In 2009, I ventured into the world of e-commerce retail for the first time. With a limited budget, but a good product, I wanted to see how lucrative an online store would be. It was a one-man startup in the board game industry. Every year since the first, I’ve experienced around 33% growth—not bad, considering I had never dabbled in e-commerce or the competitive nature of the market. I learned a lot along the way and have been able to encourage a number of one-man startups to position themselves for the best chance at financial success in a crowded market. If you are wondering if it’s still possible to make it on your own, to build a successful e-commerce business online, the answer is yes. But it doesn’t usually happen with a good idea alone. You might have a great product, but you also need good web marketing and solid management. Yes, you can succeed in e-commerce. You can succeed on your own, with a limited budget and limited time. You can make a good living online, provided you have the right tools in place and the right targets in mind. Here are five things I learned to effectively manage revenue growth in my first four years in e-commerce. Take these tips, apply them, and give yourself a fighting chance in the busy online world of e-commerce. 1. Adjust Pricing And Target Market My initial thinking with the business was to make the products as accessible as possible and use pricing to do it. I made the products relatively cheap. But I discovered early on that, as a one-man (or small) startup, the higher priced items not only sold better and returned better profits, but were also a more economical use of my time. I could pack 20 Monopoly board games one at a time and make a profit of $100, or I could pack one good quality chess set and make the same $100.00. This not only affected my product strategy over time, but it also impacted my target market. In my case, one of my target markets was families. I was hesitant to price above their means. But a moment's thought reminded me that this was just a matter of tightening my niche. There were a lot of families out there for whom money was no obstacle. Takeway: Focus on a narrow niche at the higher end of your market. In many ways, this is the only way to go in e-commerce. You can’t really compete in the book market with a $9.99 book while Amazon exists. But you could become the expert in full-volume, higher-priced, deluxe editions of a chess strategy book written by Garry Kasparov. 2. Set Growth Targets Once you start getting a good feel for your sales statistics, it is time to set targets for your ROIC (return on initial capital). Apart from anything else, setting ROIC targets can give you confidence and encouragement as you see them coming to pass. The principles and motives for setting your ROIC targets also apply to your profit margins (PM). You may be getting only a 10% return on investment per annum, but if your profit margins are 200%, well, you are heading somewhere good. Profit margin analysis and target setting allow you to start digging into individual products on your site. Are they profitable or not? To return to the example of Monopoly and the chess set above, I soon stopped selling the lower-priced items, or else I encouraged customers to bundle them. The reward might be free shipping or something similar. We set our first year's profit margin target at 20%. We met that and so we raised it to 30% in the following year. Apart from the obvious budgeting reasons of knowing your break-even point, setting PM targets allows you to measure growth and deliberately work toward growth. It’s physiological as much as it is wisdom. Everything you can do to improve profit margin, while still maintaining a high standard in all things is just good business. Takeaway: Measuring the profitability of each product takes time, but allows you to weed out the runts, refine your niche, and better target your market. 3. Monitor Your Expenses My grandmother used to say, “Every Mickle makes a Muckle.” In other words, every cent adds up. Often, we think of revenue growth only in terms of product sales. Not true. One of the best ways to increase your profit margin and grow your revenue is to monitor and take the pruning shears to your costs. How much did you pay for shipping last year above what your customers gave you? Are there alternative shipping methods? Do you need to charge the customer more? We started out with a flat $5.00 fee for shipping thinking it would encourage sales, but it didn’t. As a result, in the second financial year, we lifted all shipping prices so that they reflected true shipping costs. Did sales drop off? No, they grew by another 33%. Not only that, but we also reduced our costs by 52% for the same period in the following year. How did we cut costs? A hundred little changes contributed to the improvement, but some of the most notable moves included: I found better stationary and packaging supplies and reduced my per parcel costs. I introduced and promoted bank transfer options alongside Paypal which considerably reduced Paypal fees. I packaged out products better to reduce dimensions and switched couriers. Over a year, the savings were considerable for me as a small retail business online. Takeaway: Creating revenue growth is not just about charging more or even selling more. It’s also about constant pruning and refining of your budgets. Spend equal time on both sides of the equation. 4. Improve Customer Lifetime Value While adding additional products or expanding marketing can help you grow your customer base, one of the most efficient ways to grow a business is to increase the value of your existing customer base through a higher lifetime value (LTV). LTV refers to the total amount of revenue generated from a customer over the lifetime of the business-customer relationship. The formula for LTV is: Average Order Value x Sales Frequency x Average Customer Lifespan. By improving any of these factors listed in the equation, you can generate more revenue from your existing customers. Increase Customer Lifespan When you build a solid foundation on quality customer service, your one-time customers can easily become repeat customers and boost your overall LTV, so you’re not just relying on a single order per person. About 95% of consumers say customer service is key to their brand loyalty, and 89% say they are more likely to make another purchase after a positive customer service experience. The bottom line is that customers want to make sure they’re being taken care of and that you have their best interests in mind. Start leveling up your customer service by making sure shoppers can easily contact you with questions, concerns, or other requests. Include an email form on your website with a support ticket system and consider installing a live chat feature to improve customer service. You may also want to consider hiring an answering service to take calls during business hours and assist customers if your e-commerce business gets a lot of orders during the week. We all make mistakes, but it’s all about how we handle them. If you mess up with order, be sure to apologize to customers and do what you can to make it right. A coupon or discount code can go a long way in restoring trust and a positive relationship with your customers in these situations. Improve Average Order Value There are several ways to increase the average order value of your online store. Start by looking at what incentives you can offer to encourage customers to make bulk purchases or add additional items to the cart, which inevitably will boost your profits. Offering free shipping for large orders or a discount for bulk orders or suggesting add-on products are all examples of ways to move more inventory at once without increasing your costs. Boost Sales Frequency Staying in touch with customers is key to boosting sales frequency. Email marketing and retargeting campaigns can keep your brand top of mind. Offering a subscription service makes it easy to establish ongoing sales with little effort from the customer. In addition, loyalty programs can reward and encourage repeat customers. Takeaway: Focus on getting more value from your existing customer base through great customer service, higher order values, and customer marketing. 5. Expand Marketing Strategies Marketing can be both fun and challenging because there are always so many marketing strategies to consider for your e-commerce store, but don’t let this overwhelm you. Instead, realize that you just need to test out different options to find out what produces the best results for your store. The key is to focus on expanding your marketing strategies by building on what’s already working and exploring new options. One thing you should really be investing time and money into is search engine optimization (SEO). Improving SEO takes time, but it can also help your store and products rank higher in search engines like Google, Bing, and Yahoo. With more traffic coming to your store—traffic that is ultimately much cheaper than paid traffic—this increases the chance for sales with higher profits. To optimize your site for search engine rankings, you should start by: Performing SEO keyword research Optimizing and updating keywords in your page URLs, product descriptions, and blog posts Building quality backlinks Another way to expand marketing for your e-commerce store is to consider partnering with influencers to help promote your product. Do some research to see who you may want to collaborate with and what you can offer them. Even if you don’t have a lot to pay someone, consider sending them a free high-value product of yours and allowing them to earn a commission on the sales they help you make through an affiliate link. Finally, consider upgrading your own social media marketing strategy. Start posting more often and intentionally on visual platforms like Instagram and Tiktok. This can help bring more customers to your online store. Takeaway: Don’t just jump on marketing trends, but rather, test out strategies that may work for your business until you get lasting results. 6. Consider International Expansion Have you considered international expansion yet? If not, why? A 2021 consumer report found that 76% of online shoppers made purchases on a site from a different country. If you’re not reaching international markets, you could be missing out on an opportunity to grow your e-commerce store. Check your e-commerce store platform to make sure your shop is able to accept orders and payments from other countries and ship products to them as well. Japan is one country that has the best rates of cross-border shopping overall, with an increased demand for fashion accessories and beauty and food items. While some customers find that shipping costs are a barrier to international purchases, this could still be a great way to sell digital products in your store that are easy to download. Or, you can discount international shipping once customers reach a minimum order amount. Takeaway: Don’t miss out on international customers and a chance to grow revenue by reaching people outside of your home country. Measure Performance, But Be Open To New Ideas Putting performance measurement systems in place can be an important way of keeping track of the progress of your business. It gives you vital information about what’s happening now and provides the starting point for a system of target-setting that will help you identify, implement, and measure the effectiveness of your growth strategies. That said, it’s also crucial that you stay on top of trends going on in your industry and different marketing strategies. On one hand, if it’s not broken don’t fix it. On the other hand, you don’t want to be stuck in time with your e-commerce business and miss out on opportunities for business and revenue growth. Sometimes thinking outside of the box and being willing to explore ways to improve can really pay off. And you can’t really go wrong with valuing your customers and overserving them with your business. Pursuing business growth often requires investment up front. Don’t let a lack of funding prevent you from pursuing your growth goals. Click here to learn more about e-commerce financing.