Together with “how do we grow fast?”, this is possibly the question I’m asked the most, my FAQ.

You might be struggling with scaling your eCommerce business and can’t quite figure out what is stopping you.

Here’s the most common barriers I got to work against and overcome over the last 16 years, while learning hands-on how to use data, digital and eCommerce to drive business growth.

eCommerce is BIG

Over the past decade eCommerce represented the largest growth opportunity for B2C businesses worldwide.

Suffice it to say that global eCommerce sales doubled in 2019 vs 2016 (reaching $3.5 Trillions), are expected to top $4.2 trillion in 2020 and reach more than $6.5 trillion by 2023 with more than 2.1 billion shoppers by 2021.

This fast pace is now only accelerating due to new consumer behaviours arisen during the Covid-19 pandemic: with the so called Offline-to-Online Migration.

eCommerce Share of Total Retail Sales 2015 - 2023

Evolve to survive. Then thrive.

Although I’m not going to spend time in this article discussing the tsunami-like ripple effects that 2020 had on physical retail so far, there are two opinions I hold strongly that I want to express:

  • YES, there is still an important role to be played by bricks-&-mortar in the future of retail and consumer engagement.
  • NO, a new sustainable retail formula will not look anything like the current one. Retail will need to reinvent itself into a much more collaborative, social, experiential and less commoditised version of itself - that goes for large distribution and luxury stores alike.

So, if today you find yourself leading a consumer brand and you don’t have a clear and strong eCommerce strategy, then you fundamentally have only two alternative options to avoid failure for the brand:

1) Quit your job now and let somebody else do it.

2) Run immediately to do your homework, collect real insights and contributions, and start drafting an all-encompassing eCommerce strategy.

And to avoid any doubt: NO, “let’s sell more stuff on the websiteis NOT a strategy.

As gratuitously provocative as this may sound, this is the unfiltered truth.

The most common barriers for DTC brands

Large Direct-to-Consumer (DTC) eCommerce growth is possible, but 2020 is most certainly not 2010 - eCommerce years are like dog years, competition is now much fiercer and the whole system massively shifted.

Here we go then, let me take you through the most common eCommerce growth barriers to avoid death-by-a-1000-cuts of your DTC operations.

MEDIA

The media arbitrage got thin - meaning that consumers attention is not as cost-effective anymore. The price of an ad impression is far from what it was ten years ago, which directly reflected in the average Cost of Acquisition (CAC) of a new customer, becoming orders of magnitude higher than it used to be.

PARTNERS

Media Agencies, with their one-size-fits-all approach to “performance” marketing and their broken business model, are struggling to keep their own lights on, let alone being able to constructively fight for their clients' growth.

TALENT

Due to very high demand of eCommerce and growth marketing talents, the talent market is shockingly polluted with bull*****ers who end up landing decision-making roles due to sheer scarcity of quality offer. More often than not actively contributing to the tanking of hopeful brands. And don’t even get me started on the utter inutility of headhunters in this vertical: far out of their depth in 99% of the cases.

MANAGEMENT CULTURE

Many business leaders today did not grow professionally in their careers by running hands-on eCommerce websites or performance marketing accounts. What they entirely missed to experience is the principle of aggregation of marginal gains, which is intrinsic to the organic nature of eCommerce and Growth Marketing. As a consequence, their decision-making process suffers greatly. Pareto-efficiency (ie: the good old 80/20 rule) is often chased in the misguided attempt of identifying those, often gimmicky, silver bullets that should save the day. But never do. This is especially true in businesses where powerpoint slides contribute to careers more than results. 

Incentives. Incentives. Incentives.

VALUE PROPOSITION

Due to the vast DTC brands offering available across a multitude of categories (from razors, to glasses, to mattresses, etc..), simply existing as a DTC brand with a slick website is no longer enough to ensure a sustainable slam-dunk success. Brands need to craft a multifaceted value proposition that re-thinks brand and experience (product + service) - a fantastic example of this is Italic, with its subscription-based access to top-quality products at cost.

A value proposition re-design is even more crucial once distribution inevitably expands into wholesale doors.

AMAZON

You don’t need me to spell it out, right?

FUNDING

VC money got (thankfully!) more cautious, starting to emphasise the value of unit economics over just fast growth and the mirage of hype rainbows.

CULTURAL FIT

Most large brands struggle to shift and fit in with societal tectonic shifts. Think for example of Abercrombie & Fitch and Victoria Secret protracted delay in even realizing there was a positioning issue to begin with. Freshly designed brands reflect more authentically today’s culture (eg: MadHappy and their mental health centered branding or Noah and their radical transparency approach to labour and supply chain) especially in a historical moment in which brands are asked to take a stand on social and environmental issues on both a local and global scale.

PAID ATTENTION 

...see what I did there? :)

Committee-led brands, slowly yet inevitably, keep averaging down their relevance by favouring a middle-of-the-road-boring-to-the-bone approach to communication. All that, while challenger underdog brands erode their market share by taking more risks to cut through the noise with their unapologetic attitude. This allows them to quickly learn what resonates with consumers and build upon it (eg: Milk and their inclusivity-centered approach with unisex packaging, use of genuinely diverse models)

TECH QUICKSAND

Large established brands suffer from tech stillness heavily encumbered by legacies and unnecessarily stringent policies. While out there, with a fast growing online retail market, the technology behind Content Management (eg: Webflow), eCommerce (eg: Shopify) and CRM (eg: Klaviyo) evolved quickly towards lowering barriers to entry for neophyte merchants - making the cost of starting a DTC eCommerce business almost immaterial.

in conclusion...

All barriers and failure points listed above can be overcome, as what’s holding you back most, is likely already in your control.

In fact, even the simple act of becoming aware of the existence of such barriers will give you a competitive advantage vs who keeps banging their head against them without even realising. Just because things are as they are.

You must get inventive, adopt a growth mindset and relentlessly focus on improving the financial sustainability of your business growth. Get coached by experts if needed, then become independent ASAP.

Consistently avoiding pitfalls, and embracing the need for relentless transformation, is the only way forward. And upwards.

...or as Charlie Munger (legendary investor and business partner of Warren Buffet) puts it:

“You get further in life by avoiding repeated stupidity than you do by striving for maximum intelligence.” — Charlie Munger