There was a great retail pause, Covid caused retail to let off the gas. What was the future in retail going to hold, we all wondered?
That was March / April, we’re now in July. It is time to get out of neutral, downshift and accelerate past your competition.
The key is the downshift. You need the torque to make the pass while your retail competitors hang in 5th gear cruising along. You can achieve this in four not so simple steps.
Step 1) Drop everything and focus on ecommerce. If you have physical stores they likely won’t die, but now is not the time to invest. If you are a B2B, don’t look past this opportunity. This is your time to own your brand and distribution. Your brand should be known just like Intel is known while only a tiny fraction of people actually buy their chips.
Step 2) Hire the most badass leader in ecommerce. Don’t set their goal, make them tell you what they can do with your brand and them in control. You may think you can go from $10M to $100M, let them tell you what they think and how they will get there. (Sorry, I’m spoken for)
Step 3) Give the leader a real budget. Budgets shouldn’t constrain, rather they should promote spend.
Step 4) Invest in tools to increase the variable contribution margin of each order. That means optimized marketing spend, increased conversion, increased AOV, decreased shipping spend. You cannot make up a negative variable contribution margin with volume. The only thing you are accelerating is going out of business.
Too many skip straight to step 4 and just start dropping money all over the place. What I’ve learned over my nearly 20 years in ecommerce is that you need a plan and you need ownership. If you have no leader you are likely considering things like outsourcing your digital marketing. There are tons of firms out there that will tell you they’re different and they understand your business. They don’t. Running to sell on Amazon is also tempting, avoid it if you can, they are eating your margin and taking control of your brand. There are really quick and easy ways to spend money and get no return, if you don’t have a leader you are not equipped to avoid these mistakes.
There are roughly 97% of your visitors not buying. Don’t talk about conversion rate, flip it and talk about what you are missing. But don’t ignore your customers, make them repeat buyers. You don’t do this with coupons, that’s destroying your contribution margin, you do this with value add. What can you give your customers that will add value. There are simple tricks, my all-time favorite was our Ugly Box stickers. We recycled boxes to decrease our variable contribution margin and to save the environment. When we did this we put an Ugly Box sticker on the recycled box signaling that the box was likely ugly due to multiple shipments. Customers loved them, they would email us and thank us for recycling and they would share them on social media. Our logo sitting dead center with them raving about us. They would remember us for the smallest value add possible.
When (or if you already do) you have that leader expect them to invest in things like merchandising tools, site search, product recommendation, onsite marketing and retargeting, order (return) manager and shipping platforms. With each tool, ask yourself the following: “Is this increasing my variable contribution margin?”. Determine which of the buckets I mentioned above is affected and track the effect. Small changes have huge impacts and compound, imagine if conversion rate goes up 10% and AOV goes up $10, it’s a multiplying effect!
Now is not the time to coast, treat this moment like it’s 2008. The world didn’t end and back then we invested while competitors cowered in the corner, when the world truly didn’t end we were ahead and never looked back.