At the end of its third year, the average ecommerce company generates $1.1 million in revenue per month. But the most successful ecommerce stores have a different story.
“After three years, companies in the top quartile have almost 4x the number of monthly orders, resulting in 279% higher number of all-time orders,” RJMetrics writes in its ecommerce Growth Benchmark Report.
Unsurprisingly, these ecommerce stars have both an impressive start and a consistently strong growth trajectory. “By month six in business, top performing ecommerce companies have separated from the pack, reaching a monthly revenue over $600k, 329% higher than everyone else.”
For businesses to reach that point, though, they have to apply a wide variety of growth strategies. These strategies allow businesses to accelerate sales, build customer loyalty, and increase their overall profits—strategies your ecommerce company can easily implement.
Read on to discover 11 tactics thriving ecommerce brands should employ to get a leg up on the competition.
Affiliate marketing is a performance-based marketing strategy that allows brands to pay traffic sources a commission only when a referred visitor converts into a sale. For example, a t-shirt manufacturer with a 30% gross product margin can offer affiliates a 20% commission for every successful order.
This means the brand would earn a 10% net profit on each order through an affiliate. This straightforward and risk-free approach to customer acquisition allows companies to take advantage of the unit economics of their products.
But, to turn affiliate marketing into a major revenue source, companies need to offer affiliates a compelling commission. Most affiliate programs offer a 3-7% commission, while others may offer anywhere between 10-25%, depending on the product and industry.
At scale, stores need to factor additional costs into their affiliate economics. Those include:
- Customer service costs (including returns and exchanges)
- Shipping and handling costs
- Coupon, discount, and special promotion costs
Each of these reduce your product margins. To protect themselves, stores can include commission reversals for orders that are returned.
When like-minded businesses pool resources and share customers, the opportunities are endless. For example, ecommerce companies can partner with publishers, influencers, lifestyle blogs, and other brands that target the same audience but aren’t direct competitors.
According to the National Federation of Independent Business, a few cross-promotional opportunities include:
- Co-branded advertisements: to share exposure and costs.
- Social media support: to distribute each other’s content and help grow each partner’s fan base and social following.
- Joint mailings: to send co-branded catalogs, newsletters, or postcards to their customers.
- Partnered giveaways: to collect email addresses for remarketing purposes later.
But, before you commit to a partnership, Stephanie Gruner for Inc. Magazine recommends asking yourself four questions:
- “Are we a natural fit?”
- “Do we enhance each other’s credibility?”
- “Do we bring different resources to the table?”
- “Is the sum of our parts greater than the whole?”
If the answer is yes to all, then you have a match!
Post-purchase, brands have a unique opportunity to educate customers about how to best use and care for their products to ensure they get the most value from their purchase.
In fact, a strong FAQ page, support hub, and other product-related resource center can help stores reduce return rates too.
Savvy ecommerce managers can employ email marketing to encourage repeat purchases, stay top of mind with their customers, and reduce shopping cart abandonment rates.
Here’s a quick rundown on five email campaigns ecommerce companies should send:
- New arrivals notices to inform customers about inventory updates.
- Segmented campaigns based on gender, location, and interests.
- Product review requests to source customer feedback.
- Birthday emails to celebrate their special day and share an exclusive offer.
- Last-ditch emails to re-engage customers who haven’t purchased from you in a while.
Some products flop and, when they do, smart brands shift their focus. For manufacturers like Procter & Gamble (P&G), it’s not unusual to see product lines slashed in half.
In an article for Bloomberg Business, Alexander Chernev explains, “This means P&G must put more resources into managing each brand in its portfolio. To improve its profit, the company might have to focus on brands that have scale or synergies while divesting some of its smaller, ‘orphan’ brands.”
Before a failing product is completely sold out, many companies decide to stop marketing it entirely. Because customers will only browse through so many products and because websites only offer so much real estate for goods to be featured, prudent brands have three options:
- To completely abandon their worst products (and donate them to charity).
- To give them away to customers as a free add-on with purchase.
- To deeply discount the product, offering it at “clearance” prices to recoup some of their investment.
The sooner an ecommerce business ditches its underperforming products, the faster it can focus its efforts on improving and marketing its best selling products and researching and developing new items all of their customers may love.
Contrary to popular belief, direct mail marketing isn’t dead. Among leading ecommerce brands, cataloging is wildly popular. For Practicalecommerce, Charles Nicholls found that nine out of 10 of the top converting websites had a catalog.
The conversion leaders include Schwan’s, ProFlowers, Vitacost.com, and Lands’ End. With online conversion rates ranging from 41.7% to 18.3%.
And, if you thought billboards and posters were a dying business, in NYC, mattress company Casper advertises its product in taxis and subways as an economical alternative to Facebook ads, which have tripled in cost over the past year.
More on offline marketing for ecommerce here.
With coupons, brands have full control over their offer. Yet many make the mistake of providing customers with a deal that eats into their profits.
Instead, they should focus on sharing coupons in a conservative manner to not only drive revenue, but profits. To do that, small business expert Daniel Kehrer suggests eight things:
- Measure your marginal cost to guarantee profits on bulk orders.
- Commit to converting first-time buyers into returning customers.
- Prevent coupon abuse by ensuring customers may only use a certain discount once.
- Track order history for each customer to share different coupons for first-time customers and returning shoppers.
- Factor in fees from coupon portals like Groupon or affiliates.
- Collect contact information for remarketing purposes.
- Cross-sell and upsell to increase order totals.
- Ruthlessly track performance to shut down profit-losing offers and aggressively promote profit-generating coupons.
Receipts and transactional emails are an underappreciated marketing medium that can increase revenue.
Jack Dorsey, CEO of Square and co-founder of Twitter, believes the digital receipt to be a product that people actually want to interact with. For clever business owners, the email receipt can be used to:
- Offer customers discounts on their next purchase.
- Gather responses from customer satisfaction surveys and get product feedback.
- Highlight answers to commonly asked questions and address product misconceptions.
- Eliminate buyer’s remorse with positive product testimonials.
- Increase referral program participation.
- Upsell related products and recommended items.
Every small business owner loves the idea of having their brand featured on prime time television and on the biggest billboards around the city, but that sort of exposure is costly. Each year, businesses spend millions for thirty-second ads at the Superbowl.
For ecommerce brands with a far more limited budget, there are smarter and more cost-effective ways of marketing that’ll generate better ROI. Those include:
- Targeted display and search advertising
- Sponsored email newsletters
- Native advertising
- YouTube product placements
That said, any paid media should be bought with scrutiny. Ads should be targeted to a store’s ideal customer with priority towards audiences that have purchase intent.
Smart inventory management
Ever since companies began mass producing product, they’ve made every effort to forecast sales so that they can place one large bulk order with their manufacturer and later sell out of inventory. But companies pay a huge price when their products eventually do sell out.
According to business consultant Ian Johnson, companies with poor inventory management lose profits, customers, and market share. To combat that risk, stores should arrange to have safety stock.
Savvy ecommerce entrepreneurs also need to make it a priority to partner with agile manufacturers to produce product in an almost on-demand manner and ensure inventory replenishment is never an issue.
Support brand ambassadors
A survey from Nielsen on consumer trust in advertising reveals, “Word-of-mouth recommendations from friends and family, often referred to as earned advertising, are still the most influential, as 84% of global respondents across 58 countries to the Nielsen online survey said this source was the most trustworthy.”
What this means for brands is this: Customers can be a powerful marketing asset. In fact, some of the most popular people around the world and online already tell their friends and family members about your company: You might know them as influencers.
To encourage positive word of mouth, ecommerce shops should create a program that supports their biggest brand ambassadors. Three things every ecommerce business should do with their biggest brand advocates are:
- Share exclusive product
- Invite them to VIP events and opportunities
- Give them products to give away to their fans, followers, and friends
To build an ecommerce business that can go from $0 to $10 million in sales in just a few years, store owners must be open to collaboration with other companies, clever and careful with their marketing, proactive about customer education and service, and willing to prune their product portfolio.
By making the right choices (and sacrifices) ecommerce brands can thrive in even the most competitive environments. Want to make the right choices for your ecommerce business? Check out CM Commerce today.