Customer acquisition is hard! SEO is competitive. Paid acquisition is, well, paid and therefore expensive. Here is how you can build an e-commerce empire you can be proud of by building killer margins.
E-commerce is a !#(%(#$%
Let’s face it: e-commerce is a bear.
Andy Dunn said it, Josh Hannah said it, and I think I heard the guy in the MUD truck say it to me five minutes ago. I swear.
OK so why is everybody saying it?
Because customer acquisition is hard! SEO is competitive. Paid acquisition is, well, paid and therefore expensive.
And once you’ve acquired a customer, you often have to spend up to re-acquire that same customer again!
High acquisition costs = a high hurdle you have to overcome before you make a dime.
High acquisition costs mean you either have to do one of two things to make money:
- Build acquisition into your model to reduce the costs over time (eg., flash sales like Zulily, subscription commerce like Craft Coffee). Let’s call this Model A.
- Achieve adequate margins to allow you to spend up on acquisition in the first place (eg., vertically integrated manufacturer-retailers like Everlane). Let’s call this Model B.
Building Killer Margins
I want to talk about the second of these two options, Model B: achieving killer margins.
If a higher-margin retailer is what you aim to create, think about producing your own product. Given the realities of global commerce, this often means importing a line of product and, yes, selling that line on Amazon as well as through your own direct-to-consumer website.
Far-and-away, the people I see achieving gains quickest in e-commerce are adhering to this model. If you nail your product, ramping to $5K, $10K a month within months is not uncommon.
Alibaba makes it easy to source the product; Amazon gives you a great channel through which to acquire the customers.
So where do you start? Should you log onto Alibaba now and order up a container load of skin care products shipped directly to your apartment?
No.
You learn first from people have done it before.