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Avoid the Top 5 Mistakes E-Commerce Companies Make


As a hands-on advisor to E-commerce and DTC companies, here are the top 5 mistakes I see being made, which cause significant challenges and prevent revenue growth. Read on to avoid making these costly errors.   

(1) Success with DTC is driven by building a strong relationship between the brand and customer and leveraging this to better understand consumers, predict trends and pivot offerings. However, often brands don’t invest enough in infrastructure to enable collation of data from this interaction to build a record of customers which includes not just demographic information but also behaviors, interests, purchases and intentions.    

(2) Start-up brands often start selling on Amazon without considering the long-term costs. The immediate benefit of accessing the immense market of motivated buyers on Amazon is clear. However, there can be significant costs which could ultimately lead to an inability to grow your brand, revenue and value in the long term. Not having access to you own customers data is a big cost. Not only that, Amazon collects fees which increases your CAC and sets all the rules, like gathering the data you are not getting access to and potentially using it to compete against you.    

(3) Brands often fail to manage both DTC and Retail channels in a cohesive manner, causing flat revenue for the company and channel conflict for customers. So rather than upsetting your retailers with a DTC strategy that causes their sales to drop, you should employ strategies which strengthen brand awareness and increase revenues across channels, including for retailers. For example, you could also use your own website to benefit the retailers which sell your products like links to their sites. Also, you can differentiate how you bundle and package when selling DTC so as not to crowd out sales for retail partners, such as bundling or subscription products.     

(4) Not tracking both customer acquisition cost (CAC) and lifetime value (LTV) of your customers is another big mistake.  Make sure you track and use those insights proactively. If your overall LTV to CAC ratio is too low then these ratios need to be improved by honing in on reducing CAC, for example, focusing marketing efforts on those customers most likely to convert. Also increasing LTV by tactics such as upselling better products, quantity discounts and free shipping over a minimum amount.   

(5) Lastly, a huge part of success lies within sourcing product, inventory management and fulfilling customer orders on time. A big mistake companies make here is a lack of operational oversight on these areas. Getting a deep understanding of who your suppliers are and how they work, focusing on the right supply chain metrics and hiring expertise in this area are some ways to excel in your supply chain management.