HOW I TRACK AND ESTIMATE DTC/ECOMMERCE SALES (PLUS AN UPDATE ON NUGGET COMFORT)

Date

This is my 4th-month tracking Nugget Comfort. I am so impressed with their level of business, I am starting to think I might be getting duped. I have been asked many times, “how I estimate a companies revenue?”. 

Here Is How I Estimate A Companies Revenue:

Most eCommerce systems are set up with sequential order numbers. If you place two orders a set time apart, the difference in order numbers is the total number of orders for that period of time.

Then, I have to estimate their average order value. There is no way for me to know for sure what their average order value is, but there are ways to get relatively close. 

First, I look for the most popular products on their website. Most times, there will be a filter on their website that allows you to sort their product listings by most popular (if they are on Shopify, there is a url trick to sort by their most sold products). I will also look at the number of reviews on each product. What products have the most reviews? What products have the most recent reviews?

Second, I look at what they do on-site to try to increase average order value. Do they have a free shipping threshold? Do they offer cross-sells and upsells in the cart? Do they have other offers to increase average order size (i.e. buy two get one free)?

Lastly, I use my 10 years of experience in eCommerce to guess if their products are something that a consumer will buy multiple of.

Once I have the estimated average order value, I multiple that times the number of orders during that period of time to get my estimated revenue for that period of time. I will do this monthly to keep a running track of how a business is doing.

What’s the data I have for Nugget Comfort?

Here are the orders I have for Nugget Comfort:

05/31/2021 – 466342

07/03/2021 – 489470

07/28/2021 – 504958

09/14/2021 – 543882

10/04/2021 – 567670

I break this down to the average number of orders for each month:

June – 700 average daily orders

July – 595 average daily orders

August – 828 average daily orders

September – 1189 average daily orders

Average Order Value:

Nugget only offers a few items for sale. 1 is their flagship product, The Nugget Comfort Couch, for $225. They also sell the triangle pieces and replaced covers for $99. The vast majority of orders are going be for their flagship product. There will be some orders for the replacement covers and extra triangle pieces. There will also be some orders for people buying more than one Nugget. For these reasons, I estimate their average order value is approximately $225.

Monthly Revenue Numbers:

June – $4.7M

July – $4.1M

August – $5.7M

September – $8M

Am I getting duped?

These are crazy good revenue numbers, especially when they have zero ads on Facebook and zero ads on Google. I start to second guess my methods, are they really doing this level of business?

So how could I be duped?

I know that they are on Shopify. And 100% Shopify uses sequential order numbers. However, Shopify does let you put a prefix or a suffix on your order numbers. Some companies will put a few letters before or after their order number. I have seen some other companies put numbers before or after they order numbers. Looking at these order numbers, I am fairly positive they are not using a prefix on their actual order numbers. The only option would be that they are using a suffix, but I am not convinced of that either. I do not see a pattern in the ending of these numbers. And if I were to take off the last digit of the order number, that would make their order numbers only 5 digits. Shopify starts with order number 1000, which would mean they only have received just over 55,000 total orders. Nugget reported on their website in 2019 they sold over 50,000 Nugget couches. 

So unless they are inserting many thousands of fake orders into their own systems, it does not appear that I am being duped. Nugget is really generating that much revenue.

Fomo

Nugget Comfort has used Fomo (fear of missing out) to drive sales for them. Their product has been back-ordered for the past year and a half. But their back-order appears to be coming to an end. Back in June, their lead time was 4-6 weeks. In August, it was down to 2-4 weeks. Today it is only one week (a reasonable time frame for furniture to ship). 

Nugget still does planned limit runs. They will introduce new colors and only run those colors for a limited time period before they “retire” those colors. I have seen them bring back “retired” colors for limited releases as well.

The Buzz

As I mentioned before, Nugget Comfort does not run any Facebook or Google advertising. They feed off the buzz around their product. On Instagram, they are tagged in posts around 800-1,000 times per month. There are groups on Facebook that have tens of thousands of members dedicated to talking about the Nugget Couch.

Here are Nugget Comfort (@nuggetcomfort) Instagram Followers by month:

June – 414K

July – 418K

August – 427K

September – 434K

Where Could Nugget Go?

I have to imagine sales will only increase during the holiday season for them, but after that, I have to believe some of the organic buzz that was created by people wanting these but not being able to get one has to die down a little bit. I desperately want to see if they turn on Facebook and Google Advertising, and if they do, what will their strategy be. More to come on Nugget Comfort. 

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