How to Manage Growth as an Emerging eCommerce Brand



Entrepreneurs face just as many opportunities for failure as they do for success. In fact, eight out of 10 entrepreneurs fail within their first 18 months of starting a business. With great reward comes great risk, but how do those risks evolve as a business grows past the startup stage?

For emerging eCommerce brands (online retailers that have achieved initial success and are beginning to grow more quickly), the risks of business failure are even more dramatic. New business owners often jeopardize their personal security as collateral for business needs. The need to fund growth, combined with a lack of experience in key disciplines, means that emerging brands need to learn quickly as they deal with rapid expansion.

While there is no single way to effectively manage business growth, there are options that emerging eCommerce brands should consider as they navigate around the many land mines they’ll face. Here is our list of three things an eCommerce entrepreneur should consider when they have the opportunity to build a much larger company:

Select Appropriate Partners

When dealing with growth, it’s important to ask these questions: How can I minimize the learning curve and avoid making costly mistakes in technology, warehousing and distribution? How can I reduce investments in facilities, equipment and people, but still provide a great customer experience?

If you can’t provide the solution, the good news is that there are trusted partners with proven track records for helping emerging companies like yours. They’re available to help in fields ranging from operations to technology. You just have to do your due diligence to find the right partner. The first rule is to find a vendor that treats you like a partner, not a business deal. Check references and make sure the vendor has successfully supported other businesses through periods of high growth.

Additionally, look for a partner that can show you how to improve the customer experience and reduce costs. Expertise shouldn’t come at the expense of finding the right “fit,” however, both in terms of the size of your business and its culture.

When looking for a distribution partner, find one who offers the right combination of flexibility and scalability. It’s easy to find a vendor who does one well, but usually not both. Here’s where due diligence pays huge dividends.

Choosing the right vendor with accredited industry experience, as well as a demonstrated commitment to details and transparency, can provide a tremendous competitive advantage. Picking the wrong partners can put you on the fast track to failure, so choose wisely.

Scale Quickly, But Responsibly

When scaling rapidly with limited resources and expertise, it’s easy to make the wrong decisions based on instincts and gut reactions. Unfortunately, these decisions can be very costly. Make sure the proper time and resources are allocated to big decisions. Rely on the expertise of vendors and crunch the numbers, especially with operations. Do the math and make sure that you are tracking the data as you grow.

We frequently see the that two most significant mistakes early stage companies make are the lack of inventory management and freight management – two of the largest expenses in eCommerce. How much inventory should I carry? Do I have a plan to manage product lifecycle?  Knowing when to liquidate can be just as critical as knowing what products to sell. Implementing a freight program that ensures you are not overpaying for freight, yet meeting customer experience objectives, is also critical. When scaling, here are two pointers to consider:

Inventory Management – Always know what items are in inventory and how long they have been there, as well as your carrying costs. High carrying costs mean that you’re not only wasting valuable space in the warehouse, but also tying up cash that can be used for marketing and new products that will sell. To avoid inventory waste, have a plan to initially sell at full price, put on sale at a reduced price if you aren’t selling a specific product, sell at clearance and liquidate as a last resort. Letting inventory build can put you out of business.

–  Freight Management – Selecting the appropriate carrier and service often starts with average order value as well as product size and weight.  Determining what you can afford to pay is the first step. Once you understand this, you can look to the customer experience to determine an acceptable transit time.  Get to know which carriers provide the most cost-effective service, depending on weight. A blend of services and carriers often yields the best combination of acceptable transit time and lower cost.

Communicate With Intent

Don’t wait for consumers to reach out to you; connect with them throughout the entire purchase experience. The customer experience doesn’t end with a sale, but too many brands fail to engage in customer communication beyond this point. Develop intentional, long-term communication strategies.

For example, according to our recent packaging survey, customers feel that they lack shipping insights when an order is placed. You can supplement this information gap by communicating with customers as soon as they check out and throughout the delivery process. This can be done through email confirmations and social media (hashtags are a great way to maintain open communication), or through follow-up customer surveys. Consistent communication with customers (even when they aren’t thinking about a product) initiates conversations that you can leverage to make a direct ask in the future.

With these three tips, emerging brands can maintain success beyond their initial growth. Attention to detail and commitment to customers will help emerging brands escape the 80% failure rate. These odds may be based in history, but emerging brands have the power to change their individual futures.



Image credit: CC by Maria Elena

About the author: Doug Sternberg

Doug is a senior executive with over 30 years’ experience building collaborative partnerships with client organizations. He helps to grow their eCommerce and direct-to-consumer channel while reducing the costs associated with operations and transportation. As Executive Vice President of Client Strategy at Dotcom Distribution, Doug focuses on ensuring that each custom solution developed on behalf of the company’s client partners provides the infrastructure necessary to meet their operational, branding and customer experience needs for both the short and long term.

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