Everything I know about e-commerce

designed to be skimmed

Author

Connor Gross
December 13, 2023

Welcome to Biz Brainstorms –

My name's Connor.

I go down weekly rabbit holes of business ideas & lessons. Then, you get this 200 second email.

Todays Agenda: Everything I know about e-commerce

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Last week I had a consulting call with someone who basically just wanted an ecom 101 crash course.

They said “Hey - tell me the most important things I need to know before starting an ecom company”

So, we went through everything I know in 60 minutes.

This email is a written version of my notes from that call.

Here are the 5 most important things to consider when starting an online store:

  1. LTV is truly your north star metric.

  2. 1 channel is all it takes (and that’s usually Facebook)

  3. You probably aren’t sending enough emails.

  4. Not all products are created equal

  5. Customer Surveys are the most underrated growth hack.

Quick “Why Should You Listing To What I Have To Say” section:

  • I’ve been selling products online for 8 years (both Amazon & Shopify)

  • Cumulative total: $14.43M (45% of which came in the last 12 months)

Ok, let’s get into it:

LTV as your North Star

LTV = Lifetime Value = How much money someone gives you… ever

Look at companies that probably take the majority of your hard-earned cash:

That’s insane. But important.

Here’s why:

“The more you can get someone to pay you, the more you can spend to acquire them as a customer. And whoever can afford to spend the most to acquire a customer, wins." (Legendary Marketer, Dan Kennedy)

Too many marketers focus on reducing their CAC (Cost to Acquire a Customer)

It’s a worthy pursuit. But you’re better off figuring out how to get someone to spend money with you and keep coming back.

And that’s usually a result of better products & better merchandising.

One Channel Is Key 🔑

Just like anything, you can overcomplicate the sh*t out of customer acquisition.

You can focus on…

  • Social Media Advertising

  • Search Advertising

  • SEO

  • Affiliate Advertising

  • Influencer Marketing

  • TV Commercials

  • Marketplaces

  • Referral Programs

  • Print Ads (yes, they still work)

  • Postcards

  • Ringless Voicemail Drops (see tweet here)

And they all work.

But the truth is, you only need one to build a $10M+ company.

In the words of Charlie Munger

“Diversification is for people who don’t know what they’re doing”**

**It’s good to be omni-channel at scale. But not needed in the early days.

Emails

This might be controversial if you aren’t already in e-commerce… but the brands I’ve seen that make the most money just lean into a email hard.

Tbh, if I were to raise a fund, I bet you can build a big business just by simply:

  1. Buying online commerce companies that don’t capture emails

  2. Implement email captures & email marketing

  3. Grow revenue by 30-40%

Here’s the difficult psychological point to overcome for someone who doesn’t own a brand today:

As consumers, getting too many emails from a brand is annoying.

But can you really remember the last time you felt so annoyed?

You usually just… unscubscribe.

It’s the reason my Welcome Email flow is 13 emails long over a 15 day period.

It’s the reason we send 4 emails on Black Friday

Customers will unsubscribe or buy.

It’s really that simple.

Not all products are great for e-commerce

You’ll never build a big business (long term) with a bad product.

You can make money. Absolutely. But eventually, brand catches up with you and it gets difficult.

Well, the same applies with choosing the right product.

There are just certain items that are more difficult to sell online.

  • Clothing = Returns – $281B in returns/yr

  • Big Items = Heavy shipping – Avoid the Ice Baths, Weights or Tables

  • Food = Perishable – Or selling chocolate like Feastables could melt

  • Low AOV = I sold cell phone accessories for 4 years. Do you know how hard it is to build a million dollar business selling $8 products?

There’s a reason why makeup and supplement brands scale best in online stores.

Customer Surveys

I don’t hear many people talk about this so here’s an extra bonus:

In almost every other business, you talk to your customers.

  • Agencies have sales calls & monthly check ins

  • Retail greets customers at the door.

  • Real Estate owners meet tenants on site.

Well in e-commerce… nothing.

You set up a landing page. Pay for ads. Wait & stare at pixels on a screen to go up.

That’s why every time we get a sale when launching a new brand, I call the customer ASAP.

And every Q1 once the craziness dies down, we send a full-list survey asking customers what they want us to change.

It is by far the most effective lever we have to improving our business.

This applies beyond e-commerce: whoever serves their customer the best, wins.

✌️ See you next week

-Connor

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