After a year of transformation, operating online stores is nothing new for SMEs. The same is true even for larger brands alike – which offer products and services to mass markets. Everyone may already be familiar with selling their products on shopping websites, using paid online shopping platforms, or even launching their online stores. This has also led to many marketing requests from our clients to grow their online business.
The people of Hong Kong’s consumption habits have changed. It is now easier and even more popular to establish online stores than ever before. It isn’t only merchants who open online stores. Anyone who has a dream to turn their craft or passion into a business, or just moonlight, can do so.
Opening An Online Store Requires Extensive Knowledge
Radio Television Hong Kong (RTHK) broadcasts at 8:30 AM daily. In response to an increased demand for knowledge about online stores, Bernie Wong has filmed several episodes about it. The content of these TV programs discusses the different aspects of running an online store. These include products, pricing, store launch, payment system, logistics, and marketing. Each episode aims to explain a model of an online store in the simplest terms. In the process of collecting materials, Bernie came across an online store growth equation. It is a model for everyone who wants to open an online store. It is also worth studying for both beginners and experienced merchants.
Examining The Achilles Heel Of Online Store Growth
Matthew Axline published this eCommerce growth equation on Twitter: (V x CR x LTV) – VC = $
This means Visitors x Conversion Rates x Lifetime Value minus Variable Costs is equal to Profit. Such a simple equation is a good tool for examining the growth of online stores. It also means that having visitors does not equate to profit.
Businesses commonly use paid advertising alongside content marketing to increase website traffic. This is a two-pronged marketing approach. Yet, even if they have dedicated creative content that attracts the attention of many, there has to be a good conversion rate. This means that customers must be willing to pay. That is also the reason why brands should not simply ask for “likes.” The number of likes is questionable. It is blurred if they can bring business or value toward a brand.
Conversion Rate and Lifetime Value Are Kings
Conversion rate is inseparable from factors that relate to the customer. Has the entire customer process been thoroughly considered? Is it optimal? There are also product prices and positioning to consider. More often than not, brands tend to overlook the lifetime value of customers. In fact, setting up an online store is only the first step. In Hong Kong, an effective method for attracting a steady flow of visitors and obtaining repeat purchases from customers is via SMS and WhatsApp. These are besides spending money wisely to control variable costs.
Examine Your Business Comprehensively to Grow
I have never believed in a fixed formula for success. Although I find this eCommerce growth formula as a good framework for merchants to review their existing online business, it can also help newbies to make better considerations and more comprehensive plans for their online business.