Why So Many eCommerce Stores Can’t Get Past $5 Million In Annual Revenue

There’s a real bubble (and opportunity) in the eCommerce industry: companies generating anywhere between $0 – 5 million annually.

Currently, out of the 1.3 million eCommerce stores that are active in USA and Canada, 95% fall within this bubble. This is an ridiculously large grouping. The next tier, companies with an annual revenue of $5 – 25 million, have just 3.9% of the eCommerce market.

So, why can’t so many stores get past $5 million in annual revenue? What’s the wall that they can’t break through that they keep running up against?

Here are five reasons companies get stuck in this bubble:

1. Lack Of Scalable Digital Marketing

These eCommerce stores have not found the right channel (i.e., social, email, press, etc.) where investing time and resources can lead to revenue increases. Because their spending is typically divided across multiple channels (many that are not repeatable), growth is unscalable.

2. Heavy Reliance On New Visitors

For companies in this bubble, returning visitors make up a very low percentage of their annual revenue. This lack of consistent existing customer revenue means that companies are always fishing for new customers and spending tons of money to acquire them.

3. High Operations Budgets and Costs

Spending and cash allocation for these companies is disproportionately spent on operations and products, instead of outbound marketing and sales. To break past $5 million in revenue, a business needs to invest money in identifying and developing a scalable marketing channel where revenue is predictable based on spend. Without consistent investment – it’s very difficult to attract key players or spend on critical efforts.

4. Wrong Focus

Every CEO believes that they know what’s right for their business. However, when they operate in silos, many can lead a company astray. Sometimes, it takes a trusted outside voice to help change the focus. This allows CEOs to clearly see what they’re doing right versus doing wrong.

5. They Forget About VIP Customers and Key Partners

Right now, there are at least 20 customers who love your brand, mission and products. Additionally, there are at least 10 brands, affiliates and organizations, where your product complements their work. By deepening your relationships with these individuals and groups, your network will double or triple without the effort you spent to get where you are so far. Don’t do it alone. There are big communities waiting for you to engage them.

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