When you’re relying on apps or websites that you don’t own to sell your products, it can be pretty scary. Sometimes, when we think we have things figured out, the goalposts really start moving on us. You have Facebook nailed down, the revenue is rolling in and then, something changes and things just drop off a cliff. In a post iOS 14 world, this happens all too often – but Alex Fedotoff is here to tell you how to protect your eCommerce business.
Alex Fedotoff started his eCommerce journey as a cookie salesman, making $100 a month from his parent’s apartment in Ukraine in 2014. Now, he’s the founder of eCommerce Scaling Secrets and the founder of several seven and eight-figure eCommerce brands. In this episode, he shares some of his secrets to eCommerce success even as things change.
On April 26, 2021, the iOS 14.5 update shocked the digital advertising world as it introduced App Tracking Transparency (ATT). This major privacy feature required every App Store mobile app to ask for an iPhone user’s permission before tracking their activity across other apps and websites owned by different companies. In other words, it stopped advertisers from getting user data efficiently via ad networks like Facebook.
For many ecommerce brands, this update didn’t just reduce targeting precision—it also disrupted their conversion tracking, making it harder to see which ads were actually driving sales. Despite a business’s efforts to personalize ad, the ad campaign will likely not reach iOS users they’ve shown their ads to before. And this happens if users opted out via the ATT setting.
Fedotoff further explains the iOS 14 marketing impact, especially on their company. “Facebook has been always at least 80-90% of our traffic, at times, it’s like 100%. So the updates on Facebook have been the most kind of impactful from a negative standpoint. So whether it’s like Facebook sometimes the end of like quarter when they have a lot of advertisers, a lot of competition, sometimes they would just like, shut down the accounts or business managers or pages out of nowhere. So there’s like a big wave of bands. So those things have been, like, very impactful for us, like in a negative way, and then obviously the ios update, which happened approximately, like April May this year. It’s kind of like in the short term, it kind of impacted our business slightly for, like, a few months. But then we have found ways to kind of make it still works, and some of those ways I’ll share with your audience as well.”
How exactly did iOS 14 IDFA changes affect how a marketer deploys a Facebook ad? Let’s say you’re a business specializing in clothing, and you have landing pages targeting customers actively shopping for clothes. Previously, Facebook would know these specific kinds of users via their tracking and would build lookalike audiences from your best customers, then serve your business’s ads on their iOS devices.
But, as Fedotoff explains, after the update, they can no longer track user via the platform. “Facebook wouldn’t know the person is buying a lot of clothing because they’ve chosen to not be tracked, and so the overall pool of buyers, potential buyers that advertisers have access to just decrease significantly.”
The Facebook iOS 14 changes have pushed businesses to look for other sources of traffic. Fedotoff explains, “I think this whole update just exposed businesses that have been over-dependent on Facebook, including our business. We are so dependent on Facebook that any change is pretty much very detrimental.“
For Fedotoff, the first step is to realize that you can be vulnerable to such changes. Some business owners tend to be complacent and still continue to do things as they’ve been doing, only to realize at some point that it’s no longer working. But as Fedotoff points out, “But the only direction it will go is like D2C will become more and more competitive. Amazon will become more and more competitive. Facebook will become more and more strict. They already introducing a kind of like the feedback score, like on the Facebook page. You have the feedback score. That feedback score will be visible. Every app you will see what is the actual feedback score? So if customers see that, let’s say your feedback scores, like three out of five, that your customer experience is not good, that will impact your conversion rates.”
Simply put, digital marketing will only continue to get challenging, and it’s the business owner’s responsibility to respond to these challenges if they want to continue the success of their business.
Despite iOS 14 changes Facebook advertising, Fedotoff was able to mitigate the negative impact of the change using first party data, which is none other than server-side tracking. The business’s own server (for its store/checkout) sends events directly to Facebook (e.g., via the Facebook Conversion API).
Fedotoff shares stories that all carry a single, clear moral: diversification matters.
One story he shares is about his client from India:
“…in India, they have this tax like we are tax, you pay like 18% or something like a tax on your ad spend. So if you’re spending, let’s say $100,000 per month on ads, you’re paying extra like $18,000 in ad spend. You’re paying $18,000 on top of that in tax, right. So it’s like 118, not $100, which makes your margins shrink significantly. Because a lot of businesses function like 20% 30% margins, and so we have this conversation with him, and obviously he’s not happy with these margins.
He’s doing good numbers in terms of revenue, but not his margins, and I tell him, okay. So why don’t you introduce, like, a digital product like a course, that has high perceived value, but at the same time, it doesn’t have a lot of costs. You pay for it just once, and you see all of these companies, like, even Peloton, is based on physical products and digital kind of like the media.”
“So this is kind of like one of where we are heading right now in a few years. If you don’t have media with your business, this is just like a physical product. Unless you’re hyper-efficient, you will be struggling to compete because that media aspect increases retention. It adds subscription revenue. Like even Alo, there’s a company called Alo Yoga. They have this whole training class from yoga classes and stuff. So you buy the apparel. But then you have all of the classes that you can actually exercise, and charging you on a subscription basis adds another revenue stream to the business, makes the business more stable and also adds customers that are more loyal, increases their retention, and so he found someone who created a course, and so he paid them $400 to create that, like, course recorded videos, kind of like educational stuff, and he put it in the course, and he started selling it as an upsell for one of his products, and so he spent $400 on it. He paid, like, one time to the person he already has generated $100,000 in extra revenue with the product last, like two months or so, and that obviously has no cost. You don’t have to fulfill it. It’s just an automated email that sends you access to that digital product…”
He ends with, “You have to constantly evaluate your business and be open-minded.”
He shares another story about diversification.
“We were using Stripe. It was two years ago, and it was Q4, and we were doing decent numbers, like $20,000, $25,000, like $30,000 a day in sales, and we were pushing cue for a good time, and our company at that point was established in Singapore, and Singapore is like with their reason, they have a seven day payout time on a kind of like on transactions. If you generate sales today, Stripe holds for seven days, and then they give it to you, and so during that, pretty much like Q four week, we have accumulated, like, $200,000 on Stripe and then Stripe, just like, one morning I wake up after that was after 2017 or 2018 around the same time as now, and I woke up and they sent me an email. We decided to terminate your kind of relationship with you because we don’t seem like we seem like you’re too risky for our business model, and we will hold your money for 120 days, and then we’ll release it back to you.”
In hindsight, he reflects on his failure to diversify. “But the best thing is even, like, very clean, compliant businesses. They have issues with Stripe. With PayPal. Those businesses are very, sometimes they’re very strict, like, out of nowhere, something triggers, like security check, and they terminate the relationship with you. Some of our clients would say they have $30,000, $60,000 on PayPal, and it just locked, and then PayPal says, okay, we’ll not release it because you terminated some of the, Let’s say it’s drop shipping from China, and you haven’t disclosed it or something like this. Then they have the right to keep that money, and those are the type of horror situation.”
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