Unless you’ve been living in a cave for the last couple of years, you’ve probably heard about the surge in the number of businesses that have capitalized on pandemic-induced ecommerce opportunities – at least across developed nations.
But, while recent data indicates that the trend of ‘going digital’ is expected to grow over the coming years, many are guided by the misconception that the business of ecommerce is easy, particularly when your focus is primarily on the success stories.
The unprecedented growth that was triggered by the COVID-19 pandemic saw businesses expand quickly as demand rose and sales increased as a result. However, retail-tech guru Paul Waddy explains to The CEO Magazine that, if you needed the pandemic to thrive, you might not stand the test of time.
"We are going to see lots and lots of closures over the next 12 months and I personally think the number one reason is a lack of financial acumen," Waddy explains. "A lot of good brand people create businesses and don’t care about the business."
Bad habits, as he puts it, have led businesses to get comfortable, but he insists that the bubble is beginning to burst as sales volumes drop and previously struggling businesses become unprofitable once again.
A recipe for long-term success
The ecommerce author, advisor, speaker and Director of digital marketing agency Ecom Nation is on a mission to help business owners, entrepreneurs and anyone with a strong product and a drive to succeed to claim their share of this global multi-trillion dollar industry.
He ranked second in Inside Retail’s ‘Top 50 People in Ecommerce’ 2021 report, dubbed the "The all-rounder", and was the recipient of the Industry Recognition Award at the Online Retail Industry Awards in 2022.
"I’m interested in building long-term businesses that grow in value over time, not flash-in-the-pan businesses that are good for a year or two and then fizzle out because also, you can’t sell those businesses," he points out. "You need consistent, strong financials if you want to sell your business as well."
It’s a hard pill to swallow for those who prefer a surface approach and who base their decisions on assumptions, like selling their products for a price they think is fair rather than closely examining the numbers.
Waddy’s golden advice is to operate within a framework that ensures you have a well-rounded business with sound processes in place.
While you certainly don’t want to be competing in the marketplace with a generic product offering, the ecommerce expert has seen businesses with great products and websites fail simply because they lacked expertise in other areas.
His biggest tip is to find a niche to operate in where the competition is less fierce and where you may be able to gain more traffic on a smaller budget.
"I have a framework that I encourage brands to operate within. So I think that people need to do their homework before they just open their store and sell things," he says.
"And once you are operating within a certain framework, that’s where you can start to dial it right up and you can see those success stories of businesses who go from zero to 50 million in five years."
Why launch an ecommerce business today?
Waddy believes that, if you’re prepared to learn the trade and budget conservatively, there’s no reason why your online business can’t boom, particularly at this point in time when a mere 20 percent of retail businesses are online.
"Believe it or not, it’s still early days," Waddy affirms.
He enthusiastically shares his passion for the world of ecommerce through authoring books – Selling Online For Dummies and Shopify For Dummies – and advising brands like Miss Amara, Geed Up Clothing and Maison De Sabre.
"We’ve got businesses like Maison de Sabre, who are growing incredibly quickly because they’ve got three markets they’re big in: the United States, Australia and Japan. And each of those markets has a strategy," he says.
"They know how much to spend on marketing per country. All the analytics and reporting is set up per country. They have Japanese speakers on the team, they have fast logistics, they have that whole package, rather than just launching a brand and sort of hoping that it works."
While this might sound like a lot of hard work, the benefits of ‘going digital’ for consumer brands are life-changing, according to Waddy. "You could absolutely be importing your product and selling it to a hundred different countries all over the world."
With a strong product margin to absorb some of the logistics costs, borderless commerce, in Waddy’s opinion, could be within your reach.
If sitting on a beach in Hawaii and selling to customers in Australia, Japan and Germany doesn’t sound appealing enough, the low costs, fast turnarounds and highly scalable nature of ecommerce stores are desirable incentives for small and medium-sized business owners with limited cash to invest in the business.
"I absolutely believe that ecommerce can improve the lives of people," Waddy affirms. "And part of the beauty of ecommerce is, you don’t need millions of dollars in the bank to do it.
"You can start small and scale it up. I always encourage people to start with very, very small numbers of stock and then grow from there."
Waddy’s advice for starting your own ecommerce business in 2023:
Have a checklist, which includes the following questions: Is my financial model sound? Is my pricing correct? Do I have a big enough profit margin? Do I have a wide enough product catalog?
Understand and invest in the importance of community and product.
Ensure you have exceptional processes behind each department in order to give yourself the best chance of success.
Manage your business with a diligent budget and know your planned sales number.
Just because you can access Shopify, it doesn’t mean you should go ahead and launch your business. Learn the trade first and treat ecommerce like a serious business.