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Understanding Sales
At Tydo, the definition of sales refers to the value of all sales, including shipping and minus any discounts applied. We look at sales as the money coming into your business.
How we calculate sales for your Shopify store is unique to Tydo. So, that means your sales in the Shopify Analytics dashboard will look different than what you see in Tydo’s platform.
Shopify calculates total sales like this: total sales = gross sales – discounts – returns + taxes + duties + shipping charges.
We don’t include taxes and shipping in Tydo’s definition because both values are out of your control—meaning you can’t change (either as an increase or decrease) those values in a sales transaction. Also, we don’t subtract returns because of how the logistics of returns typically work (which alters data).
Why is understanding sales in Shopify and building a sales strategy important for your business? It:
- Offers insight into your customer’s orders and their respective pain points
- Shows you how much money is coming into the business, which impacts other data points such as AOV, ROAS, and blended ROAS. All these metrics help you understand profitability and how to improve the CRM.
- Helps pinpoint where the best sales practices are taking place
How to calculate Sales
Sales = dollar value of product price (Shopify) + dollar value of shipping charges (Shopify) – the dollar value of discount used (Shopify)
Data source: Shopify
Example
You launched your online candle store a year ago, and it’s time to check in on your annual numbers. The data shows that your customers purchased $50,000 worth of candle products, but that’s not your sales number (don’t forget to account for shipping revenue and discounted orders!).
In that year, your customers redeemed $10,000 worth of discounts, and shipping revenue totaled $5,000. So, your annual sales = $50,000 -$10,000 + $5,000 = $45,000.
Takeaway
Sales are like the bouquet you get after planting seeds in your flower garden. Every seed doesn’t result in a flower, but what you have at the end of the season makes up that gorgeous bouquet.
We all want sales. It’s money coming into your business! Understanding this number allows you to get the full picture of how your business is doing and if reaching profitability.
Ready to level up your learning?
Read more about Sales
Understanding what makes a Sale: Sales and Returns
Is a canceled order a sale?
In your Tydo dashboard, we include canceled orders in our sales number.
Shopify views this differently. In Shopify, “When you cancel an order, it appears as a sale for the day that it was placed and a return for the day it was canceled, so your sales numbers are zero for that overall order.” This is different from Tydo because we do not account for returns in your sales number.
Is a returned order a sale?
In Tydo, we include returned orders in our sales number.
In Shopify, “the sales reports include sales and returns from open, archived, canceled, and pending orders and draft orders that have been converted into orders. The sales reports do not include sales and returns from deleted or test orders.”
Is a test order a sale?
In Tydo, we do not include test orders in our sales numbers.
In Shopify, sales or returns from test orders are not considered part of your sales.
How to improve performance and sales activity
There are various ways to improve sales performance. Here are a few strategies from experts and top-tier ecommerce brands:
Simple, consistent messaging on your homepage with a clear CTA
Prospective customers should understand your brand and what you sell right from the start. Use a clear headline on your homepage. Graza’s homepage is a great example of how a succinct headline works to grab attention.
Pair a sharp one-liner with clear imagery and a call to action. This will encourage new customers to buy, which leads to sales!
Does your website look the same on mobile?
Most potential customers shop on mobile, so your website needs to be optimized for this shopping behavior. Optimizing your mobile site will create a better shopping experience for everyone.
Keep the website clean, easy to navigate, and simple! Minimize the text and center product photos. This helps optimize an ecommerce store for mobile use and attract new leads.
A fixed navigation bar simplifies the user flow and creates a seamless shopping experience. Also, provide a buy button (make sure they’re full-width on mobile for easy visibility) on every screen. All these choices help drive sales.
Spread the word about your brand on social media
Create a social presence wherever relevant and make it a part of your sales strategy.
Should you be on TikTok? The platform is a great place to build customer relationships and show them the human (and authentic) side of your brand. “The key: Can you bring enthusiasm and energy to the platform? TikTok responds to that,” says TikTok creator Dulma Altan.
JT Barnett shares that the platform is an easy and free way to get more eyes on content. It costs zero dollars to post, so why not? Having user-generated content (UGC) on hand is helpful, too. It builds trust, and it’s easy to share across various channels and marketing efforts. All of these efforts on social can lead to more sales.
Focus on recovering abandoned carts
Are customers adding items to a cart and not following through with checkout?
Adding an abandoned cart email flow to your email marketing and sales funnel can be beneficial. These emails effectively remind shoppers about items they left behind and increase the likelihood that they return to your Shopify store and finalize the purchase.
How to understand your sales data
View sales over time
Tracking brand sales over specific timeframes can help you track patterns or see trends in an ecommerce business.
Do certain seasons see increased sales? Are influencer programs impacting sales? Is a certain discount code bringing in more customers and purchases?
Track and compare your sales to the previous period with Tydo’s Store Overview (for free).
Look at types of sales and filter by product
Tracking sales is more than just seeing the dollar amounts and meeting quotas. You can use this data to see what products drive the most sales or are stagnant.
In Tydo, we refer to this as product performance, and you can view it for free in the Store Overview.
What is product performance? It’s the dollar value created by each product. You can also look at product performance as a formula like this for a particular product:
Product sales – (product discounts + product returns)
At Tydo, we include returns because we want to understand the value of each product individually. By doing this, you can see how each product performs. You can see this through dollar value or by units:
Product Performance (by dollar value): dollar value of product price (Shopify) – the dollar value of discount used (Shopify) – the dollar value of returns (Shopify)
Product Performance (by units): number of units sold (Shopify) – number of units returned (Shopify)
Data source: Shopify
Understand attributed sales within the sales process
If you’re running paid ads on platforms like Google or Facebook, you’ll want to know what portion of your sales are being driven by those channels (also known as attributed sales). This data is helpful to know, so you can adjust your ad spend accordingly—based on results or sales goals. Note: These numbers can be low fidelity due to frequent iOS changes.
Here’s an example of attributed sales in action:
For April, you run ads on Instagram for your granola brand to attract potential buyers.
Within Instagram, your ads drove 200 customers to purchase from your website, and those customers equaled $1,200 in sales. Your attributed sales number from Instagram is $1,200.
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