Post on 14-Jun-2015
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@sweettooth
The Trend Disrupting eCommerce and Killing Businesses
Mike Rossi
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eCommerce has gone pretty well so far, right?
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But what about the next 5-10 years?
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vs.
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About Mike
• Co-Founder, CEO of Sweet Tooth
• Worked with Magento during its beta stages
• Helped hundreds of merchants with their eCommerce marketing efforts
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What did eCommerce marketing look like 5-10 years ago?
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Where did online store sales come from in 2004-2009?
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1. SEM, Pay-Per-Click Ads
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1. SEM, Pay-Per-Click Ads
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2. SEO
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3. Affiliates & Link Building
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4. Content Marketing
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What do all of these have in common?
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1. Get a visitor 2. Convert 3. Profit 4. Repeat!
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1. Find 2. Kill 3. Eat 4. Repeat!
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Important Metrics in ~20071. Cost Per Click (for SEM)
2. Marketing Costs per SEO Visitor
3. Conversion Rate
4. Cost to Acquire a Customer
5. Average Margin
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Example Merchant in 2007
• Sells apparel
• Cost to acquire a customer = $5
• Average order = $50
• Average margin = 30%
• Average profit per order =
$10
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So, what’s been happening in the past ~5 years?
@sweettoothSource: searchengineland.com
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These marketing methods have become less effective over time
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– Andrew Chen
“Over time, all marketing strategies result in shitty clickthrough rates.”
The Law of Shitty Clickthroughs
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…but why?
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2007 Merchant
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2014 Merchant
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More competition in every vertical!
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Side-Effects of More Competition
1. Higher pay-per-click ad prices due to more bidding
2. SEO is more difficult (i.e. less efficient)
3. Prices are driven down, which lowers margins
4. Commoditization
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Example Merchant in 2014
• Sells apparel
• Cost to acquire a customer = $7.50
• Average order = $50
• Average margin = 20%
• Average profit per order =
$2.50
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2014 Merchant
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So what have merchants been doing about it?
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Source: Monetate
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Marketing Budgets
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Important Metrics in 2014
1. Customer Lifetime Value (CLV)
2. Average number of purchases per year
3. % of sales from repeat customers
4. Churn, or the number of customers who never return
5. Some of the 2007 metrics too!
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“Hunter” Merchant in 2014
• Sells apparel
• Cost to acquire a customer = $7.50
• Average order = $50
• Average margin = 20%
• Average profit per order =
$2.50
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“Farmer” Merchant in 2014
• Sells apparel
• Cost to acquire an existing customer = $2
• Average order = $50
• Average margin = 20%
• Average profit per order =
$7.50
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1. Referral programs 2. Lifecycle emails 3. Loyalty programs 4. Great customer service 5. Memoriable experiences
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vs.
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Important Metrics in 2014
1. Customer Lifetime Value (CLV)
2. Average number of purchases per year
3. % of sales from repeat customers
4. Churn, or the number of customers who never return
5. Some of the 2007 metrics too!
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&
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Questions? !
@m3rossi & @sweettooth