Owning an e-commerce brand in the modern day is a challenge, but it’s also highly rewarding. Although the market becomes more saturated every year, there are lots of strategies e-commerce brands can use to set themselves apart from their competitors.
As a brand owner, you must understand what contributes to e-commerce success, including innovative products, an effective marketing strategy, and competitive prices. You’ll need to be aware of several important concepts and extensive terminology if you want to grow your e-commerce brand.
E-Commerce Models
As an e-commerce start-up, you will need to decide which type of brand you want to have.
- If you aim to sell products directly to consumers, you’ll need to set your company up as a Business-to-Consumer (B2C) brand.
- If you’ll be selling products to other businesses, this is known as a Business-to-Business (B2B) e-commerce model.
- For consumers selling to other consumers, you’ll need to set up a Consumer-to-Consumer (C2C) e-commerce company.
Advertising to Sales Ratio
Advertising to Sales Ratio (A to S) is an important concept that measures the effectiveness of your marketing campaigns. To calculate A to S, you will need to add up your total advertising expenses and divide this number by the total revenue you’ve generated from sales.
A lower ratio is desirable, as it represents higher revenue than advertising expenses. The average A to S varies across industries, so it can be difficult to assess your ratio.
However, you’ll be able to compare your brand’s A to S ratios over time as you complete more marketing campaigns. You can compare your current ratio to previous ones to assess your success
You can learn more about advertising to sales ratio by reading this article here.
Conversion Rate Optimization (CRO)
Conversion Rate Optimization (CRO) is represented as a percentage. It indicates the percentage of website visitors who completed a desired action, such as signing up for your newsletter or purchasing a product.
A high CRO is ideal as it shows that your website is successfully turning your visitors into leads or buying customers. More leads and customers mean higher annual revenue and e-commerce success.
Customer Lifetime Value (CLV)
The total amount of money a customer has spent on purchasing your products or services is known as the Customer Lifetime Value (CLV for short).
Calculating each customer’s lifetime value enables you to identify who is the most loyal to your brand. You can reward the most loyal customers with special offers and discounts to encourage them to remain loyal to your brand and continue contributing to your sales.
If you notice that particular customers have low lifetime values, you can place more resources into marketing toward this segment of your target audience to increase their engagement. For example, you might want to send more email marketing campaigns or SMS messages to these customers and offer unique discounts or product bundles in the hopes that they will purchase something.