eCommerce has witnessed several fluctuations as an industry since COVID. Where once we saw a dramatic rise in development and M&A, many hold the view that the graph is now coming down.
To gain a deeper understanding of the eCommerce landscape and the strategies that can help businesses succeed, Nathan invited Steve from SKRP Media, an eCommerce expert with over two decades of experience. In this episode of eCommerce On Tap, we delve into the key takeaways from our conversation with Steve and explore various aspects of eCommerce in 2023.
Steve’s eCommerce Journey:
Steve’s journey in eCommerce and M&A is a testament to the industry’s growth and adaptability. He shared his story, which began with a job separation that led him to explore eCommerce:
“About seven years ago, I ventured into eCommerce due to a job separation and some personal reasons. I needed the flexibility that eCommerce could offer. It started as an experiment; I told my wife that if I couldn’t make it work in six months, I’d return to a conventional job. Six months came and went, and although I hadn’t reached all my goals, I had made significant progress, which motivated me to continue.”
Steve’s experience highlights the allure of eCommerce—the ability to build a business, adapt, and experience the empowering moment when your sales register starts ringing.
The Resilience of eCommerce:
eCommerce has weathered various storms, and Steve’s story is no different. He mentioned how unexpected challenges can shape your eCommerce journey:
“We grew our business from a simple dinner idea to a seven-figure venture, only to have the pandemic disrupt everything. It was a surreal experience. However, what I’ve learned is that eCommerce remains viable. Regardless of the hurdles, if you’re on the right path with a growing, profitable business, there are buyers out there.”
This insight emphasizes the resilience of eCommerce as a business model and serves as a motivating factor for entrepreneurs.
The eCommerce Market in 2023:
As of 2023, the eCommerce market continues to thrive. Steve’s involvement in mergers and acquisitions (M&A) for eCommerce and SaaS businesses provides a unique perspective on market dynamics:
“While the eCommerce market saw sky-high multiples during COVID, it has evolved since then. The private markets may not mirror the public ones, but we still see deal flow. Sellers have diverse reasons for selling, from burnout to partnership changes. Not all businesses are distressed; some have excellent margins but lack working capital.”
Steve’s insight illustrates the diversity within the eCommerce market. There are distressed deals but also thriving businesses with unique challenges.
Navigating Supply Chain Challenges:
COVID-19 presented supply chain challenges for many eCommerce brands. Steve’s experience sheds light on this aspect:
“Our business was in the fitness space, selling accessories. Our supply chain was severely affected because our main supplier was in China, which went into lockdown for four months. This delay led to a significant gap in our inventory. We had a backup supplier with lower-quality products, but I hesitated to switch. Managing these supply chain complexities was a valuable lesson.”
COVID-19 presented a series of difficulties for eCommerce businesses. Lockdowns and restrictions disrupted manufacturing and shipping operations, leading to delays in product availability. Factories closed, causing shortages of raw materials and finished goods. Fluctuating demand patterns made inventory management a delicate balancing act. Many businesses struggled to meet customer expectations for fast shipping and experienced increased shipping costs.
Maintaining safety protocols for employees in warehouses further complicated operations. eCommerce companies had to adapt quickly, diversify suppliers, and invest in technology to enhance visibility and resilience in their supply chains, lessons that continue to shape the industry in 2023.
Steve’s experience emphasizes the importance of diversifying suppliers and being prepared for unexpected disruptions.
The Power of Data: Knowing Your Audience
Understanding your audience is a fundamental eCommerce strategy. Sharing his experience in M&A and highlighting the importance of data, particularly email listings that businesses gather over the course of developing their business, Steve says it’s the most important thing a buyer is looking for.
Steve discussed how he identified and catered to his ideal customer:
“I knew our ideal customer was a 48-year-old female, living near San Antonio, Texas, college-educated, working in the medical field as a nurse, with an SUV, an iPhone, and a passion for running. Knowing these details allowed us to tailor our marketing to address their specific needs.”
This level of audience understanding enables businesses to craft personalized marketing campaigns and connect with customers on a deeper level. Having the ideal buyer persona also helped companies to attain value in the eyes of acquiring entities:
“Data is key. Even if you have an Amazon store, remember that Amazon’s customers aren’t yours. Focus on building your brand’s data. A buyer doesn’t just acquire your products; they seek your brand and the data behind it.”
This underscores the value of a brand’s customer database in attracting potential buyers.
Selling a Business: Importance of Transparency
Steve offered valuable advice on preparing an eCommerce business for sale:
“The more transparent you can be, the better. Clean financials are crucial, but also make your business as efficient as possible. Leverage customer relationships and deeply understand your audience. Document your processes, so a potential buyer can step in smoothly.”
Steve’s advice highlights that preparing your business for sale involves more than financials; it’s about presenting a well-oiled machine. He also states that while showing a rising graph of profits and revenue generation is important , it also helps immensely to be transparent and present a detailed list of kinks and quirks that make your business unique. Sharing insights about mistakes made, difficulties identified, and challenges that you’ve overcome can present a realistic view for a buyer.
Takeaway:
As per Steve, eCommerce’s future remains bright despite challenges. Steve’s journey and insights demonstrate that adaptability, audience understanding, and data are critical drivers of success in this evolving landscape. His decision to experience M&A really changed his perspective of how he looked at eCommerce businesses, including his own. And though he’s not focusing too much on it now, he’s of the mind to restart his entrepreneurial adventure later on.
Whether you’re running an eCommerce business or considering selling one, Steve’s insights provide valuable guidance in navigating the dynamic world of eCommerce in 2023 and beyond.
As the eCommerce landscape continues to evolve, businesses must stay agile and customer-focused. Understanding your audience, leveraging data, and preparing your business for potential sales are essential strategies for thriving in this dynamic marketplace. With Steve’s approach, eCommerce businesses can overcome challenges and achieve long-term success.