In case you hadn’t noticed, the retail recession is afflicting more than just malls.
At the peak of inflated e-commerce expectations, it was hard to imagine anything but exponential growth in online retail. Yet today, any online retailer who isn’t Jeff Bezos is wondering where all that sales growth went.
Amazon, of course, is a big part of the challenge. The company is nearly impossible to compete directly against, leaving other e-retailers to either sell through Amazon, shaving their margins even thinner, or find a product line Amazon isn’t competitive in. Those, by the way, are getting harder — much harder — to find.
But even if you’ve found your e-commerce niche, gravity inevitably pulls on those early-days growth numbers. Once you’ve found your core audience and ramped up to serve them, it gets more difficult to find new customers. The low-hanging fruit has already been picked. The temptation then becomes to expand your product offerings into new niches.
The truth is, finding new products that customers truly want and that meet your standard of quality and profitability is tough enough; balancing that on top of managing the cost of doing business makes it even more challenging. An unpleasant reality is setting in: Online retail is not as cost-free as once believed. It turns out the complexity and cost of maintaining the back end and logistics for e-commerce stores are on par with the cost of operating a brick-and-mortar store.
So, while the get-rich-quick dreams of yesterday are largely gone, there is definitely still room for driven, innovative companies to succeed — if they take the right approach. These four strategies can help any e-retailer boost its sales, grow its business, and thrive in today’s competitive marketplace.
1. Promote what makes you different.
Everything starts here. To scale up, you have to stand out. That means finding the best way to meet your customers’ needs. You can meet a need that’s never been met before by selling a patented product. You can meet a need better than anyone else can by using proprietary technology to power your marketing, sourcing, or distribution. Or you can flip the script, like Pura Vida did.
Pura Vida took low-cost bracelets and built a multimillion-dollar brand. How? By not selling bracelets. The brand differentiated itself by selling a mission: the socially conscious idea of supporting the Costa Rican artisans who made the bracelets by hand. Marketing cheaply on college campuses rocketed sales to 30,000 online orders a month.
2. Stay lean and focused.
When your standout products take off, you’ll be tempted to cash in on some perks — maybe a prime San Fran address or a fleet of baristas for the office coffee bar. You may find yourself evaluating your brand according to image rather than results, seeking to build a cool startup rather than a solid business.
These decisions often originate from good intentions to build a strong culture and retain employees. But here’s a secret: The best talent won’t take or leave jobs for the free coffee.
Take a hard look at where you’re spending money and ask whether it’s necessary. That’s what Automattic, the web development company behind WordPress, did when it concluded it no longer needed its beautiful nearly 15,000-square-foot San Francisco office. So it sold the space. And, so far, WordPress still works.
3. Focus on performance.
Once you’ve identified the wasteful spending, look at your strategic spending and see whether you’re getting a worthwhile return. A lot of e-commerce companies invest in marketing partnerships with influencers, for instance. This can be a valuable strategy — but not when done blindly. These need to be performance partnerships with compensation based on results.
If you can’t track it, skip it. You have to be sure each of your dollars goes toward the best possible use, especially when you’re working with venture capital money. Every dollar you spend brings you closer to having no more dollars.
4. Emphasize culture.
So, if in-house baristas don’t create a magnetic company culture, what will?
That’s an individual question for every company. But I can tell you from experience that you should forget trying to create a cool place to work and focus on being a good place to work. Make people feel appreciated and like they belong. That will go a long way toward building the kind of culture that keeps the best people around. Consequently, that feeds right back into lean operations, as employee turnover is expensive.
Growing up, a lot of us probably held the notion that the business world was comprised of serious people who stoically made decisions based on rigorous analysis. Now that we’re in it, we see that it’s often not much different from the schoolyard — fads take hold and inspire unthinking adopters, and assumptions go unquestioned about what you should and shouldn’t do to be cool or successful.
Similarly, in the online world, success goes to the critical thinkers who can stand out and are not afraid to buck the trends. Accentuating what makes you different, judging growth and performance according to your own internal metrics, and treating internal and external partners with respect while holding them accountable are the surest routes to success.
Acceleration Partners is a performance marketing firm focused on online customer acquisition.