3 Uncommon Sense Ways You're Wasting Money in Your eCommerce Business

Zach Lukaszek, co-Founder of Ships-A-Lot

Zach Lukaszek is a former PhD student turned entrepreneur who enjoys writing about eCommerce, business, and programming.


bird@shipsalot.com

Zach Lukaszek, co-Founder of Ships-A-Lot

Zach Lukaszek is a former PhD student turned entrepreneur who enjoys writing about eCommerce, business, and programming.


bird@shipsalot.com

3 Uncommon Sense Ways You're Wasting Money in Your eCommerce Business

Ecommerce, optimization, profit, roi -

Motivation

We all hate wasting money. I was glancing over a list of Shopify stores ranked by daily traffic over at ShopySpy and something struck me: The themes of most of the top stores (which all easily have 7-9 figure annual revenues) are completely stock. They don't have custom designs and don't feature heavy modification. They also lack heavy use of optimization applications.

I started thinking about this and came up with a list of 3 things I frequently see Shopify entrepreneurs fixate on despite these things giving meager contributions to growth.


1. Favoring optimization over revenue growth

There is an entire industry devoted to collecting eCommerce entrepreneur's money in exchange for website optimization. Google "eCommerce optimization services" and you'll get pages upon pages of companies happy to offer you six-figure services.

You can also find much written about price, style, shipping price, or packaging optimization all over the internet. This list could be increased ad infinitum.

Until the bottom-line impact of optimization outweighs the bottom-line impact of simply increasing your sales, favoring optimization over growth is a factual waste. It's about the opportunity cost. You should already have a good understanding of your market and how much room you have left to grow. 

Your acquisition cost is a good metric to see how well you're doing here. Is the profit generated by a new customer acquisition greater or less than the profit generated by juicing your existing customer base?

Are you obsessing over which premium Shopify theme to pay for instead of pursuing a wider customer base?


2. Refusing to outsource your big time sinks

I am obviously biased here. I would like to think that this is counter-balanced by the fact that I partake in this refusal from time to time. We recently acquired a whale of a customer (top 25 Shopify stores by daily traffic) at Ships-A-Lot and I've been way too focused on the minutiae of daily execution.

All of us were, frankly. So, we had to realize that we couldn't do everything forever and had to hire two new full-time employees to handle the volume. Every business owner has moments like this. It's part of your role in the company maturing. Refusing to let go of time sinks, however, can be detrimental!

I see so many companies with a ton of hesitation to outsource fulfillment (as a...convenient...example) because it's seen as so intrinsic to the customer experience. The result is a lot of high-value resources (capital, owner's time, etc.) being burned to "get it right", despite the fact that so many fulfillment centers have been "getting it right" for years now. 

Every heard of WhatsApp? Facebook paid 22 billion USD for a company that had 50 employees at the time of the sale. They outsourced everything that wasn't absolutely necessary


3. Not understanding your bottom line

While this suggestion may sound like promotion of optimization over revenue growth, it isn't. The early eCommerce pioneers of the 90s showed us with their venture capitalist-horrifying business strategies that if you lose money on every sale, you cannot make it up with volume

If you don't understand where your bad sales are, you won't know when all your sales have become bad sales. I have yet to meet a successful eCommerce entrepreneur that doesn't at least have an Accounting 101 understanding of their sales cycle. There is probably a reason for this. 

Cash buys you runway space, but a business owner that doesn't have a plan to profitability with the math to back it up should be as terrifying to their employees as a pilot with no real takeoff plan besides "go fast, get airborne". 


4. Bonus round: emotion over reason

We like feeling good. We like feeling productive, like we're accomplishing so very much every day. Like our business is doing so well. If we never sit down and take an inventory (potentially an abstract one: a la "What time sinks am I refusing to outsource?") then we're certain to go broke. 

Make the data-backed, occasionally unpopular decisions: they're usually the right ones.


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