etail east - growth in retail opening remarks - 2015
TRANSCRIPT
eTail East 2015: Boston Track A: Growth in Retail
Eldar Sadikov
CEO of Jetlore
@elversatile
Growth in e-commerce industry as a whole
China/India/Asia
US
Europe
Latin America
Global 15%
18%
22%
15%
40%
2013: B2C e-commerce accounted for 0.92% of the global GDP. 2018: Projected to reach 1.61% of the global GDP.
Growth for an individual e-commerce business as a function of time
‣ In the early days of your company, you’ll
grow simply by building awareness.
‣ You’ll build a high-functioning website,
create some ads, and grow a subscriber
list.
‣ But once you cross the two million in
revenue line, you’re going to need to
work harder to achieve the same results
Ave
rag
e g
row
th r
ate
0%
50%
100%
150%
200%
250%
$1M $2M $9M
100%
130%
223%
GROWTH RATE BY REVENUE SIZE
How do you acquire users? Major user acquisition channels
65%
17%
16%
2%
Search: organic and PPC
Email & direct mail discounts/promotions
Referrals/affiliates
Retargeting/social/other
Growth is more about Retention than AcquisitionR
eve
nu
e
(Mill
ion
s o
f $
$)
0.0
2.5
5.0
7.5
10.0
Low-performinge-commerce businesses
2012 2013 2014 2015 2016
Re
ven
ue
(M
illio
ns
of
$$
)
0.0
2.5
5.0
7.5
10.0
High-performinge-commerce businesses
2012 2013 2014 2015 2016
Existing users New users Existing users New users
Top performing companies generate most revenue from repeat customers
‣ It may seem counter-intuitive, but proper
growth strategy is about retention and
increasing LTV
‣ As the user base grows, cost per
acquisition only gets higher which
makes it increasingly more important to
retain users.
‣ Higher customer LTV allows for higher
cost per acquisition!
Pe
rce
nta
ge
of
tota
l re
ven
ue
10%
30%
50%
70%
90%
Months since first order
0 9 18 27 36
New
Repeating
> 50% repeat revenue
TOP QUARTILE – NEW VS REPEATING REVENUE
The key to repeat revenue is customer LTV
Average number of orders for
top-performing companies is
2x higher than average
AOV for top performing
companies is 50% higher
than bottom performing ones
Customer lifetime value for
top performing businesses is
5x higher than average
3 7
Bottom 3 quartiles Top quartile
$0
$20
$40
$60
$80
$100
$60
$72$76
$94
$0
$1,000
$2,000
$3,000
$4,000
$508$460$769
$3,641
5x higher
CLV BY QUARTILEAOV BY QUARTILE
So how can I increase LTV and retention?
‣ Increasing LTV is about having:
• A tight conversion funnel
• Making a customer go through that
funnel again and again
‣ How do you tighten the funnel?
• Shopping cart triggers
• Browsing/search triggers
‣ But even if your funnel is tight, your
retention may be very poor!
How can I make a customer go through the funnel many times?
‣ The key here is to make daily content an
exciting event (give a reason to come back)
‣ Scarcity is one way: limited time events
‣ Product curation is another way: help users
discover new products every single day
‣ Product curation could be done by humans
or driven by machines
Other ways to increase retention?
‣ Loyalty programs
‣ Customer lifecycle orchestration
(lifecycle triggers)
• Inactivity triggers (churn prevention)
offering special coupons
• Birthday triggers with special
promotions
• Other triggers
Always remember about the top of
the funnel! Re
ven
ue
(Mill
ion
s o
f $
$)
0.0
4.5
9.0
13.5
18.0
2012 2013 2014 2015 2016
Existing Users New Users