“Build it and they will come”

No, they won’t. 

We had a fantastic team meeting last week hosted by our one and only Guy Kingsley Smith in which Guy took us through a presentation of what a good ecommerce business looks like. Guy is one of the most well-read individuals I’ve known and always provides insights and current thinking which is on trend and relevant to our clients. 

The theme of last week’s meeting was ‘it’s never been easier to start a business, but never been harder to scale one’. He could have left it at that. 

As an ecommerce agency, we have had an influx of covid-preneurs who, in part, thanks to the likes of Shopify and Fiverr have set up businesses looking to provide what they see as gaps in the lockdown market. FMCGs, PPE & trending market segmentations. 

On paper, it all looks simple. Create an ecommerce website, brand it with the help of someone from Fiverr and off you go. But as 99.9% of these new online businesses will discover, just because you built it, it doesn’t mean you have a queue at the door of shoppers. 

Those early successes with orders from friends & family will soon dry up and the harsh reality of acquiring customers kicks in. 

So, what’s the problem? 

You have a brand, you have a shop, you’re posting on social — why aren’t the orders coming in? 

As we have discovered over the past decade of looking after ecommerce retailers online, it all comes down to expectations vs. reality. 

Social media has a lot to answer for. We’re all told that all we need to do is ‘follow our dreams’ or ‘hustle’. If you wake up at 4.30 and read some books while meditating, success will surely follow.

Sadly, the narrative fails to include basic economic principles. Scaling a business is EXPENSIVE and if you’re not prepared to meet the basic economic input required, no amount of positive thinking or ‘hustle’ is going to help. 

The real cost of growth. 

Lets go back to 2000. No particular reason, but it’s 20 years ago and that’ll do as a benchmark. 

You’re a retailer. You need to open a store. The store, by proxy would need to be in a prominent high street position to gain traction and benefit from passing trade and this would require significant investment and commitment for a lease, fixtures and fittings, utilities and staff. 

You also want to sell to the whole of the UK. You phone the Yellow Pages. 

You pick a modest advert — quarter column in 102 directories, full colour.  

This would have set you back £600 x 102 = £61,200

So we’re looking at the first annual advertising investment of around £80,000

*excluding stock 

Fast forward to 2020, these days the shop front is an online store and the business owner expects to reach a national audience with a budget of….? That’s right, very often its nothing, sometimes it’s a modest amount. 9 times out of 10, these stores come with no business plan, no goals and no willingness to sacrifice profit for growth. 

Social media has told the would-be entrepreneur that it’s all possible, for free online. If you build it, they will come. 

The truth

The reality is, opening and scaling a business is the same as it ever was. 

Yes, there are huge differences but one thing that remains the same is simple economics. 

There is a huge financial commitment to running and scaling a business and in 2020 this isn’t free – despite what social media tells you. 

The solution

Raising and spending significant amounts of money on an online business is a daunting and terrifying prospect. What happens if it doesn’t work? Will I be in debt? Will I go bust? 

This is where an ecommerce growth agency like ours can help. 

We have seen all types of ecommerce businesses. We have turned plenty away as we didn’t think it was viable. We have experience of success and of failure. In short, we know what works and what doesn’t. 

We can take the risk of scaling online with tried and tested strategies. 

Ecommerce success isn’t limited to ad spend, it’s a multiple of variants – as any one conversation with Guy Kingsley Smith will tell you! And it isn’t an overnight success.

The stats speak for themselves: 

Shopify grew by 71% in Q2 compared with Q1 in 2020

90% of ecommerce start-ups fail in the first 120 days. 

The two main reasons according to Forbes and Huff Post are “poor online marketing performance coupled with an overall lack of search engine visibility” 

With a number of respondents claiming to have failed to estimate the cost of digital marketing. 

Hiring us isn’t cheap, we are digital stockbrokers. We know what a good investment looks like. 

Or you ask Dave down the pub to make your futures investment for you after a few pints. 

If you want to be part of the 10%, hire ecommerce experts who know how to scale a business. Better still, before you start your ecommerce business, speak to us today.