7 Reasons Your eCommerce Isn't Profitable
If you're struggling to achieve profitability with marketplace or direct to consumer sales, it may be time to examine if your efforts are facing one of these barriers.
1. Prioritizing the Wrong Items
Carefully select a portfolio of eCommerce-friendly SKUs. To the extent possible, avoid low-dollar price points (<$20), harder-to-ship items, and items that are hard to differentiate in your priority channels (we call these "eCommodities").
2. Failure to Optimize for Fulfillment
If you're shipping packs that are mostly air, or worse, mostly water then it's time to have another look. Your finance department will thank you, your shopper will thank you, and the earth will too.
3. Focusing on the Wrong Competitors
If you're differentiating against your traditional "big box" competitors, you may be missing the mark online. For example, if you're selling coffee on Amazon, you'd better look at Death Wish coffee in addition to Dunkin'.
4. Inefficient Customer Acquisition
Make sure you understand your CPA (cost-per-acquisition) on every bit of eCommerce marketing that you do. If CPA < net profit/order, you're likely in very good shape on this one. If not, see if you can optimize.
5. Failure to Drive Lifetime Value
Repeat is where it's at and customer lifetime value (CLV) is how we measure it. Common tactics to boost CLV include subscriptions, email, SMS, retargeting, and brand community building.
6. Insufficient Scale
If you're using search media to drive visibility at the digital shelf, you'll need a competitive plan to achieve visibility. It's counterintuitive, but under-spending can hurt your profitability.
7. Duplication of Internal Work
Have you centralized your eCommerce content development and syndication? Are you practicing "one budget" buying for your retail media? If not, it's time to centralize and simplify!
Ready to increase your profitability? Let's talk!