For today’s online entrepreneurs, the need to include e-commerce channels into your business strategy is crucial. Consumers have come to expect the option to purchase in-store or online, at any time or location that’s convenient for them. With so much competition in the market, finding and buying your products needs to be as seamless as possible.
E-commerce has become such an integrated part of the consumer buying experience that online sales are expected to comprise 17.5% of total retail sales worldwide. Fortunately, with the number of technological advancements and applications continually coming onto the market, the number of ways to ensure online business growth is more plentiful than ever.
New technologies like virtual reality, voice-activated search capabilities, and machine-learning software integrations are all exciting endeavors. But as much hype as these tools are getting, they can distract marketers from implementing the basics of e-commerce.
In order to grow your e-commerce business successfully, the best approach is to lay a stable foundation before exploring tertiary technologies. This article will take you through the three basic starting points to ensure your e-commerce business is on the path to success and growth.
1) Find responsible sources of funding
The first foundational brick required to grow your e-commerce business is to identify responsible sources of funding. A successful e-commerce business should focus on sustainability, so racking up credit card debt is a shaky foundation to building a profitable company. Fortunately, there are a number of responsible sources of funding available to help you grow your e-commerce business.
Angel investors are individuals who support a company at its early stage. They commit to investing periodically in order to support the business as it tries to gain a foothold in the market. This type of investing is preferable for small businesses.
In many cases, they are often—although not always—tied to the business owner in a personal manner (e.g. A parent, friend or other family member). An angel investor will expect a return, such as partial ownership of the business or a financial pay-back. This form of investing can be a helpful way to kick-off a start-up.
- Investment comes from a trusted source
- You maintain autonomy over the business
- Minimal returns are usually required
- Minimal source of funding
- Only suitable for small businesses
- Not sustainable in the long-term
A venture capitalist is usually an experienced entrepreneur with the available funds to invest in businesses and capitalize on the returns as these companies grow. Venture capitalists are often more involved than angel investors.
This type of funding will provide you with more finances, management, and consulting support from an interested expert. However, this could present issues with autonomy over your own business. A venture capitalist will expect higher returns and continually monitor the success and growth of your business.
- Large source of funding
- Management support and consulting
- Suitable for sustainable long-term growth
- High-pressure to create visible and often unattainable growth
- You give up a degree of autonomy over your business in the form of equity
- Higher returns are paid
There are a multitude of crowdfunding websites that allow you to ask for financial support from the greater online community. This form of funding is excellent for launching a business and building brand awareness but is not sustainable in the long-term.
If your product or service has a niche community surrounding it, such as a Vegan cosmetic brand or a healthcare technology start-up for diabetes, you can reach out to groups within your distinct market and find the right audience. A number of successful brands have been able to grow their e-commerce business from crowdfunding, including Allbirds, MVMT watches, and Popsocket.
- You’re able to connect with a supportive community
- “No strings-attached” returns
- Business autonomy is maintained
- Only suitable for small to medium businesses
- Not suitable long-term
An increasingly popular source of funding, especially for SMB online businesses, is revenue-share funding. Reason being that many of the aforementioned sources of funding simply aren’t designed for newer companies with shorter projections and fewer hard assets.
With revenue-share, you get funded based on actual historical data pulled from your bank account, e-commerce platform etc. and pay it back as a percentage of future revenues. The best part? You don’t have to sign a risky personal guarantee or give up equity in your business.
Revenue-share funding is sort of a hybrid of venture and debt financing and is gaining traction among e-commerce companies because it can mitigate risk based on cold hard numbers from platforms like Shopify and BigCommerce. In 2018, a study on alternative funding mechanisms showed that 63% of participants were willing to explore or co-create a revenue-based financing structure.
- Less risk
- Doesn’t require travel
- Turn-around time to get funded can be as little as 2 days
- Interest can creep up depending on how long you take to pay it back
- You won’t get the expertise or mentorship you would with a VC partnership
2) Leverage influencers to spread the word
Influencer marketing is a successful form of outreach that many companies have used to grow their e-commerce business. In fact, 49% of consumers depend on influencer recommendations when making a purchasing decision.
When it comes to ROI, influencer marketing reaps approximately $6.50 for each dollar spent when done correctly. In order to see returns, the key is learning how to effectively use influencer marketing to grow your e-commerce business.
The first step to successful influencer marketing is to identify people with influence over your desired demographic. These people may be experts in your industry or simply have a loyal fan base that fit the age, geolocation or gender you are trying to reach. Look for the following characteristics in an influencer:
- High post frequency: Ensure that the influencer posts frequently and consistently on their platforms to increase the chances of your product or services being exposed to your desired audience.
- Audience data: Ask the influencer to provide analytics from their platform or website, including website traffic, time on site and page views. This helps you build confidence that the influencer will provide a worthwhile ROI.
- Authenticity: Use the website or platform analytics to guarantee the influencer’s followers are verified and engaging with the content. It’s not adequate enough to partner with an influencer under the assumption that a high following will yield a high ROI.
- Audience engagement: Track the influencer’s likes, comments and shares to ensure that people are engaging with their content. This will be an indicator of whether or not they will engage with your product or service.
It’s important to find organic ways for your chosen influencer to integrate your product into their content. Consumers cringe at inauthentic influencer advertisements. Find an influencer who genuinely supports your product and wants to promote it to their audience. You can find the right influencer for your brand by doing the following:
- Follow Instagram hashtags related to your brand to see which content creators use the same keywords.
- Search for influencers on tools like Buzzsumo or TapInfluence.
- Track engaged followers with a social CRM.
- Use a platform like #Paid to find influencers and launch campaigns quickly and easily.
3) Diversify your digital ad spend
If you want to grow your e-commerce business in a sustainable manner, you can’t put all your digital ad spend eggs into one basket. Diversifying digital ad spend is an excellent way to facilitate long-term growth and mitigate risk and financial losses. Spreading your ad spend across a variety of channels will offer you the highest likelihood of optimal ad performance.
Entrepreneur and social media guru Gary Vaynerchuk said it best when he said, “I’m honestly more worried about those who are starting to win on platforms like LinkedIn or Instagram because that’s when they start to get complacent”.
Diversify by platform
Many marketers talk about the 80/20 rule. It refers to spending 80% of your time and resources on the most successful platforms and the other 20% on areas of opportunity. This ensures you are capitalizing on the more profitable channels while continuing to build alternative pathways. What works now might not work later so you should have multiple touchpoints and backups.
Facebook and Google have become very saturated with more and more advertisers competing for the same eyeballs. As a result, CPMs increase and ROAS decreases.
To get around this, consider allocating some of your ad spend on underpriced channels like Snapchat, Pinterest, or TikTok. As long as your target audience is hanging out there, explore these less popular channels before they become saturated as well. Always start out with small tests to see how your ad spend would be best spent.
Diversify by vertical
It’s especially valuable to diversify your ad spend when you’re marketing to a variety of audiences. For example, Gen Z and Millennial marketing differs from Gen X and Baby Boomer marketing. There’s no room for complacency in business growth. With the ever changing digital landscape, you must remain agile to grow your e-commerce business.
Case Study: BauBax
The BauBax travel jacket is an innovative clothing item designed to make traveling convenient and comfortable. It’s also the most highly funded clothing item in Crowdfunding history.
BauBax partnered with Clearbanc to build a solid e-commerce foundation after gaining support through Crowdfunding. Clearbanc helped BauBax advertise their crowdfunding campaign across various social channels, including Facebook, and market to unique audiences that would be interested in trying this custom jacket. As a result of the tailored targeting and successful crowdfunding, BauBax saw an astounding 571% ROI.
It’s not enough to scale your e-commerce business quickly. Growth needs to be accompanied with a focus on long-term sustainability. Creating a foundation with responsible sources of funding, a network of relevant influencers and a diversified digital ad spend strategy will set you and your business up for long-term growth and protect you against risk.
If you want to make more money online in 2020, you need to start working smarter, not necessarily harder. By laying down the foundation of basic best practices when it comes to online business growth, you’ll be able to readily accomplish your goals and objectives.