The 5 Growth Vectors That Optimize E-Commerce Acquisitions for Powerhouse Profitability, Part 2
Part one of this series likened the investment in an underperforming online brand to putting one’s money in a “fixer-upper” home that needs a lot of work because, in both cases, there's a greater chance of maximizing one’s return on investment. Part one addressed two of five important growth vectors that e-commerce aggregators and other investors should pay close attention to: first, the need to maximize a product’s existing Amazon.com listing and, second, the strategy to subsequently take the product “off-Amazon” and move it to other important marketplaces such as Shopify and eBay. Part two will look at three more ways that a brand can be optimized for maximum ROI.
Growth Vector No. 3: Increasing the Effectiveness of Paid Advertising
Paid advertising, particularly pay per click (PPC) is very important to the success of online shopping. Small online shops — before they're acquired — often use outside agencies to get help with advertising because they don’t have that kind of expertise in-house. However, the help they get is rarely on target. Most online shops admit that the assistance received from an external ad agency was good in the beginning, but then hit a plateau and stopped being effective. It’s a problem of understanding an online business — and e-commerce itself — deeply enough to offer the kind of ongoing support needed for the long haul.
E-commerce aggregators, on the other hand, typically have many specialists on staff ready to look at paid advertising and maximize the return on dollars invested in it.
Growth Vector No. 4: Creating an Optimum Website Culture
Entrepreneurs who bring a product to market often do a good job of describing it online, but they fall short in creating a website that offers consumers a viable place to actually buy it. Skillful aggregators build an online presence that surrounds a brand. Not only will the remodeled website be a place where the product can be purchased spontaneously, it will provide a wealth of information and relevant resources that will keep customers coming back for more. Reviews, FAQs, user group forums, complementary products, tutorials and more can all be offered in one inviting place. In other words, the smart aggregator generates a community around the brand where none existed before, investing in the long-term viability and health of the product by supporting the customers who have purchased it or plan to do so.
Growth Vector No. 5: Expanding the Product Line
During the evaluation phase of an acquisition, machine learning (ML) technology can be used to analyze product reviews to determine what new variations or improvements of the product can be developed to satisfy the marketplace. This offers insight on improvements to make, versions to develop, and entirely new products to bring to market to satisfy the needs of the customer base in that particular niche.
While a clever entrepreneur may have developed the original concept, it will most likely be up to the aggregator’s in-house product design engineers to create the variations that will result in increased sales. Successful aggregators have these versatile engineers on hand to work on new product design as they add new acquisitions to their portfolios.
Filling the Sales and Marketing Void
The key idea is to realize that most entrepreneurs are not retailers. They may be skilled at bringing an innovative brand to market initially, but they typically hit a wall when they reach a certain level because they simply don't know how to scale up for volume sales. That’s where an informed e-commerce aggregator comes in. Using technology like artificial intelligence (AI) and ML combined with big data, an aggregator can see where a product may have plateaued but still has tremendous growth potential. An aggregator should become the marketing and sales expert for the small online shop for it to realize its full potential.
The smart real estate investor uses paint and grass seed to generate maximum ROI from the purchase of a fixer-upper. Similarly, the savvy e-commerce aggregator expands markets, develops new product variations, and very precisely markets the heck out of the e-commerce business to get the greatest return. Using these techniques, the most astute aggregators can compete with the behemoths of the e-commerce industry.
Golan Manor is the chief technology officer of TCM – Technology Commerce Management, a company that uses predictive AI and ML technology to identify, acquire, and optimize e-commerce businesses.
Related story: The 5 Growth Vectors That Optimize E-Commerce Acquisitions for Powerhouse Profitability, Part 1
Golan Manor is the Chief Technology Officer of TCM – Technology Commerce Management, a company that uses predictive AI and ML technology to identify, acquire, and optimize e-commerce businesses.