Cost of Sales: PPC vs. Marketplace - with Sorin Dochian from Heureka Group!

In this presentation, Serindo Kan, the country manager of Compardo Drop, discusses how e-commerce businesses can evaluate their true cost of sales to make informed decisions. He explains the pay-per-click model, highlighting its advantages such as speed, control, and targeting precision, which allow businesses to optimize campaigns effectively. Serindo also compares this model with marketplace selling, emphasizing the differences in audience trust, conversion rates, and control over marketing strategies. He illustrates the cost of sales calculations using a practical example of an iPhone, demonstrating the metrics needed for each approach. Ultimately, the speaker concludes that businesses should find a balance between these strategies to maximize profitability while growing their brand.

Hello guys, my name is Serindo Kan. I'm uh the country manager of Compardo Drop, part of Heeka Group. Today uh uh I want to speak a little bit about me. Uh I have over 10 years in uh sales uh focusing on ecom and qcom and um I helped quite a lot of businesses small and medium and high businesses to digitalize to focus on uh a sustainable growth

and a business on their business strategy. Uh I think that's all about me and I think we should uh dive in into my mission. So my mission is clear for today. I want to provide a clear and a practical on how shops can better evaluate their true cost of sales and make more informed decision in e-commerce. Sorry. The agenda is quite simple. I want to speak about

us a little bit. I want to speak about the pay-per-click model, their cost and advantages, the marketplace, and after I want to create a head-to-head comparison, and obviously some conclusions. Cool. about HERA group. HERA is the largest price comparison and shop advisor in so we are in nine countries of central and eastern European. We jointly create the largest connected catalog of products on the online shopping market.

Today we are proud to say that we are the number one commercial platform in Czech Republic in Slovakia with Hueka in Hungary with Arukerio and in Slovenia with Yinia after we are also proud obviously that we are the number one price comparison platform in Bulgaria, Romania and uh Croatia. Yeah. So, I think that's a a little bit about us. We have 23 million monthly users. We have

over 55,000 merchants in our platform, over 85 million products. I think there's 90 million products. We increase our products day by day. So, we have quite a lot of offers. about Pazaruvi. We launched in Bulgaria in 2006 with user reviews and ratings building trust amongst the sellers and providing insights into the product quality and reliability. In 2023, we launched one platform. So basically, it's our new platform,

our new app. You can obviously try it. You can check that. Um, it's quite beautiful comparing to the older one. We are the first price first price comparison site in Bulgaria. We have over 1,500 monthly visits and we are partners with over 950 merchants into our platform. I think we have more than more than this one. I want to thank them all. So I think uh we

already work together. We build trust for our merchants. We build their brand. So keep up the good work together. This is our product tree. You can see that we have many products, many categories, many subcategories all across the platform. These are these are the main categories and the main subcategories. So you can find basically anything you are looking for. And let's jump into the most interested part

of the presentation. I will discuss a little bit about pay-per-click. So I will highlight some advantages like the first how it's working. The pay-per-click advertising refers to a digital ads where you pay for each click. It's quite simple. If you are going to enter to our platform for example and you are looking for an example of a product, it's quite simple. You are going to search the

product, find the product and after you are going to click the button, it's redirect to you to the store. It's quite simple. And this is the exit click. This is the paper click is working. The next one, what are the advantages? So, you have speed and control. Here you can launch campaign fast. You can pause and optimize them in real time. Next is targeting precision. You can

reach user by intent, by behavior, demographics or location. Category based flexibility. The cost per click varies by product category and price point enabling a better ROI for high margin products. After you can scale faster, you can increase your budget instantly but obviously is diminishing the returns. testing friendly easily test landing pages, creatives and and data reach instant feedback on what's working. So this is the market the

pay-per-click I will going to in the end to discuss about the head-to-head comparison and you are going to see more more informations and I think that'll be marketplace I think marketplace we all know them all know this type of platform how is working it's a third party platform where where you list your platform your products and pay commission on sale it's a paper sale is not a

paper click. It's quite let's say easier to understand. Basically, you are listing your product. You are going to click the buy button. The product is going to the chart and that's it. What are the advantages? It's a large built-in audience. You get access to million of ready to buy customers. High trust and conversion shopper trust marketplace. more than other platforms because here you are going to find

the a higher conversion rate comparing to because it's a bigger trust. It's a fast go to market. It's ideal for testing new products and clearing your inventory. And what is a big advantages for some partners is no need for funnel because you are going to listen into their own funnel on the marketplace. So, it's quite more simple to list into a marketplace comparing to a pay-per-click Good.

Let's go and jump to the head-to-head comparison. I will start with a with an example with the cost of sale is exactly the title of this So, let's start with the product. I looked for an iPhone 16 Pro Max with a price of 2599 leva. cost of sales is the following. We should look on different different uh things. What is the price? What is the cost per

click? We need the number of visitors and after we need a conversion rate. If we don't have this, we aren't able to calculate the cost of sales. It's a simple math, quite simple math. It's the number of visitors multiplied by the cost per click and after is divided by the phone the phone price. And after we can find that the cost per sales for this example with

a 1% conversion rate. So it's a lower conversion rate. It's 1%. So one out of 100 traffic is buying a product. So the conversion rate is 1.39%. And if we are going to jump in a small comparison with the marketplace, the cost of sales here, it's quite simple is the commission is that and that's it. And if we are going to look the cost of sales for

the pay-per-click, it's quite lower and you receive not just the traffic, not just the sales, you receive the traffic, you are increasing your brand and so on. I will jump to that after this slide. So uh in my small conclusion here is on the pay-per-click you are receiving more for a lower price. Okay. Uh let's make head-to-head comparison. In the pay-per-click the cost model is simple. It's

the paper click. You have full control over your funnel or UX. You can scale quickly but obviously the cost is rising. You you can strong you can straight your brand and your visibility. You own the clients. Yes, it's a lower conversion rate but the profit margins are higher and it's a little bit complex because there are multiple metrics like cost per click like CVR like average order

value return of ad spense lifetime value. Yes, there are quite more uh more uh KPIs. So, it's funnel dependent comparing to the marketplace where we are looking on the paper sales is we have you you have limited control because there are fixed templates and policies. The scale is only with demand but dependent on the platform brand is secondary marketplace own anything. And what I would like to

highlight here your brand is important. You own the customer base, the clients. You can do anything with with your You have higher profit margins. And if we're going to compare a little bit with the marketplace, you are dependent. Your brand is secondary. higher conversion rate and lower profit margins. So unfortunately it depends on what is your needs. If you prefer to sell obviously you should choose the

marketplace. If you want to create a brand, if you want to create more than this, you should go for the Moving forward with some conclusions and takeaways, I want here to make a small comparison. I think we all love to go to the restaurant and eat with friends and family and so on. I think we love to eat or I I don't want to speak in my

name. So let's think that you are going to your restaurant with your best experience with your wonderful clients, extraordinary journey, nice furniture and so on. And from my point of view, this is pay-per-click. And in the marketplace, you have good restaurant, good food, and receive some food orders. And that's about it. Okay. Uh my key takeaways for this presentation is important to understand your real cost of

sales. You should go beyond return of ad spense or the CPA, the cost per acquisition. You should consider your commission, returns, logistics, fulfillment and funnel efficiency. Think channel fit, not channel favorite. You should you should uh choose exactly what your business need like PPC gives control and long-term brand value marketplace offer speed and scale and less ownership and I think from my point of view the winning

formula is a smart mix. You should test both. You should track everything and optimize for profit, not just for volume. It's obviously important. What are you selling? I think that's all for my presentation. Thank you for welcoming me and if you need some advice or if you have questions, please find me near my booth. Thank you.