Alright, online stores can be categorized in many different ways, but what concerns us today is the following division.
Some online shops are created to push some stock, make some money and get flipped or closed. The owners typically move on to the next niche and open the next store for another 1-2 years, then move on again.
Such store usually sell mass products like dropshipped clothes, kitchenware, baby products, imitation jewelry, which are widely sought online and barriers to entry are low.
That’s short-term ecommerce. It relies on persistent advertising to drive traffic, discounts, remarketing when people don’t buy and their only goal is to make revenue now.
The business owner’s strategy usually is:
The other kind are long-term oriented online shops that are created to stay and grow. The people behind them want to work on the shop and brand, developing it for years and reap the profits when they come, realizing it may not be overnight.
Such stores often sell original products, and serve merely as a channel for these products to reach the buyer. They’re customer and product-driven instead of quick-win driven.
The strategy of such stores focuses more on retention and developing customer relationships, building trust and a brand.
They improve on feedback and get customers through word-of-mouth because the experience is superior. Long-term oriented stores might forgo a sale today in order to create something that will pay off in the future because they’re here to stay.
Because we see something strange in the approach of some ecom guys.
They say they want to build a lasting business to make a living and carefully select the products to sell.
Yet, in their marketing they act like they’re here only for a day and apply short-term strategies that don’t bring profit in the long run.
Short-term strategies to drive traffic and orders do not necessarily mean long-term gain.
Favorite tactics include pricey advertising and deep discounts that bring in one-time customers, which often means no margin at all. Revenue today may actually be costing you money instead of making you some.
It’s ok if your goal is to just flip the store, but not ok if you want to stay in business longer, grow and turn profitable.
For those of you who want to build a stable online business with long-term goals, here are the pitfalls to avoid in your strategy and what to focus on instead.
We all know that the first sale is often at a loss. You pay to play. Why then are you letting customers go after just one sale and losing money?
Plus, you know nothing about those newcomers and yet you have to convert them. What they want and how they shop? You don’t know. If they were old customers, you’d have pointers to step on and make the selling process easier.
Balance your efforts on new and existing customers.
Acquiring new customers is absolutely normal but to realize any profit, you have to keep these customers and get more than one order from each. This will cover the CACs and actually make a customer valuable.
Also, observe customer behavior and use it to improve. When you know somebody, their habits and preferences, you can do tailored marketing and sell them more.
Of course, you always need new customers but if you need to advertise every time, your business is dependant on the platforms.
Especially FB ads are getting bad results these days and experts expect them to stop working soon due to many reasons: saturation and competition driving prices up, users changing privacy settings and info available for targeting, etc.
Find other acquisition channels – free if possible.
Review sites, forums, discussion groups, content, events can be all good sources of new buyers. The idea is to be where your audience is without paying to spam them because people are increasingly annoyed by brands that target them heavily in the newsfeed.
That’s mathematically wrong. Revenue is the value of the sales you make before any costs are deducted. If your costs are too high (as explained above), any revenue can melt away.
Focusing on revenue alone is useless. It can even mislead you to drive revenue at any cost, which cannot be a long-term strategy.
Work for profit.
It’s what you actually earn after all costs are accounted for. No matter whether you want to reinvest in the company or just put it in your pocket, that’s the goal to optimize for.
Even companies like Тhe Trunk Club and One Kings Lane learned that the hard way. You cannot grow if your costs don’t cover your income.
If you can only sell to newcomers, you have some serious problems with customer satisfaction. People don’t want to buy from you again and that’s big.
Businesses that don’t provide even basic positive shopping experience can’t hope to stay afloat for long. That’s one of the very short-sighted tactics that plague ecommerce.
Some hustlers don’t see why they should deliver the quality advertised or any customer service. They just want some money to hit their bank account. What happens next is of no concern.
Well, let me tell you – you can’t hope to always find new “fools” to fall for bad products and service. Sooner or later such a store gets exposed.
Work on customer satisfaction and retention:
In essence, don’t burn bridges.
Want to work on your store’s retention but not sure where to start?
Metrilo helps you learn more about your customers and stimulate repeat orders.
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