Well, it looks like the planet is not fixed and that makes the eCommerce growth quite sticky.
20% of the retail is online in the US. And 27% in the UK.
The good news?
If you’re reading this article, that might be a sign of good news for you, as you’re in the eCommerce space.
However, the happiest about it should be the small and extra small CPG brands.
They are the ones that are now generating more than 65% from the sales when the goods are being delivered. On the physical retail, they generate less than 25% of the sales.
That means a major shift is happening.
And eCommerce is still a work in progress.
According to BuiltWith, 44% of all the eCommerce websites that are live in November 2021, were created in the last year alone.
What else has happened in the last 12 months?
Well, the cost of average Facebook ad costs surged 89%, while Google and YouTube’s costs are up by 108%, according to Hunch.
That means companies have a more difficult job than ever, as the game is changing: It is not about acquiring customers anymore. Instead, it is a game of acquiring the right customers at the right time and then, to turn them into repeat customers and achieving the highest network effects through them.
Companies must become more efficient at customer acquisition and maximize each customer’s revenue.
But what’s the best way to monitor if an eCommerce does that?
The ratio between customer lifetime value and customer acquisition cost.
That is what the eCommerce game is all about.
Nail this ratio, keep it above 3:1 and you have a sustainable business.
However, few are the companies that monitor CAC and CLV.
And even fewer do something to optimize it.
This happens usually, due to 5 main factors:
- Company’s mentality – order-centric companies that work in siloes
- Obsession over acquisition marketing – due to FB & G Ads narratives & training
- Hard to calculate & monitor CLV properly – but we have a solution
- Lack of know-how – we have a solution for that, too
- Over-reliance on Google Analytics – visitors are not customers, though.
By far, a game-changing type of methodology for an established eCommerce is Conversion Rate Optimization.
That’s a great endeavor, as it is data-driven, uses customer’s voice, and is based on experimentation, rather than spray and pray.
The challenge with CRO is that it touches only the website, which is just a part of the customer journey.
So, a more impactful approach is to focus on optimizing the whole customer journey, using the same data-driven principles as CRO.
This process is called CVO (Customer Value Optimization) and is what will definitely help companies to traverse this tectonic shift.
Want to learn more about it? We have a whole guide about CVO on our blog.