Your Ecommerce Business’ Path to Scalability, Simplified

The topic of scalability is an all-important concept for most—if not all—people in the ecommerce industry—in fact, some may say that talking about it is what everyone has in common.

For those starting in digital business, the idea of scaling is the goal that gets their operations up and going. And for those with multiple ecommerce brands under them, it’s imperative that they strategically work towards keeping stakeholders satisfied and protecting their market positions.

At this point, if you’ve immersed yourself in the world of ecommerce, then you’ll probably agree that scaling is one thing that runs through your mind almost all the time.

But what does it take to scale an ecommerce business?

Well, there isn’t a single definitive answer that solves the entire idea of scalability—in fact, it depends on which stage your business is in, and changes as you grow in size. 

In a recent episode of The EcommOps Podcast, hosts Dayu Yang and Simon De Raadt sit down to help ecommerce business owners find the answers they need to hear about scaling effectively and what to watch out for along the way. They cover a wide range of essential lessons that you can use to take your brand to the next level in every stage, such as knowing what to invest in, what to look out for, and what opportunities to capitalize on when they come up. 

If you’re looking to scale your ecommerce business with little to no bumps along the way, then this podcast episode is for you. 

Below are some of the most important takeaways from Dayu and Simon’s eye-opening conversation.

LTV

Key Takeaways

1. Achieving scalability in ecommerce businesses goes beyond revenue numbers and entails optimizing for Lifetime Value (LTV).

Instead of solely focusing on revenue, it’s crucial to allocate a greater percentage of your focus on maximizing this key metric because it dictates your ability to sell more, remain relevant to your target market, and achieve sustainable operations.

Here’s what Dayu has to say about this:

True brands are all about optimizing for actual LTV. True brands are okay with losing money on the front end, but making it back on the back end. And this is also where optimizing for the experience is so important. Because the moment that you have a customer who doesn’t like your product or thinks it’s too slow, you’re going to lose that customer. They’re never going to repurchase from you again.


Remember: fixating on revenue means fixating on one transaction at a time—but focusing on LTV means working towards getting more transactions and returns per customer. 

2. There are three types of ecommerce entrepreneurs: dropshippers focused on profit, single brand owners on brand and consumer experience, and multi-brand owners with a global fulfillment vision.

Each of these types has its path to scalability along with respective priorities that need to be focused on—as Dayu says:

Three client types, these three categories. And look, I don’t think that everyone fits perfectly within each one, but I think that these are very clear patterns that we’ve seen working, know hundreds of very successful brands of different levels and we see these clear patterns. And the reason why I think that this is valuable to think about is, as Simon said, it’s not about your order volume, it’s not about your sales volume. There are different stages in the business of dropshipping, ecommerce, or retail. Even that fundamentally requires very different thought processes and different operational mindsets to run.

After identifying which type you fall under based on where you are along the way, you’ll be able to better strategize for scalability and growth depending on what lies ahead. 


inventory management

3. Scaling doesn’t only stop at product quality, customer experience, and building a team to handle different business aspects, but it also has much to do with keeping your stock as filled as it needs to be.

With a better level of control on your supply chain, you can tackle one of the biggest hurdles ecommerce companies face during your scaling process—something that Dayu says during the conversation:

Actually, especially earlier on when we were talking with some kind of like, more traditional drop shipping clients, they would be like, well, I was, ‘okay, you have to hold stock with us’. And they’ll be like, why do I have to hold stock? Aliexpress doesn’t make me hold stock. Why are you making me hold stock? Well, anyone who hopefully has a little bit of understanding of the supply chain realizes why that is important. And the outcome is that when traditional dropshippers or their suppliers don’t hold stock, that’s exactly when sometimes you have like four-week shipping times.

By holding stock and accurately calculating how much you should exactly hold, it becomes far easier to not only scale your operations with minimal risk but also keep shipping times short—while, most importantly, keeping your customers happy. 


4. Establish a robust global fulfillment strategy to manage inventory across multiple locations and adapt operations to cater to international clients.

This way, as Simon says, you’ll be able to consistently serve customer needs and fulfill more orders—completely avoiding an all-too-common hurdle that hinders most ecommerce brands from achieving scalability:

Start replicating that with other brands to be able to actually have that global impact, but also have a sustainable business for the long term. Let’s say you have a warehouse in the EU, in Europe, in the US and in China, and you’re getting 50 orders from the UK, and your warehouse is in Germany, and you only have 20 pieces left in Germany. Where are you going to ship the other 30 from? That brings a lot of complexities. If you run these warehouses separately from each other, or if you run these stores separately from each other it becomes very complex to have this overview of how to run a day-to-day business.

With a more robust global fulfillment strategy, you can slowly roll out a scalability effort that has no hiccups in day-to-day operations or customer service around the world. 


5. Cultivate a strategic partnership and collaborate with your fulfillment agencies, because these are the keys to successful ecommerce growth.

According to Dayu, constant communication can open up a range of opportunities that help brands scale because of how impactful it is in terms of operational effectiveness and the number of regions and customers you serve:

Communication is so important. And actually, that is one of the other key differences between the one, two, and three types of clients as well. A traditional dropshipper usually doesn’t want to talk to their suppliers at all. As the clients mature and build a brand, they start to realize—or actually we even tell them: ‘We need to know what your plans are. We need to tell you that you’re out of stock, so you need to restock.’ You should be listening at whatever level you’re in.

EcommOps podcast Scale Ecommerce Brand

Once you start communicating more with your fulfillment agencies as early as possible, scaling and serving more customers becomes far easier as they become more capable of creating and tailoring solutions to help you out. 

Final Words

This episode of The EcommOps Podcast with Dayu Yang and Simon De Raadt serves as a crucial resource for ecommerce businesses that are invested in the idea of scalability but don’t know how to achieve it. By understanding exactly what stage you’re in, you can focus on the most critical factors that can help you transition from being a five or six-figure brand, to becoming a seven, eight, or even nine-figure brand. 

If you loved the insights from this in-depth episode on branding and brand experiences, you can access more of The EcommOps Podcast’s insightful episodes on our website. Follow us on LinkedIn for the latest updates.

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