REPEAT COMMERCE: 01 - What Number Predicts If Your Shopify Store Survives?

0:00In 2013, the average online store lost about$9 every time it won a new customer. So the cost of acquiring that customer,$9. After the ad spend, any discount codes, returns,$9 on average. Annoying, but not horrible. Now, today, that number is$29 on average. I know many stores spending a ton more than this, but$29 gone every single time somebody buys from your store for the first time. And you know what most of us do when the first order comes in? We celebrate. We screenshot. We hear the cha-ching. We put the ROAS number in Slack and we're throwing parties around transactions that we're actually losing money on.

0:45Welcome to today's Shopify 1 % episode. As you know, I'm Jay Myers and every episode we try to do one specific thing to help you improve your store or make it at least 1 % better. Now, today's episode is actually the start of something bigger. This episode is one of a whole series on what I'm calling repeat commerce, which is the business of the second order, the third order, the 10th order, and so on. Because I believe that most Shopify brands have actually been quietly building the wrong machine. A machine that's brilliant at winning customers once, but it's terrible at keeping them coming back over and over.

1:20Now, by the end of this episode, you're going to do one thing for me. You're going to pull up two numbers in your Shopify admin. It'll take maybe five minutes to do. And you're going to find your repeat purchase rate and the percentage of your revenue that is coming from returning customers. Now, most merchants I talk to have never even looked at these numbers and they definitely don't know it off the top of their head, but they're numbers you should know intimately. And I'm going to tell you later exactly how you find them, what counts as good, what counts as bad. And one kind of sneaky way that Shopify's default number can actually fool you into thinking you're much healthier than you are.

1:54So I'm going to show you how to actually figure out your true number. So stick around for that part because almost nobody knows that.

2:03OmniSend just shipped something that I've always wanted. You can now connect OmniSend to ChatGPT or Claude and just say, where can my email and SMS campaigns be making more money? And it actually figures it out. It reads your store data, all your campaign details, your store history, and it tells you. And the insights are legit good. And even better, you can then say, okay, let's fix that. Or build that campaign. and it actually does it right from your chat. It's wild. Now, if you're one of our listeners, you can get 30 % off for three months on OmniSend. Just go to the show notes. There's a link there.

2:34Or you can just use the code J30, J-A-Y-3-0 when you sign up. Now, if you're using another email and SMS platform and you want to switch to OmniSend, which is a great idea, they will do the migration for you. Just give them five days and then you show up with everything set, ready to go. Now, they've migrated thousands of stores from Klaviyo And on average, they're saving 35 % on their email and SMS bills. If you're listening to this show, you clearly care about your Shopify business. If your store isn't backed up and protected, it could all be for nothing. That's why I tell every store owner I know who cares about their business, you 100 % need Rewind installed.

3:10It's a non-negotiable for me. One bad CSV import, one app that edits your store the wrong way, which has happened to basically everyone I know. One bulk edit gone wrong. And now AI making changes for you. Listen, Shopify does not have an undo button. Rewind is the undo button. Go to shopify1percent.com slash rewind for 30 days free on us. Links in the show notes too. Last year, I went to Commerce Roundtable in San Diego and it was so good. I'm going back again this year. It's September 21st and 22nd. And honestly, you should come too. It's the one e-commerce event that I recommend to everybody without blinking.

3:50It's not a trade show. There's no booth demos. It's really just operators on stage sharing what's actually working in their stores right now. And it's basically a room full of all founders. I was actually scrolling through my camera roll from last year, and I have over 100 pictures of slides from people's talks. I learned so much. It's that kind of an event. Now, I have five passes to give away for a 30 % off ticket. It's first come, first serve. So if you're interested, email me, jay at shopify1percent.com and I will hook you up. They will go fast. So email if you're interested. And if you're going, come say hi.

4:25Let's grab a coffee or a drink during happy hour. I'd love to meet you. So let me give you two numbers that made me want to record this entire series. That$29 figure from the open where I talked about how an average order now is costing $29 versus nine. That came from a report from Simplicity DX. They actually tracked the fully loaded cost of acquiring a new customer, including ads, returns, overhead, all of it. And they found that the average merchant went from losing$9 in 2013 to now losing$29. That's a 222 % increase. And there's a lot of factors playing into this. iOS privacy changes, ad costs are skyrocketing, rising rates of returns.

5:11People are returning stuff more than ever. And it all kind of stacks up. Now, the second number from that same research is the average repeat sale generates$39 in profit. Okay, so the thing I didn't mention in the beginning is the cost on the initial order has gone up 227 % to losing more money. But the second order, the average repeat sale and third and fourth and fifth order is generating$39 in profit. Again, not just taking into account the acquisition costs, because that would be obvious because you're not paying to acquire, but returns, all the other costs, everything else. So that's actually up 36 % over the same period of time.

5:58So first time customers have become dramatically less valuable, 222%. And your repeat customers have actually become much more valuable, 36 % more valuable. Like if that doesn't kind of make you stop and think right there, the difference, it's widening. The gap is increasing, making repeat customers even more valuable. And there's so many things. I've talked about this on the show before that are important about repeat customers. Not only is your spend going up, customers just aren't finding you through Google like they used to. Google actually put out a report recently that 61 % of searches no longer end in a click.

6:36So like they're just going to AI. They're reading the AI overview. And on top of that, agentic commerce is here. People are just going to like shop app, for example, chat GPT and asking for products. And they might not even visit your site. So once you do get that customer, it's so, so important. Okay, so when someone asks, is my store profitable? Honestly, that's almost kind of the wrong question. The real question is, do my customers come back? Because if they don't, you didn't really make a sale. You made a donation to Meta or whoever you're spending your ad money with, with just a few extra steps.

7:13And that's why I think repeat commerce should be the default way we build stores, not the thing we think about after. The word default actually really matters here because right now, repeat is kind of the exception. It's an afterthought. Like it might be some email flow that you have set up or someone hasn't touched it. Who knows if it's even still working. So I want to spend this series convincing you to completely flip that. And so today we're going to start with what I call the three lies that got us here. So lie number one, growth means new customers. And this one is baked so deep into e-commerce culture that we don't even notice it.

7:57If you open any brand's marketing meeting, the agenda is acquisition, new customers, CAC, customer acquisition costs, ROAS, return on ad spend, top of funnel. These are words that you hear at any marketing meeting. And I get it. I fell for this one too when I was running stores. I've been running online stores since 1998. And for the first decade, I literally believed that the scoreboard was how many new customers I got per month, how many new faces were coming in, how many total customers I had. Then in 2012, I founded Bold Commerce with three friends. And over the next decade, I got to see the inside of hundreds of thousands of Shopify stores.

8:37We built the first upsell app on Shopify, the first subscription app, the first membership app, all of it. Merchants were constantly showing us their numbers because our apps were using those numbers. And patterns started to show up so consistently every single time. The brands that grew steadily year after year through all the changes, through iOS update changes, ad costs, spikes, pandemics, you name it. They were never the ones with the best ads. They were the ones whose customers kept coming back without being chased. and the data backs up and what I watched happen. Stores, I got this written down here, stores with a 40 % repeat customer rate generate 50 % more revenue than stores sitting at a 10 % repeat customer rate.

9:24Same traffic, but wildly different outcome as far as revenue goes. And repeat customers, so many more benefits. They spend 60 % more per order than one-time buyers. and it's because they already trust you. They skip the whole comparison shopping. Once they've bought from you once and especially if they're a member and even more so if they're a paid member, they stop shopping around. It's called brand affinity. They just add the second items to the cart. That's why they're spending more. And so here's a different definition of growth that I want you to try on, let's call it. Growth for you should be the number of customers who would notice if you disappeared.

10:06So if today, if your store disappeared, how many customers would notice? Is it 10? Is it 1 ,000? Is it zero? So new customer acquisition fills the room, so to speak. It brings the customers in. But repeat purchasing is whether anyone stays for dinner, let's call it. Both matter. And I'm not telling you to turn off your ads. Of course, that would be insane. I'm telling you that if every dollar of energy goes into just filling the room and zero goes into dinner, you've basically built a really expensive revolving door. So just, I guess a quick gut check on what you can do right now, before we even get to the Shopify reports, if you stopped all paid advertising tomorrow, what would your revenue do next month?

10:50If you had zero ads and if your honest answer is it would completely fall off a cliff. You don't have a brand yet. You have a media buying operation that ships products and that's not bad. That's important, but we need to get you to the point where you become a brand and you're not a media buying operation shipping product. So I know it stings a little bit. I know it stung me when I first did the math on one of my own stores back in the day, but it's kind of one of the single more clarifying questions in this whole episode. Okay, lie number two. Retention is an email problem. Lie number two is, this is sneakier because it actually sounds responsible.

11:35A merchant hears retention and they say, yep, oh yeah, we got that covered. We've got email flows. We got welcome series. We got abandon carts. We got win backs. Yep, yep, we got our retention taken care of, box checked. Email is a channel. Retention is a design decision. So if you think about the brands that you personally reorder from, not as a merchant, but as a customer, the coffee you buy every month or the dog food or the skincare, did the email make you loyal to them? Or did it just remind you of a decision you'd already made because the product was awesome and the reordering was painless?

12:13Retention actually gets decided in places email doesn't touch. It gets decided in the product experience. Did the thing arrive fast? Did it work as promised? Did it feel worth it? It gets decided in unboxing and the follow-up. Did anyone tell me how to get the most out of what I bought? How to use it? How to tips and tricks? Or did the relationship end after it was shipped? Which a lot of brands do. You get your shipping confirmation and that's it. And this one matters, I think, more and more every year because it gets decided by how easy you make the reorder itself. Every single click between I want this again and purchased is a place where I might wander off and get distracted or worse.

12:59I might just buy it from Amazon or Costco or anywhere else I happen to see that product. So when I say repeat commerce should be the default, I mean designed in the same way you would design your product page. Most brands design the path to first purchase obsessively. Like you've got heat maps, A-B tests, you're watching screen recordings, CRO audits. Like you obsess over getting that customer through when they land on your site through to the first purchase. But they leave the path to the second purchase as, I don't know, they get a newsletter, they get an email. So we got to flip that energy.

13:36I mean, even if you flip to enter 20 % of it, let's flip it. at the beginning of the show i told you why everyone serious about their shopify business should have their store backed up and protected with rewind there is no excuse not to there literally is no undo button for shopify shopify's own terms actually say that your data is 100 your responsibility your products your theme your customizations your settings everything They don't back up any of it. And no, a CSV export does not cover it. With CSV exports, there's no images, no metafields, no themes, settings, etc. Nothing. I was talking to the people at Rewind about a brand where one team member actually ran a bulk update and accidentally overwrote 11 ,000 products.

14:26Orders, customers, contacts, all of it gone in a single action. Luckily though, with Rewind, it was a simple one-click rollback. It could be anything. A bad CSV import, a random app you just installed that messes everything up, or all of these AI tools that everyone's using to manage their store now. I have heard so many horror stories. Rewind just gives you peace of mind no matter what. If you don't have Rewind installed, you absolutely should have it. Go now and get it. Shopify 1 % dot com slash Rewind. You'll get an exclusive 30 days free on me. The link is also in the show notes. At the top of the show I mentioned, OmniSend can now talk to ChatGPT and Claude.

15:07And I want to tell you why that's even bigger than it sounds. So if you missed it, quick catch up. OmniSend is what I use for email and SMS on every Shopify store I work with, plus for this show as well. And you can now connect your AI, Claude, ChatGPT straight to your OmniSend account. Your data, your campaigns, your flows, everything. You open a chat and you ask, what should I focus on this week to make more money? And it will come back with real answers about your store, which flow is underperforming, which automation needs improvement, which customers are going quiet, what's missing, everything.

15:41My favorite part, though, is AI segments. I used to build these by hand, clicking through filters forever. Now I just type something like customers who bought twice but ignored my last campaign and it just builds it. and anything it writes already sounds exactly like your brand because it pulls from all your previous emails, from your website, your logo, your color, your voice, everything. I've been doing this for 15 years and this is the closest I've ever felt to having a full-time marketer sitting right beside me. I have a link for you in the show notes that will give you 30 % off for your first three months or you can just use code J30 when you sign up, J-A-Y-3-0.

16:17If you're ready to migrate from Klaviyo to OmniSend like thousands of others, they will do everything for you. You just show up and all your campaigns and automations from Klaviyo will be set up and running in OmniSend, ready to go. And usually at 35 % less what you were paying Klaviyo.

16:36Okay, lie number three. I call this one, we'll fix repeat later after we scale. And this third lie is one, honestly, I hear most from growing brands. And, you know, it sounds totally reasonable. Like, I get it. You don't have a ton of customers yet. So why worry about retention? I'll worry about that when I have thousands of customers and retentions on the roadmap. And right now we just need to focus on volume and we'll fix it once we're bigger. And I've heard it all. There's two big problems with that. First, a repeat revenue compounds, which means delaying it is very expensive. Every cohort of customers that you acquire this year, even if you're just beginning, becomes an asset that you're going to have to pay to acquire again next year, or it just becomes a sunk cost.

17:26So if you acquire 10 ,000 customers this year and your second purchase machinery doesn't exist, you didn't just postpone retention. You probably permanently lost most of that cohort. And they're not sitting around in a waiting room until your roadmap catches up. They've moved on. They've bought their next bag of coffee from someone else, their next protein powder from someone else. So you have to bake it in from day one. And I think the second big problem with it is later is when retention actually gets harder, not easier. So at$500 ,000 a year, you can kind of read individual customer emails.

18:05You can actually see the names that keep coming back. Like when you're just getting started, you can see what makes someone loyal and you can fix a reorder problem with one Shopify setting much easier than you can at$20 or$30 million. At$20 million, that same problem gets buried under 14 dashboards and an agency managing your email and you don't see it as easily. And unwinding an acquisition only culture becomes a company-wide project at that point. But it's easy to do when it's early. So it's important to bake it in early on. The average repeat customer rate across Shopify sits at around 28%.

18:47That means for a typical store, roughly 7 out of 10 customers buy once and then vanish forever. Gone. You paid$29 to each of them actually lost$29. and most of them ghost you. Now, and this matters for everyone listening, whether you're doing$100 ,000 or$50 million, the right benchmark depends heavily on what you sell. So consumables, supplements, coffee, pet food, skincare, usually their repeat revenue is around at least 40 % because their products naturally run out and they need replenishing. So furniture, clothing, luxury, big one-time purchases, they're usually around 15 % and that's normal.

19:33That's like the structure of the business or that vertical. It's not a failure, but it's important to know what the ranges are for the different verticals. And so if you sell mattresses and you're listening to this show, don't panic when your number looks nothing like a coffee brand. Your repeat purchase game is different. It's accessories, it's referrals, it's replacement cycles. It's a different sport, but the same scorecard, but different sport. But whatever your category or your vertical, There is a healthy number for it and most brands are below what it should be simply because nobody ever made the second purchase someone's actual job.

20:08OK, so time to get to your numbers. I don't know if you're at your computer right now, but if you are, I'm going to kind of walk you through something. But if not, you can kind of bookmark this and come back to when you are at your computer. So you're going to open your Shopify admin and this is just going to take a few minutes. Number one, first thing you're going to do, you're returning customers rate. So in your admin, go to analytics and right on the main dashboard, there's a call card called returning customer rate. Now set your date range to the last 12 months. So a full year kind of smoothens out seasonality because if you're running this report in December or January, you might see a lower rate because you saw a spike of customers in Black Friday.

20:49So you always want to run it for at least a year to actually get a true number. Now, the sneaky part I kind of promised about in the open is Shopify's version of this metric counts any customer in your date range who's ever ordered before, even if their first order was outside the window. Now, that tends to kind of flatten the number, which it's directionally useful, but it can run a lot hotter, I want to say, than your true repeat purchase rate, sometimes by a lot so treat this dashboard card as the friendly version because so remember if someone ordered from you 10 years ago and you run this report for the last 12 months they're going to show as a repeat order even though it's not a super healthy repeat order but just keep that in mind knowing that that's how it's calculated okay now number two which is i would say the honest kind of version of your repeat revenue is go to analytics, then reports, and then pull up new versus returning customers.

21:54So you can also search the report list for first time versus returning. And this will show you the sales dollar split between first time customers and returning customers. Now, the question you're answering here is what percentage of my last 12 months of revenue came from people buying a second or third or fourth or fifth time? What percentage of my revenue is coming from repeat customers versus one-time customers? Okay, that's it. Those are the only two I want you to run right now. Write those numbers down. Physically write them down. Put them on a sticky note. Put them on your wall beside your computer.

22:31It's important that you know these numbers. Now, even though the first one I said is somewhat inflated, that's okay. These are going to be your benchmarks. So I'm serious about this. Put it beside your monitor because we've got a whole series coming out about moving these numbers and improving them. So I hope that you look back at that sticky note in three or four months and you run these reports again and the numbers are better. Now, there's an even more kind of honest version of these numbers. And it's one that strips out your subscribers because auto renewals or subscriptions, they can kind of quietly inflate your repeat rate.

23:14And it is a repeat order. I get it. But we also want to track separately customers who are just coming back because when the default number that Shopify has in, it includes all of the subscriptions. So it kind of hides how many of your one time buyers are actually choosing to come back. And there's a big difference there. So there's no canned Shopify report for this and you have to run a query. And I'm going to give you the exact query for this in one of the upcoming episodes because I don't want to go too deep here. But just so you know, those canned ones in Shopify do not include. Sorry, they do include all subscriptions.

23:53There is no canned one to exclude it. You have to run a custom query. You can ask Sidekick to do it for you. But we're going to cover that in depth in an upcoming episode. So I'm not going to go too deep in here. I just want to let you know. So here's how to grade yourself. Roughly is, I mean, this varies, but industry average repeat purchase rate is around 20%. And a healthy revenue share from repeat customers from an established store somewhere should land between 20 to 40%. Now, I've seen stores upwards of 80 to 90%. Like this is kind of benchmark average. We're of course going to strive for better.

24:30And it's going to be higher for high consumable products and then lower for what I call durables, which are anything that lasts and doesn't get consumed. So below 20 % in a repurchasable category is where you should be concerned. So you found the biggest lever in your business and it's not going to be new ad creative. It's going to be growing repeat revenue. So one more thing while you're in your reports, I want you to glance at customers over time. It's in the same report section. If your new customer line goes up and your returning customer line stays flat, that's what I would call a leaky bucket indicator.

25:16So that's in the new versus returning customer section and you can see customers over time. And so if your new customers is going up, meaning you're paying and spending to require more, but the returning customers isn't also going up, it's of course going to be less. I know it's going to be in the 30 % to 40 % range, but it should mirror the new customer rate. But if it's not, even if it's flat or not going up at kind of the same rate, you've got a leaky bucket. So take a screenshot of that because we're going to come back to that in a future episode as well too. But that's one that we want to increase.

25:50So let's leave it at that. Your 1 % win today, I'm just going to say this. It's dead simple. Actually do it instead of nodding along as you're running on a treadmill, which is totally fine. Run these reports. Open Shopify Analytics. Pull your returning customer rate, your repeat revenue share for your last 12 months, and the customers over time. And write these down with today's date. Put it on your wall. That's it. No apps to install. No flow to build. Nothing crazy. Nothing to buy. Just look. Look at your reports. That's your 1 % win. Put it on your wall. because I've watched this exact moment change how founders run their companies.