Why Everything You Know About Mobile App Is A Lie- A Journey to Profitablity

W

Truth is, building a mobile app is simple, getting it profitable is hard.

Too many guides and gurus online focus on the technical part of the process and often ignore the more difficult piece. Over the next few months, I will be focusing on that difficult bit.

Here’s a documentation of my journey towards building a profitable mobile app.

The app will be an “instacart” for ethnic foods. I’m going after the African grocery niche.

My approach:

  1. Confirm the idea (to understand the market-need):
    
The app targets 1st generation African migrants to US. About 1.6 million of them[1. The Foreign-Born Population From Africa:
    2008–2012: https://www.census.gov/content/dam/Census/library/publications/2014/acs/acsbr12-16.pdf]


  2. Build the Least Viable Product (LVP):
    
If the results from #1 are good. I’d build an LVP fueled by the needs of my early adopters.

    

There’s 2 part to this:

    • The mobile app that allows users to place order for their groceries. This will be available for free in the Apple and Play store.
    • The backend delivery system, working with delivery drivers and local grocers.
  3. Market the LVP:
    
With all the engines in gear, we’d ramp up our marketing with Facebook Ads and influencers.

How I Confirm the Idea with Facebook Ads (Ran for 2 Weeks)

We won’t be trying to build an app. I first want to see reaction to an advertisement of the product as though it already in the market.

I set up a simple web page and ran this ad:
The Main Ad

Some engagement with the ad:


Analysis of Test Results:

We got a 3.4% clickthrough on this ad. That is good and bad depending on the industry average. I don’t know that for now.

Here’s what I know:

As of today, Saturday, Oct 28th, we’ve got 30 “conversion” (people who have signed up for the waiting list).

I estimate the average value of a customer/conversion at about $150 (lifetime value). That means, we’d make $4,500 with an acquisition cost of $72.72.

There might be something here.

If we include all the costs of goods and salaries, we can make a profit of $1500 – $2000 per 30 customers.

[Initial] Key Findings:

  • It’s profitable to kick-off in New York and Dallas (as much as I’d prefer our home city, Boston, the tests prove otherwise).

    Most popular cities, top to bottom:

    • New York
    • Dallas
    • Baltimore
    • Atlanta
    • Boston
  • We need to invest a lot in marketing. The idea is not as “magnetic” as I first imagined.
  • There is enough demand to keep this sustainable.

Next Steps:

  • Continue getting sign-up for the “wait-list” with the expanded Facebook campaign in the top cities (Dallas & New York).
  • Start collaboration with top African food blogs to get their insights/expertise for influencer marketing later.
  • Get the timeline of getting our MVP app developed.
  • Kick-start partner store scouting in NYC and Dallas.
  • Figure out the delivery system/logistics (we are promising same day).

One more thing for you:

If you know anyone in New York or Dallas, please send them to https://shapcart.com/, we will be in their city soon.

Let me know your thoughts, I’m happy to answer and clarify below.

Add comment

By Dele

Recent Discussion

Categories