerce finally recovering? What about Amazon Web Services (AWS)? ⤵️ 𝗥𝗲𝘁𝗮𝗶𝗹 / 𝗲𝗖𝗼𝗺𝗺𝗲𝗿𝗰𝗲 Amazon's retail business appears to recover quite well this year, now growing 7% again. Strategically, this isn't a big deal, though. More importantly, "Third-Party Seller Services", its #marketplace business, is growing 20% YoY as Amazon prioritises 3P merchants over its own #retail unit. One explanation might be that Amazon's first-party sales receive the most significant amount of scrutiny by regulators and the public, often accused of using its data advantage and copying successful merchants. But there's more to it... 𝗔𝗱𝘃𝗲𝗿𝘁𝗶𝘀𝗶𝗻𝗴 / 𝗥𝗲𝘁𝗮𝗶𝗹 𝗠𝗲𝗱𝗶𝗮 The by far fastest growing revenue line of Amazon is its #RetailMedia business. #Advertising revenue growth is re-accelerating to 26% YoY growth. 👉 Hear me out! That doesn't only mean that Amazon Ads are growing faster than Google Search (11%), Meta Social Ads (23%) or Snap Inc. Ads (5%). It shows Amazon Advertising is already bigger than YouTube and Snap Inc. combined. In fact, by the end of this year, Amazon's Advertising business will be the size of the entire 🇩🇪 German advertising market ($48bn). 🤯 💡 Hence, 𝑻𝑯𝑰𝑺 might be the whole reason Amazon is growing its own retail business only moderately while boosting its 3rd party seller marketplace. 𝑬𝒗𝒆𝒓𝒚 𝒎𝒆𝒓𝒄𝒉𝒂𝒏𝒕 𝒘𝒉𝒐 𝒆𝒏𝒕𝒆𝒓𝒔 𝒕𝒉𝒆 𝒎𝒂𝒓𝒌𝒆𝒕𝒑𝒍𝒂𝒄𝒆 𝒊𝒔 𝒂 𝒍𝒊𝒌𝒆𝒍𝒚 𝒔𝒑𝒆𝒏𝒅𝒆𝒓 𝒐𝒏 𝑨𝒎𝒂𝒛𝒐𝒏'𝒔 𝒂𝒅𝒗𝒆𝒓𝒕𝒊𝒔𝒊𝒏𝒈 𝒑𝒍𝒂𝒕𝒇𝒐𝒓𝒎. Amazon basics don't necessarily pay their rent on the scarce screen real estate. (Remember Amazon cutting lots of its own brands recently?) Profiting from the heavy competition among third-party sellers by collecting fees for listing, fulfilment, placement, AND advertising is a much better business. 🌨️ 𝗔𝗪𝗦 𝗖𝗹𝗼𝘂𝗱 Of course, as with Microsoft & Alphabet Inc., analysts were closely watching Amazon Web Services (AWS) results. And while Azure sales are re-accelerating to 29%, making the MSFT Cloud the primus inter pares this earnings season, and Google Cloud Platform growth dropped by 5%, #AWS sales seem to have stabilized at last quarter's growth around 12%. It's worth noting, though, that AWS - in times when clients seek to save costs - has improved its operating margin from 24 to 30% and contributes USD 7 billion to the group's profit. 💸 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄𝘀 Amazon - to my knowledge - is the only company that publishes its cash flow statement as the first part of its earnings release, while most companies put it after the income statement and balance sheet. On a last twelve months (LTM) basis, Free cash flow has shifted from a negative USD 20 billion to a positive USD 21.4 billion in just one year. As Amazon is finally clearing inventory, cutting 27,000 jobs and growing its advertising and cloud business, it's back on track to generating huge amounts of cash for its shareholders.

While running Amazon ads and the Amazon business in general, the north star business metric for me has always been TACOS which is the Total Advertising Cost of Sales. Not ROAS or ACOS TACOS is basically all your ad spends as a percentage of revenue. The revenue includes both ads revenue and organic revenue. But more often than not, most Amazon teams focus only on ad revenue and ad spends, forgetting the most important part-organic revenue Very few brands would even be measuring what their organic revenue is on the platform at a keyword level. It is extremely important to take all steps that will increase organic visibility and organic sales in the platform. In fact, Amazon Pi Search Performance report gives you the SOV that you have at a keyword level for SP ads, SB ads as well as organic The lead indicator of profitability in the platform are mainly 2 things a) Increase in organic SOV in all generic keywords b) Increase in branded searches Increase in branded searches is more often than not decided by what you do outside the platform. Executing good campaigns on ATL and really good clutter breaking Meta performance campaigns often does the trick here But increasing organic SOV in generic keywords is often a result of what happens on the platform. In Amazon, whatever you do on ads also directly influences organic results. Eg. If you bid and rank top of Search on SP ads for certain keywords and your conversion rates are better than the category on those keywords, Amazon will also start ranking you on top organically for those keywords That is why I have often told that Amazon is a compounding channel and can be run profitably at scale because it rewards good performance with better organic visibility. Because of this, if you could have organic sales and directionally estimate TACOS ( not ACOS) at a keyword level, you could make a lot of optimizations on your ads as well as overall content which would benefit the business Eg: Lets say “mixer grinder 750 watt” is a keyword that I am spending money on ads. I know the ad spends, ACOS and ad driven sales on this keyword. But not how many organic sales I am getting from that keyword and is that improving with time. And since I don’t know the organic sales, I also would not know TACOS for the keyword Ideally I would want both organic SOV as well as organic sales increase for this keyword. Without it, profitability would be very difficult. Amazon doesn’t expose true organic-sales revenue at the keyword level, so any TACoS by keyword metric has to be derived The rest of the post is there in the link in the first comment. Do read and share how you do keyword level tracking of organic sales and keyword level TACOS and how you use the results

There is no one-size-fits-all when it comes to GTM. Maja Voje and I studied 12 leading B2B SaaS companies. (including interviews with their teams) Here’s what we learned: 1. PLG is eating the world >80% of the companies in our study employ PLG in some fashion. Even enterprise companies like Snowflake and Salesforce are adding free trials & freemium. It’s the new normal. Why is this working for them? In 2024, the best marketing is often your product. Users rarely want to lock in a $500K+ contract without trying the product first. But you do need to layer on a strong product-led sales motion to make enterprise work. 2. Dominate one at first, then layer on many Every company we studied got one GTM motion massively right. And, in each case, they still use that GTM motion in some form today. But, they layer on other motions over time. The ideal way to layer is symbiotically: • ABM couples nicely with outbound • Inbound supports outbound • Partnerships amplify PLG For instance: Dropbox grew at first massively on referrals. Now, other channels are much more important. 3. ABM and Outbound are pillars of enterprise For 5- and 6-figure deals, it’s difficult to rely on inbound or PLG alone. The buyer is used to a different process. They want to be hand-held. This is where motions like ABM and outbound shine. That’s why you still see the Snowflake’s and Salesforce’s of the world focusing on them. They’re the bread and butter of enterprise. So… bringing it all together, here’s where to start based on your buyer. If you’re selling to consumers or prosumers: • Lean into PLG, community, and partnerships early on • Layer in paid marketing as you find product-market fit and have budget to scale If you're selling to SMBs: • Blend inbound and outbound motions to build awareness and relationships • Paid digital can accelerate pipeline generation as you dial in your ICP If you're selling to enterprises: • Focus on targeted ABM and partner ecosystems • Inbound is great for air cover, but outbound is crucial for landing large accounts If you have a complex or technical product: • Make sure you have developer docs, free tooling, and community support from day one • Don’t underrate channels like partnerships & paid digital; they can still be crucial support And above all: 1. Remember what works at one stage may not work another 2. Remember the law of diminishing returns 3. Be willing to pivot when necessary

7 out of 10 of my projects start with fixing what most people ignore. This includes: - making copy easier to read - making images informational - making product name impactful Simple, but yet forgotten. In this post, using URturms example, I'll be sharing 11 underestimated changes that can increase your website sales. 1. Adding breadcrumbs. Important if you drive ad traffic to the PDP directly. They take shopper to the parent category page. Reducing bounce rate. 2. Adding a badge. Like "Bestseller", "Most Loved", "Few Left". This reassures the shopper that they're making the right decision. 3. Making images easier to swipe. Add a sneak peek of the next image along with navigation dots that show the count. Cap them at 8. 4. Making the product name impactful. Add key USPs. Show your current product name to 10 people. Do they understand what it is? 5. Add a short description below product name. Keep it in 1 line. Highlight it's most important feature here. 6. Consider adding an offer close to price. This motivates the shopper as they see some potential savings or benefit. 7. Highlight key product strengths in bullets or with icons. Avoid sentences. Keep this before the add to cart CTA. 8. Keep your add to cart CTA full width. Don't combine it with quantity or another CTA next to it. Make sure it's readable and prominent. 9. Highlighting shipping time or return policy below the CTA. This solves for common questions - when will I get it? can I return it? 10. Cross-selling complementary products. Like bottoms with tops. Earrings with necklace. Do this close to the add to cart CTA. 11. Adding 'Benefits' to your accordion. This gets a higher click through rate, while helping shoppers understand why they should buy this. Other UX/UI changes I did: - Removed quantity button - Made the information bar non-moving - Removed log-in, moving search next to cart - Changed the font for product name and CTA - Increased font size in places for better readability Found this useful? Let me know in the comments! P.S. If you want to maximize your PDP’s potential, start by understanding your visitor's behavior and the gaps. Get heat maps for your site (Microsoft Clarity is free). Observe what they like to (and don't like to) interact with.

StepLadder grew 11X in 1 year by 𝘢𝘥𝘥𝘪𝘯𝘨 friction to their funnel. Here's how... With degrees from Wharton, Stanford and Oxford, plus 20 years in business and a previous startup, Matthew Addison and Lucy Mullins, did not lack brains or experience. Still, their startup was not growing, and nothing seemed to work. Their company Circles powered by StepLadder helps people save, together, to reach their financial goals faster. “𝗡𝗼𝗽𝗮𝗱𝗼𝗻 𝘀𝗵𝗼𝘄𝗲𝗱 𝘂𝘀 𝘁𝗵𝗮𝘁 𝘄𝗲 𝗵𝗮𝗱 𝘁𝗵𝗲 𝘄𝗿𝗼𝗻𝗴 𝗳𝗼𝗰𝘂𝘀" "The first thing we did in the SYSTM program was find our 'rate-limiting step,'  so we would know where to focus for the greatest impact,” Addison explained. “We realised our bottleneck was in the middle of the funnel. “Getting signups was easy, the hard part was getting people to actually commit and save money each month.” “We tried simplifying the flows, testing motivational emails, nothing worked." 𝗧𝗵𝗲 𝗺𝗶𝘀𝘀𝗶𝗻𝗴 𝗽𝗶𝗲𝗰𝗲 𝗼𝗳 𝘁𝗵𝗲 𝗽𝘂𝘇𝘇𝗹𝗲 “Nopadon kept asking us 'what was holding them back?’ We couldn't improve activation until we understood why people weren't saving in the first place. Deleting form fields and turning buttons green wasn’t working.” "We interviewed customers and uncovered many blockers." "At each stage of the process, our customers had specific doubts and questions. We actually had good answers for all these questions, but we weren’t providing them.” "We started testing changes based on what we were hearing from customers." 𝗙𝗿𝗶𝗰𝘁𝗶𝗼𝗻 𝘄𝗮𝘀 𝗼𝘂𝗿 𝗳𝗿𝗶𝗲𝗻𝗱 - 𝟭𝟬𝗫 𝗶𝗻𝗰𝗿𝗲𝗮𝘀𝗲 𝗶𝗻 𝗰𝗼𝗻𝘃𝗲𝗿𝘀𝗶𝗼𝗻 “To fix this, we actually added friction to the funnel. We added steps and questions to address customer doubts. Noom does this too, their signup is like 20 screens long, but those questions answer doubts and build intent.” “Our flows got longer, but they got better. Conversion to active eventually increased from 3% to 30%. That’s not a typo.” And o͟u͟r͟ ͟L͟T͟V͟/͟C͟A͟C͟ ͟g͟r͟e͟w͟ ͟f͟r͟o͟m͟ ͟0͟.͟4͟X͟ ͟t͟o͟ ͟5͟.͟5͟X͟, which is the difference between not having a business and having one in today’s funding environment. (The arrow on the graph shows when they joined the SYSTM programme) 𝗧𝗵𝗲 𝗺𝗼𝘀𝘁 𝗶𝗺𝗽𝗼𝗿𝘁𝗮𝗻𝘁 𝗳𝗮𝗰𝘁𝗼𝗿 “There was no single magic change. We got these results from maybe 20 or 30 changes. But we tested hundreds. For us it was really about the pace of experimentation." It was also about courage. “Many of our biggest wins came from things we'd been afraid to try. We didn’t want to make flows longer, it felt like a bad idea." 𝗠𝗮𝘁𝘁𝗵𝗲𝘄 𝗮𝗻𝗱 𝗟𝘂𝗰𝘆’𝘀 𝗔𝗱𝘃𝗶𝗰𝗲 𝗳𝗼𝗿 𝗳𝗼𝘂𝗻𝗱𝗲𝗿𝘀: “Now, when founders ask me for advice, I tell them three things: 1. Interview your customers 2. Run as many experiments as you can 3. As soon as you’re ready, apply to SYSTM." "I wish we’d applied a year earlier, that would have saved us $1M and a lot of aggravation." We’re now accepting applications for our Feb cohort https://lnkd.in/e8tysm7P

Investors always talk about TAM (total addressable market). How do you guesstimate it for an e-commerce brand? Euro Monitor/Nielsen reports are too expensive and inaccessible. Yet, answering this question is crucial for every deck and also for internal teams to understand how much scale is possible for a product. Here’s a quick framework I've developed that should work for e-commerce: >Pick your category's top 10 products on Amazon. >These typically contribute ~50% of category revenue (based on my general assumption – you can take a different one if you like). >Multiply each product's review count by 30-40. (Industry data shows only 2.5-3% of customers leave reviews.) >Multiply the result by the product's selling price. Double the final number for total market size – assuming the top 10 products contribute 50%. >PS: Amazon now gives range estimates of product sales for high-selling SKUs. Let me break this down with a hypothetical example. Take the protein powder category: -Top product: 5,000 reviews, Avg price: ₹2,000 -Quick math: 5,000 x 35 x 2,000 = ₹35 Cr -Assume top 10 have similar reviews: ₹35 x 10 = ₹350 Cr -Market Size = ₹350 x 2 = ₹700 Cr Some additional pointers: -This should work across marketplaces with authentic reviews. -It is a guesstimation with assumptions – tweak them based on the category (e.g., top 10 product share or percentage of customers who review). -This assumes all reviews are from the past year – you could temper it by considering only half the reviews for the last year. I've seen founders spend months waiting for perfect data, losing valuable time to competition. But in the early stages, directional accuracy beats precision. I think this toolkit gives you enough available data to start and iterate. Thoughts? Have any other ways? Pro tip: Cross-reference this with Google Trends and keyword volumes. The intersection of these data points usually gives you a solid starting point. #business #startup #market #valuation #founder