E-commerce and Customer: Empowering Modern Business
In today's business world, many companies embrace the D2C (Direct-to-Customer) model, leveraging online channels to connect directly with consumers. For these pioneering businesses, which we view as a dynamic sales channel, key success factors include:
Product Pricing & Positioning
In the early stages of product adoption, most consumers are willing to invest more in groundbreaking, category-defining, and one-of-a-kind products. However, as the brand grows and aims to expand its customer base, a different breed of customers seeks value propositions. This shift puts pressure on pricing strategies. Hence, having a well-defined product pricing strategy that aligns with the product’s market positioning is crucial for achieving scalable success.
Customer Acquisition Cost
The cost of acquiring customers depends on various factors, including the narrative, product pricing, target audience, and the overall value proposition. If a company can attract the right customers through the appropriate platforms with compelling calls to action, it will experience a superior Return on Ad Spend (ROAS). This, in turn, lowers the Customer Acquisition Cost (CAC). Prioritizing repeat customer engagement becomes instrumental in maintaining positive Contribution Margins.
Contribution Margins (CM2)
In today’s competitive landscape, a company’s ability to achieve positive CM2 is a determining factor in its scalability and fundraising potential. A positive CM2 indicates that the company is not operating at a loss with each sale. Such a positive sign opens doors to the possibility of becoming EBITDA positive as revenue scales. This is primarily because fixed costs and overheads tend to grow at a slower pace than revenue.
