3 Ways Successful Entrepreneurs Scale eCommerce to Profit
eCommerce business is indeed a tough play, regardless the technology and precedents available. Plus, making this business profitable can take years of hard labor.
Take TrunkClub that was recently bought by Nordstrom, the ecommerce startup had a great round of growth, customer acquisition & venture capitalist backing, yet was barely profitable before the handover. And there are many more like these that exist and keep churning up or down.
On the other spectrum, there are also small to medium size eCommerce entrepreneurs who do make good businesses & establish decent revenue streams from their online shops. Perhaps size matters and the business model weighs in a lot in the final outcome.
Either way, the road to success & the journey revolves around scaling the business for profit. This is what a small merchant does, a medium size hot startup focuses on and even big behemoths like Walmart or Amazon spend their time on.
Scaling eCommerce for Profit reminds me a lot how ants organize their populations. Wait, what? – you’d say. Yes, if there is one example in the nature that would very much resemble eCommerce entrepreneurs that succeed in doing so, it would be ants.
You see, ants also have limited and varied resources (some live in deserts, some enjoy lush tropics) and their behavior & focus pretty much determines reproductive success. And it is not the ones that enjoy lush conditions (tropics = well-funded startups) that win, but the ones that forage less & focus on optimizing every interaction, saving every resource, like smart neurons vs. crazy wild, lazy ones. So, pick your ants to observe wisely!
Now, mere saving and squeezing as much as you can from what you got might not be the right start. It will give you some progress, but not the one in leaps and bounds.
When I spoke to over 55 founders and eCommerce store owners, I saw that they all share a similar mindset that is focused more on finding new ways to run the business, new technologies, processes to build that dream. More like that green school in Bali, done by the retired couple, where everything is done from the resources around, no extra nails & self-powered through smart systems (solar panels & more).
This is how you think about your resources so that they produce profit, in a more positive, loving way, completely different energy and outcomes. It might sound new age and all, but this is the foundation of successful ecommerce businesses, either bootstrapped or VC-funded & producing results. When it comes to exercising this mindset, you go through the similar process that many conversion optimization practitioners do, yet applying it to the business activities. CRO allows you to find fix the areas where your customers are leaving, while scaling for profit would redefine that bucket to build a more sustainable structure. Mind that, it is a long road, so you have to prepare to run a number of experiments to make leaps in climbing the goal, as it is not simply restructuring and reorganizing your business or ways you do so, it is has amore impact as those changes are the leaps, which will free up resources for estore growth. In basic terms, you will examine your margins and operational expenses. The 3 areas you can focus your scaling efforts are: To re-examine ways to:
1. Service and fulfill smarter
2. Sell better
3. Sign up customers faster, your initial acquisition and promotions
See the details in how & examples in my speech, videotaped from Conversion Conference 2014 in Chicago last month.
No time to watch? Get the PDF of the session with all applications and stories.
Why do so? Learn & apply or play hunger games with your eCommerce startup forever.