Patience Is A Virtue With eCommerce
If you are starting a new business, predicting a specific revenue target is almost a fool's errand. I'd rather counsel a company making major new investments on two things:
One, do you understand how your financial model works as it scales? What is your top-end margin possibility? Which metrics (for example, returns, conversion rate, shipping costs, AOV) contain the biggest downside risks to your margin?
Two, better to focus on the product and your merchandise plan. Do you have something that people actually want to buy? For these things that people actually want to buy, do you have a message that is unique and differentiated compared to replacement purchases the buyer could make? This is where the "it's about the technology/website and digital marketing" people really get it wrong. Almost any platform you pick will make it easy to click “buy,” but is there a reason to now?
eCommerce is lifting boats, but not all equally. There are many times you need more patience than anything. Everyone wants more revenue tomorrow, but at what cost?
The easiest thing to do is look at someone else's business model and have envy. Envy of their top-line revenue, worry and wonder at their growth. But what you are not seeing is likely the years of planning, mistakes, and, later, growth that went into it.
Neil Verma asked about TAM (total addressable market), which is an interesting flag to raise. TAM is interesting as a checklist item, but in many ways irrelevant. There are about 5 businesses in the world which are within 20% of their TAM. And even then, expanding your TAM is about innovation and critical thinking. There is no fixed limit to things people will want to buy in this world. Everyone else would be better served about understanding which levers are needed now to improve their product and service. It's like trying to win the NFL Super Bowl every year with the same group of reject players. At some point, maybe think about the product that's on the field?
Sureshrajan Palaniappan added “Focus on the product and branding is very important. we can't really make a product that no one is willing to pay for & waste our money in aggressive marketing.” Yes - focus on product is key. As is understanding that things take time. Richard Emanuel shared a quote, saying “it's funny how many overnight successes there are out there, that took 15+ years to build.” Amen!
