There are four core parts to any for-profit business, and e-commerce is no different. The first is volume. Whether you are cold-calling people to sell Bibles, or you are a mega-commerce marketplace like Amazon, dependent on site traffic, the first part of business is all about generating traffic—calls, clicks, views, engagements, lead form views, and more. No. 2 is conversion rate—how often you close your cold calls, or how often a user completes a desired action on your website. Third is order value, which refers to cart size, cross-selling, and upselling. Fourth is the reorder rate. How often does a customer return and transact? The answer to that question will have a large impact on a business’ growth strategy. It is critical to focus on all four of these elements to have a successful ecommerce business. Understanding industry benchmarks and period-over-period changes in these metrics is 100-percent crucial for evaluating your e-commerce performance. All that said, the most critical component for e-commerce is likely conversion rate.
With enough experience, time, and skill, any business owner can run an entire e-commerce operation—the problem is that many owners do not have the bandwidth to give the level of attention required to operate all aspects of the online strategy smoothly and efficiently. Technical issues, logistical problems, content creation, advertising, and marketplace management all work together in tandem to make an e-commerce business successful—if any one area is lacking, you will likely want a professional team to step in and handle it. Running an e-commerce business is just like running any other business. It requires a full-time commitment and dedicated resources or it will not succeed. Whether or not you should attempt to start your own e-commerce business from scratch is really a question about bandwidth and opportunity cost.
The ultimate commodity in the e-commerce world is attention, and the vast majority of that attention is garnered through Google search. Google Ads are powerful and effective tools for driving sales and traffic, but their optimization tools often do not run in alignment with profitability goals we prefer to set up for our partners. The reason any business runs a product ad is to sell that ad, for the lowest cost—often, Google optimization will ignore ROI in favor of sheer traffic volume. By granularly and intentionally setting your own conversions and dictating your own ad strategy, you can have more control over how your e-commerce ads will operate.