There are plenty of reasons every eCommerce merchant should have their own website, from increasing brand loyalty to reducing cost per sale. However, what happens once you’ve launched your own website, and are getting ready to grow?
This article will cover some of the important aspects of scaling your D2C business, from acquisition, to retention, to fulfillment, to making sure everything is in place and ready for growth.
5 Questions to ask before you scale your D2C business
Before you put the pedal to the metal and go into full growth mode, ask these key questions to make sure you’re ready to scale sustainably.
Most D2C sellers are set up on a combination of a platform like Shopify, BigCommerce, or WooCommerce, alongside various plugins. Payment gateways and plugin functionality may differ based on what you want your store to do, such as handle subscriptions.
Take a look at your current platform setup and determine whether it can handle growth, and how you can optimize for it. For example, do you pay your payment provider a percentage based on sales, or a flat rate per month?
For many small sellers, paying a percentage of every sale makes the most sense financially. However, as you grow, you should switch that out to a flat rate per month, especially if you expect to double, triple, or even 10x sales volumes quickly.
Before you start investing in growth, make sure your platform, including all of your plugins and other sales tools, can both handle that growth and are optimized for scale.
When you start out selling D2C, it’s tempting to handle shipping for the small amount of orders yourself, perhaps out of your garage or your own warehouse. That’s perfectly fine if you know what to expect, and have a good handle on your current volume.
However, what happens when you suddenly have 5x the amount of sales? Can your logistics keep up? Or will you find yourself with lost items, disorganized records, longer shipping times, and impatient customers calling and emailing in to ask where their items are?
Before you scale, make sure you build redundancy into your fulfillment and logistics. If you’re used to relying on in-house fulfillment, or something like Amazon MCF, you should invest in another fulfillment network that can kick in if your first system fails.
For example, you can use in-house fulfillment until the volume becomes too much for your in-house team to handle, and then send the overflow orders to Deliverr to fulfill. Or you can use Deliverr to fulfill your orders across your different sales channels, and supplement it with Amazon MCF.
It can be tempting to say “as long as there’s growth, we don’t need to know the specifics.” Many merchants think that an increase in sales is all they need to see, and don’t dig into the data behind their store unless sales have dropped.
This can be a mistake that costs you revenue. You should continue to monitor your metrics, especially during periods of high growth. You might discover insights that help you grow even faster, or fix your funnel so more leads convert and purchase.
For example, 10% growth with a $100 cost per acquisition (CPA) is still 10% growth. However, if you can lower your CPA to $50 while maintaining your conversion rate, you can grow just as quickly for half the price. If all you had looked at was the 10% growth, you would have missed out on additional revenue.
Once you start to scale, you still need to be able to capture accurate data on things like your retention rate, churn, and CPA. Optimizing for customer lifetime value can help you scale at an even faster rate, whereas ignoring leaks in your funnel can slow down your growth.
Even explosive growth won’t be sustainable if you have an equally explosive churn rate. That means every new buyer you get never makes another purchase, and eventually one outpaces the other.
You need to pay attention to your buyer experience in order to retain those new customers as you scale. Look at every step of the buyer journey and analyze where you can improve — whether that means creating a loyalty program, working harder to capture emails for your newsletter, or starting a subscription service.
Sometimes, growth isn’t necessarily a good thing, especially if you’re growing with the wrong kind of buyer. You can experience periods of growth by boosting your ad spend, while reaching audiences that aren’t a good fit.
In this case, you may end up with a strain on your customer support team as buyers call in to complain about the product not being what they expected. You could also see an influx in low reviews, because customers thought they were buying one thing but ended up with something else.
Before you scale, make sure you have the right audience in mind. That applies to your marketing, sales, and any external communications you put out when growing. Your ideal customers are the ones best served by your product, and they are the ones who will leave great reviews, recommend your products, and repurchase again and again.
Targeting the right audience during growth phases helps to start a flywheel that makes repeat sales and good word-of-mouth marketing easier in the long run.
Wrapping up – What to consider when scaling your D2C business
Explosive growth is every eCommerce seller’s dream, but it shouldn’t catch you off guard. Before you begin scaling your D2C business, make sure you have the groundwork for sustainable growth. This includes getting the right platform and operations in place, ensuring high quality service can be maintained, and setting the right standards for acquisition and retention.