Ecommerce Consultancy

When it comes to the digital economy our team has seen it all – we’ve grown businesses from 0 to >£100m turnover, raised many rounds and over $100m of funding, performed due diligence on and advised many others, and sat on the boards of listed players.

We have learned from our mistakes and had some fantastic success.

Growing a profitable Ecommerce business is much simpler than many perceive (ahem...)

If you think you have something to sell or are already doing it:

make sure you get enough people to know about it
describe it in a way that makes them want to buy it from you; and make that process as simple as possible
deliver on your promise to get it to them
get them to come back one day to buy again

Ok, ok, there might be a bit more to it.. So let’s consider the following before you spend any more money (stay with us here..)

Why buy your product?

You need to be able to clearly show people why they should part with their money for your products (eg accurate descriptions, imagery and calls to action). Sounds obvious but so many ecommerce businesses miss one or two on-page data points that customers need, they end up clicking away to a competitor to find them. Ecom 101. An objective view is crucial.

Be unique

You don’t have to sell products that are unique to you, but your relationship with your customer needs to be differentiated from your competition. Their perception of you must be memorable. If it’s all about price, and the product is freely available elsewhere, you’re going to get into a death spiral where you’re not covering your costs. So work out how you are going to create meaningful (not spammy email) relationships with them so that you can compete on something other than just price.
If you do have exclusive product (that you’ve designed or you have a territorial exclusive on) it’s likely that many fewer people are looking for what you sell. You’ll need a strategy to either inspire people to acquire something they didn’t realise they needed, or if they’re actively looking for a similar product sold by someone else you will need to suck them away to browse with you. This is getting harder.

Be smart about the demand for your product and your stock levels

You need to proactively anticipate demand so that you have stock levels that maximise your opportunity, without using up all your cash. Simple.. right? All businesses know exactly how many people want to buy their gear months in advance. Especially if it’s a seasonal product 🙂. The good news is that there are ways and tools to make great decisions here, but you have to dig around to find them, and apply some smarts. Tricky, but solvable.

Test your pricing like it’s just an ingredient

You need to test and learn like a crazy person so your pricing hits the sweet spot to drive conversion of the traffic-type you are attracting. You’d think this is easier with an exclusive product as you can charge what you like without price-matching, but it’s not necessarily. Customers have their own emotional or irrational sweet spots where they think they’re getting value for money. You have to find them and raise your game in terms of pricing, presentation and targeting to lean into them.
Taking into account the above you also need to be aware that typically as AOV increases, your customer acquisition cost will rise too. It costs more to chase deeper wallets. So you need to set a strategy that carefully monitors the unit cost per acquisition against the unit margin. Again, super-tricky in both own-brand and 3rd party product..

Buy less, sell more?

This above then leads to you needing to ensure that your absolute net contribution margin (profit before your fixed costs) in £/$ terms is high enough and defendable enough to cover your fixed costs like warehousing and personnel. It might be that you can make more money after your fixed costs by driving volume through the system. 1000 units per month at a £30 net contribution margin might be more attractive to you than selling 2000 units at a £15 NCM: Less stock to fund, fewer customer enquiries, and less warehousing space used. So it’s not all about turnover. But then are you in a market where customers tend to come back for more? Argh, back to the high volume model and taking a view on Lifetime Customer Value (and the risk of your numbers not getting worse as you expand into a pool of non-repeating customers -stay away from that death spiral, knowingly..). Data, and avoiding confirmation bias are essential here.

Funding

Once you have control of the above (or can persuade someone that you do while your ducks-feet paddle like mad) you need to have enough funding to make all of the above happen. You may be in the glorious position of being part of a large company which is happy to invest in your world. Or you have a model that’s so cash generative that your most ambitious sensible plans can be executed by internal funding. Wonderful.
If not, you need to raise money. The source of this money is getting smarter these days. And online retail is no longer considered very sexy. So as well as your main plan you need a conservative plan B you can trigger if you can’t sustain your business for a good while without raising any funds (banks and investors will smell blood).
Plus: for your potential investors you’ll need to demonstrate they’ll still make money from you if you have to make a pivot or two (have them in your back pocket, you’ll get asked).

Finally..

You need to work out what you will do when others catch on that you have something they can copy and flog on Amazon or another platform. If it’s a good idea to you, it’s good for someone else. And always assume the someone else has more funds and resources. Unique product and brands are much more defendable. Exclusive branded supplier relationships are great, but you have to get to a size where they’ll never take a call from the Bezos empire. If you’re lucky the brands you sell don’t want to be on these platforms out of sometimes irrational, but very often not, fear. And if you are already on Amazon now selling branded goods you don’t own, you can be 100% confident that the lovely data they have on your sales volume is being fed into a buying team whose sole mission is to shove you to the side when the time is right for them.

So. I take it back. Ecommerce is much harder than people think. Luckily, we at Triggerlabs have spent nearly 25 years learning the hard lessons and making all the mistakes. They hurt at the time and seared into our minds. The good news for you is we can share that experience and help you navigate one of the most competitive sectors in the world.

Email me on joe@triggerlabs.co.uk and let’s put a plan together.

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