5 min read
Opinions expressed by Entrepreneur contributors are their own.
The ecommerce industry is booming, with many direct-to-consumer brands seeing record-breaking revenue numbers throughout 2020 and Q1 of 2021. The global pandemic contributed heavily to this, with many consumers having no other option than shopping online and many purchasing items online out of boredom.
The opportunity is only going to increase, platforms like Shopify create an extremely low barrier to entry. As you might imagine, everyone and their brother has an ecommerce “brand” these days, but the majority of online sales don’t generate enough income to cover the hosting.
Competition is fierce online, and aside from common sense factors — selling a hot product at an attractive price and knowing how to market said product — there are other important things to take into consideration.
If you have recently started an ecommerce business or are considering it, here are some keys to unlimited growth you need to pay attention to, as they can make a big impact on your brand’s potential.
Invest in your technology stack
As your ecommerce brand grows, you will need a technology stack that supports your growth and volume. Although Shopify is a great ecommerce platform, its features are fairly basic compared to what is available.
Just starting? Then Shopify is great, and you can slowly add apps and SaaS solutions to help your business grow. Don’t be afraid to invest in your tech. Shopify’s basic plan, for example, runs $29 monthly, whereas its Shopify Plus plans start at $2,000 monthly.
It might seem like a drastic cost increase, but when you look behind the curtain and see the data, analytics, reporting and features all designed for massive growth, you understand that the cost is justified and should be welcomed with open arms by brands in the position to utilize those features.
My company’s marketing platform is designed to deliver the best features and data for our users, helping them to scale without limitations. Ecommerce tech is constantly evolving, and if you want to grow you need to take advantage of every opportunity to collect, measure and retarget as many data points as possible.
Focus on revenue to fuel growth
It takes money to fuel growth, especially if you are manufacturing products overseas and your lead time is 30-120 days, as it is with many products. Many brands that manufacture overseas spend money months in advance before their inventory touches U.S. soil.
Even a dropshipping model requires money, as marketing dollars are key. Most dropshipping products have a short shelf life, so it’s important to grow quickly and maximize each product introduced to your store’s available inventory.
Bottom line — you need revenue to fuel growth. How you feed that fire depends on what type of ecommerce business you are building. Let me explain two scenarios as examples.
Dropshipping: If you have a reliable supplier and fulfillment process established, your main objective is to drive as many sales as possible. Your “business” is essentially a marketing and branding effort, whereas your supplier handles all back-end operations, from production to order fulfillment.
In this situation, you can roll your profits back into the business to accelerate your ad buying, as well as leverage a line of credit to throw some extra gasoline on the fire. You don’t have inventory to buy and your overhead is lower, creating a much lower financial risk.
Long-term private brand: If you are building a long-term brand that you anticipate has staying power, I would shy away from debt and focus on bootstrapping. A private brand typically means you have manufacturing, storage and fulfillment costs, along with more salaries and expenses than you would under a dropshipping model.
If growth occurs a few months down the line but allows you to operate with the additional financial stress, then it’s worth waiting. There is intelligent fast-scaling, and then there are risky quick-scale strategies. Understand the difference and proceed according to your comfort level.
Focus on building a brand consumers love
Look at some of the most successful ecommerce brands in the apparel, oral care and health industries. There is an incredible amount of competition — literally hundreds of brands. So, why do some brands thrive while others that offer essentially the same products fade off into the sunset?
They build brands that consumers love. When that connection is established, you create loyal customers who will purchase from you over and over simply because they like your brand — whether that is your packaging, messaging or a certain social cause you support.
Ecommerce brands that simply send emails to their customers when they want to offer a sale or only post promotional content on social media miss out and will never experience their full potential.
Brands that make an effort to build a community, engage with their customers in a non-promotional manner and take feedback into consideration win in the end. Having a great product is important of course, but you need to make a valiant effort to differentiate your brand from the other options.
Read More:3 Keys to Building an Ecommerce Business Designed for Growth