What Sets Top Performing Ecommerce Companies Apart?

Research by RJ metrics shows that growth within the first six months is what ultimately separates top performing ecommerce companies from everyone else.

In a study of over 200 ecommerce businesses, analyzing the three year sales trends of  businesses doing between $1 - $60 million in revenue, it was found that top performing companies were making roughly 2.5x more than other companies who started making sales around the same time, and by the end of the first year, were quite literally, off the charts.

Extrapolated out, the growth of these top performing companies over the course of three years ends up looking something like this:

But how is this possible?

In case you didn’t catch it from the first screen grab, RJ Metrics says this:

"This rapid rate of growth so early on in a company lifecycle points to the significance of natural product/market fit and execution. Marketing spend can get you far, but marketing alone is unable to drive this kind of accelerated growth."

I’ve already talked quite a bit about product/market fit before, so I won’t push on that too hard here, but basically, this kind of rapid, off-the-charts growth happens early on because of three main things:

• Selling things to people who want to buy them (duh).
• Securing & owning your marketing channels early on.
• Having a plan to remarket to existing customers.

Looking at other data from the report, we see that top performers aren’t just doing double the revenue, but are actually acquiring new customers at a much faster rates than everyone else too.

This isn’t an accident. As I mentioned in my article about pre-launch marketing, top performing companies plan and test their customer acquisition strategies well ahead of their launch - often securing strategic partnerships, press contacts, and early buzz, months (if not years) in advance of the initial release.

There could be an entire blog dedicated to pre-launch marketing and early traction, but the short version is this, top performing companies aren’t launching to nobody and hoping to make sales.  

Likewise, top performing companies aren’t just acquiring customers once & hoping those customers come back. Instead, there is a plan in place, early on to get a person buying again and again and again as soon as possible, and getting them hooked on buying from you. 

Just look at the difference between the two graphs below:

The graph on the left shows how top performing companies start getting customers hooked, and turning them into repeat buyers almost right away.

By the time these companies reach the three year mark, repeat customers actually end up accounting for more revenue than new customers, which is AWESOME because marketing to existing customerscan be way more profitable and comes at a fraction of the cost. The graph on the right shows a slower, more natural progression. 

What the "average" companies might not realize though, is how much of a missed opportunity that is. For instance, did you know that Harvard Business School found that increasing customer retention by as little as 5% can increase profits between 25-95%?

What’s even better, is that other research by RJ Metrics found that top customers spend up to 30x more than the average customer over their customer lifespan.

I’m not a betting man, but if I had to, I’d bet these top performing companies are focusing on theirbest customers and developing their business around acquiring customers just like those that are spending more and more frequently.

Evidence of this can be found when you see that the average order value of top performing companies is pretty consistently around the $100, whereas there is far more fluctuation of AOV for the bottom performing companies.

It was also found that the average customer for a top performing company makes around 7 purchases in a quarter, whereas the customers for the other companies are doing less than half of that.

Richard wrote a phenomenal article on getting repeat sales and retaining customers that you absolutely need to check out if you want to nail this out of the gate.

Given these two facts, it should come as no surprise that the customer lifetime value of top performing companies was also 5x higher than each of the other groups.

So, What Does All This Mean For You?

If you’re the kind of entrepreneur that wants to light the world on fire with your new ecommerce venture, you need a plan.

That plan needs to address how you’ll:

1. Penetrate the market.
2. Find product/market fit.
3. Get people hooked on your store.
4. Encourage repeat purchases.
5. Increase your order values.
6. Focus on and reward top customers and...
7. Grow as fast as possible in a six month period.

This takes time.

Approaching the market, and knowing how to position your brand in an impactful way requires a great deal of planning and strategy. And the more time you spend dedicated to understanding the market and developing that approach, the better your chances of having that off-the-chart growth we saw in earlier graphs.

But also, it takes money.

This isn’t just the investment in the inventory, but also the tools, talent, relationships, ads, and whatever else is necessary to get you in front of the right people.

Yes, there is a lot that can be done for free (and I strongly recommend you do those things to make your first sale) however if you’re looking to build the “next big thing” you’ll need to invest in breaking into the channels where your most engaged prospects will be, and the talent necessary to position your product as something they want/need.

All that being said, there’s nothing wrong with not being a top performer either. The “average” companies in this study are still doing between $1 million and $15 million in revenue per year, which is nothing to sneeze at. 

But now that you know the difference, the question is, what kind of entrepreneur do you want to be?

The Story of Ugmonk: From Side Project to Lifestyle Product Empire

A love for typography and minimalistic design is all it took for designer Jeff Sheldon to get started on a life-changing path.  

A designer by day, and entrepreneur by night—Jeff has been able to build an online t-shirt, and lifestyle product empire over the past few years.

In this customer spotlight, we catch up with Jeff and learn more about the growth and development of Ugmonk.

Can you give us a bit of background about Ugmonk?

Ugmonk is a design brand focused on producing high-quality products with a minimal aesthetic and intense attention to detail.

It started as a small side project to design t-shirts that I wanted for myself and now it has grown into a full-blown lifestyle brand.

We've shipped tens of thousands of products to over 60 countries around the world and continue to evolve and expand our product range.

It all started with a simple idea – design fresh high-quality unique items.

Just one month after I had graduated college, married my high-school sweetheart, moved to Burlington, VT, and started a full-time design job, I found myself brainstorming about launching my own brand centered around my love for typography and minimal design.

I felt like the design culture at the time was really lacking in this area, and apparently this design sensibility connected with many people all around the world.

What started as an outlet for my passion and entrepreneurial experiment quickly grew into much more than just selling a few shirts.

How did you create, manufacture or source your product? What were some lessons you learned during this process?

Designing a product is one thing but getting it produced is a whole different challenge. In the beginning I was pretty fluent on the design side of things but quickly learned that there was a lot I didn’t know about production.

Screenprinted t-shirts sound pretty straightforward but there are so many variables that go into producing a high-quality tee.

One of the biggest things I can recommend is working with manufacturers who take a true interest in your company and are willing to guide and educate you along the way. Don’t always look for the cheapest option available.

As I branched out into other types of products like leather goods, sketchbooks, and bags, each one has a big learning process. I spent countless hours researching and asking lots of questions to figure things out along the way.

There are no real secrets or shortcuts to this, it’s just about being dedicated and willing to put in the time to learn.

The most involved product so far is our Waxed Canvas Messenger Bag.

Since this was a completely different product than anything I have produced so far, I needed a place that would help guide me through the manufacturing process and give input based on their expertise.

Many of the larger factories I contacted wanted a fully-designed bag to work from and didn’t seem to take a personal interest in helping me through the process.

After contacting over 40 places I finally found a company in Portland, Oregon (with help from Maker’s Row) that specialized in making the type of bag that I was looking to produce.

Moral of the story: don’t give up even when the search seems hopeless.

It took over 2 years from the initial sketches to releasing the finished bags in our shop, but I’m incredibly happy with the results.

We get compliments from customers all of the time about how much they love their bag.

How did you promote your business initially and where did your first sales come from?  Any major media mentions or PR wins since then?

When I launched back in 2008 I was fortunate enough to get featured on several design and tshirt blogs (like NotCot, ILoveTypography, AisleOne and others). Back then social media was nothing like it is today so blogs were still the main way of getting exposure online.

Some sites I reached out to and some reached out to me. I sent personal emails to blogs that I was a fan of and thought their readers might enjoy my products.

I kept every email personal and to the point and avoided sending any type of press release in bulk.

Rather than trying to bribe with free products, I just asked them to post if they liked what I was doing with Ugmonk. Many sites never responded but some did and those helped build some initial traction.

In the beginning word-of-mouth played a huge part is spreading the word about Ugmonk and still continues to be our primary marketing strategy.

I'm all about creating products that customers will like enough that they want to tell their friends about and come back for more.

Over the years we’ve built a very loyal community and following and have our customers to thanks for much of our growth.

This process has been slow & steady and far from an overnight success, but we’re in this for the long haul and are more interested in sustainable growth.

Building personal relationships with influencers in your market can be tremendously valuable in the long run.  It's important to make every point of contact personable and not just a copy-and-pasted email that is sent out to a number of influencers in bulk.

How did your sales pick up?

Sales picked up quite a bit when we were featured on some of the bigger blogs. Those features led to being featured on other design blogs and inspiration websites.

One of the coolest things about being featured online is that we were being seen by people all over the world, not just in the USA.

We are able to connect with people who share the same love for design and typography regardless of their geographic location.

Some hit press spotlights: Ugmonk is featured on PayPal, Ugmonk in the movie Diary of a Wimpy Kid, The band Hawk Nelson rocks Ugmonk, Seen on Cougar Town (ABC), In a Demi Lovato music video, and many, many more dating back to 2008.

I’ve also been invited to share the Ugmonk story and my design philosophy at a variety of design conferences over the past few years.

It's important to continue to build momentum throughout the ecommerce journey.  Having a strong brand, and something that stands out from the crowd will be extremely beneficial in the long run.  Ugmonk is a timeless brand in that sense.

How do you handle fulfilment and organize the back-end of your business?  Can you share some key lessons and tips on doing this successfully?

We still do all of our fulfillment and shipping in-house. It's a ton of work, more than most people realize, but it allows us to have complete control of the process and customer experience.

In the beginning we were doing everything manually. From printing postage in PayPal to filling out international customs forms by hand to standing in line at the post office, it was a tedious process.

As business picked up we spent more and more time on the fulfillment side and new we had to streamline things.

That’s when we discovered ShipStation which has been an absolute lifesaver.

This also allows us to see all of our products in hand before shipping them out and do quality control first hand. Providing great customer service is super important to us.

We want to make sure our customers have a great experience from the moment that they land on our website to the time they receive and use the product.

Thankfully I have help with shipping and customer service and hired my mom and sister-in-law to handle those crucial parts of the business.

You now work on Ugmonk full time.  How did you make that transition?

Through the first two years, we continued to build Ugmonk by working late nights and weekends refining designs, organizing logistics, and packing orders.

Each new release received an enthusiastic response from the community and knowledge of the brand spread organically through word of mouth and online features. My dream of starting my own brand was no longer just a dream.

Just before Ugmonk’s 2nd anniversary, I decided to leave my full-time design job so that I could focus all of my energies on the passion that I had for Ugmonk.

As part of this change, my wife and I moved back to our hometown in PA, and my parents graciously agreed to allow their house to become the Ugmonk warehouse and shipping center.

In the past you've blogged about productivity.  Can you share some of your tips and tricks for staying productive?

I’ve tried a lot of task management apps, but none of them seemed to stick. I’ve spent more hours than I’d like to admit just comparing features, reading reviews, and testing out demos.

While a lot of people have success with digital task apps, they all just felt like too much effort to incorporate into my workflow. I didn’t want to spend time categorizing, tagging, and organizing tasks, I just wanted to get stuff done.

I always seem to come back to good old fashioned pen and paper. It’s the most frictionless method and there are several keys things that make it work for me.

Crossing things off feels so good. Sure, you can digitally cross off tasks, but nothing beats taking a pen and scribbling out a task on the list.

I can easily jot down additional notes, sketches, or info for a particular task. For example, if I’m on the phone with a supplier and need to make some notes about production details, I can easily write it down right next to the task.

My daily routine starts with looking at my whole list of projects on my paper to-do list and then writing the most urgent tasks on a small sticky note. This allows me to focus on the 4-8 things I want to accomplish that day. 

You've done an Ugmonk charity drive in the past—what was that like?

Just a few months after opening shop, we decided to hold our first annual Ugmonk Gives Back charity drive – donating a portion of each sale during the holiday season to provide meals to children in orphanages around the world.

To date we’ve been able to supply over 30,000 meals!

We partner with a great organization called Rice Bowls who is extremely efficient in stewarding the donations they receive in order to serve the children in orphanages around the world.

My wife and I got to experience this first hand when we were invited to visit a few of the orphanages in Honduras and Nicaragua. We are so grateful for the support of our customers that enables us to give back to these children!

What software, tools, and resources are crucial to your business?

There are a lot of different tools that go into running Ugmonk.  These are some of the most important for our online store.

Shopify - for all things commerce related
Wordpress - for all of the non-shop pages
Klaviyo - for email marketing and automation
Google Analytics - tracking website traffic and conversions
Shipstation - is an absolute lifesaver for processing and shipping orders

What are your top recommendations for new store owners?

You only have a few seconds to grab people’s attention so it’s important for your site design to capture your story and clearly tell people what you are about.

Before launching a store, think about what makes you and your products unique and how you want to communicate that message.

The 10 Best Places Ecommerce Entrepreneurs Go To Find Product Ideas

This is the second post in a series of articles that will detail the process of getting started in ecommerce. In the coming weeks we will be posting further in-depth articles on other aspects of finding and evaluating products to sell online. For the first post in this series, click here. 

Coming up with a great idea for a product to sell online will occasionally strike when you least expect it. Many times though, it’s something you need to be proactively on the lookout for. The internet contains a wealth of ideas and inspiration, but as a new entrepreneur, where do you begin? Aimlessly searching online will only get you so far so we have compiled a list of the best resources to give you direction and get you started.

As you go through all the resources listed in this post, it’s vital to keep two things in mind:

1. While searching for new product ideas, make sure to look beyond the products themselves. It may sound cliche but as we learned in the last post, there is heavy competition in the most common and popular product categories. Choosing a different or unique angle can be instrumental to your success. Try not to just look at products, rather look for potential in the product category. Consider new markets, new features and new ways to use the products.
2. Don't be afraid to look at smaller product categories and niches. Even though a niche is a smaller subset of a larger category with less potential customers, it makes up for that by way of less competitors and a more targeted audience. Less competition makes it easier to get to the top of Google, and is usually more cost effective and efficient to advertise to your customers.

In this post we will go into detail about the best places to look for product inspiration and ideas. We’ll start with some broad ideas to get your head in the right space to start your search and then get into more specific resources closer to the end of the post.

Let’s get started.

Make a List

As you go through this post and the list of resources, it’s best to capture all of your ideas on paper. Once you have all of your brainstormed ideas recorded, you will be able to return to them later and evaluate them for viability and potential.

1. Start With What You Have

Before you begin searching the depths of the internet and the ends of the earth for product and niche ideas, it’s always best to start with the ideas you already have. Maybe it’s a product or idea you have had for years. Maybe it exists in a half written business plan sitting in a folder somewhere on your computer. Even if you’ve discounted it at some point prior, it’s worth taking a fresh look at it. At one point you thought it was a great idea right?

Here are a few questions to consider when making your list:

• What products, niches or industry you are particularly passionate about or interested in?
• What products, niches or industries are your friends passionate about?
• What pain points do you have in your own life?

Example: Max had a big issue with his unruly, messy hair in the morning. Short of taking a time consuming shower every morning just to be able to style his hair properly, he set out to fix the pain point with his product, Morning Head. Morning Head is a shower cap with an absorbent towel liner that you can soak with water, place on your head and rub around for a minute to get your hair ready for styling.

2. Local Community

Sometimes, you don’t need a new idea at all. Traditional brick and mortar businesses have been around much longer than their ecommerce counterparts. Paying attention to trends in brick and mortar retail and adapting them to ecommerce can be just the ticket you need to create a profitable and unique business. Look around your community and take note of what new or interesting retail concepts people are talking about. Your local newspapers can also be a great resource for this type of news and information. 

Example: Yummy Tummy Soup Company is a perfect example of someone that saw an opportunity to take a brick and mortar concept and put it online. The Yummy Tummy Soup Company sends healthy homemade soups, cakes and pastries in a thoughtful care package to someone you love, giving them the tools they need to heal whatever ails them. They cook and bake all products daily and send them coast to coast in temperature controlled containers.

 

3. Online Consumer Trend Publications

A great place to start your search for product ideas is to look at some top consumer product trend publications. Following trend publications is great way to begin getting a sense of the direction consumer products are going and the ideas other entrepreneurs are introducing to the market. Following these publications can also expose you to new product categories and industries that you previously didn’t know about. Following what’s trending can help you to dream up new goods, services and experiences for your online business.

There are several popular trend publications online including, but not limited to:

Trend Watching - Trend Watching is an independent trend firm that scans the globe for the most promising consumer trends and insights. Trend Watching has a team of thirty professionals in locations like London, New York, São Paulo, Singapore, Sydney and Lagos all looking for a reporting on worldwide trends.

Trend Hunter - Trend Hunter is the world's largest, most popular trend community. Fuelled by a global network of 137,000 members and 3,000,000 fans, Trend Hunter is a source of inspiration for aspiring entrepreneurs and the insatiably curious.

Jeremy, the founder of Trend Hunter says, "Like many of us, I was an entrepreneur at heart, but I didn't know what idea I wanted to pursue. I chose careers that I thought would lead me to my business idea... but after years of searching, I was still hunting for inspiration. It was then that I started Trend Hunter - a place for insatiably curious people to share ideas and get inspired."

Springwise - There are millions of business ideas spanning the globe that operate in a specific way, have their own style, and market in a unique fashion. It’s not always possible to travel the world searching for these ideas to bring home though. That’s where Springwise comes in. Sources such as Springwise travel the world for you, on the search for new entrepreneurial ideas, trends, and stories. Springwise publishes a daily and a weekly newsletter, which you can subscribe to for free.

Example: A great example of someone that noticed a trend from another country and brought it home is Dan and his product, Inkkas. Inkkas are beautiful, unique shoes using authentic South American textiles. The idea came about when Dan noticed the trend for these style of shoes in Peru. Determining this was a great product that would also do well in the North American market, he brought the idea home and successfully funded his Kickstarter project, raising over $77,000 in pre-orders.

4. Industry Leaders

If you know the industry or niche you would like to be in you can use various tools to discover the influencers in the industry. Following the right people on social media can help inspire new ideas via a constant stream of carefully curated content from the people in the know. It’s up to you to uncover the opportunities.

There are several online tools you can use to discover the influencers online for a particular industry or niche:

• Topsy
• FollowerWonk
• LittleBird

5. Product and Trend Discovery Review Sites

Product review and discovery sites can also be a fantastic source of ideas and inspiration. Sites like Uncrate (men’s products) and Outblush (women’s products) are great ways to see new curated product trends daily. What better way to get inspired than to get a daily glimpse into the new and interesting products other entrepreneurs are bringing to the market.

Here are just a few examples of popular consumer product blogs to get you started:

• Uncrate
• Outblush 
• Bless This Stuff
• Cool Material
• Gear Moose
• Werd
• HiConsumption
• Firebox

Don’t just look at the big and popular sites but explore niche reviews sites as well. Consider what types of products and niches you're particularly interested in and search for consumer product review blogs in those niches.

6. Social Curation Sites

Pinterest and other similar image curation sites can be a goldmine for product and niche ideas. Many of the images contain interesting, new and trending consumer products. Using the built in social signals you can sometimes get a sense almost immediately of their popularity. This could be your first clue if there is a market for the product or niche.

Several of the larger social curations sites are:

• Pinterest - Pinterest is the fastest growing social network with over 50 million monthly users. Don’t forget to check out the popular section for what’s trending.
• Polyvore - Polyvore is a new way to discover and shop for things you love. Polyvore's global community has created over 80 million collage-like “sets” that are shared across the web.
• Fancy - Fancy describes themselves as part store, magazine and wish list. Use Fancy to find a gift for any occasion and share your favorite discoveries with all your friends.
• Wanelo - Wanelo (Want - Need - Love) describes itself as a community for all of the worlds shopping, bringing together products and stores in a Pinterest like product posting format. You can start by checkout out trending people. 

7. B2B Wholesale Marketplaces

What better way to get product ideas than right from the source. This has been a popular option amongst ecommerce entrepreneurs for a while and this list wouldn’t be complete without it. Wholesale and manufacturer sourcing sites like Alibaba exposes you to thousands of potential products and ideas. It can be easy to get overwhelmed with the sheer amount of product available so take it slow.

Some of the more popular B2B wholesale product sites are:

• Alibaba - You’ve likely heard of Alibaba. They are one of the biggest ecommerce companies in the world, up there with Amazon and eBay. Alibaba connects consumers all over the world with wholesalers and manufacturers from Asia. With hundreds of thousands of products, there’s not much you can’t find on Alibaba. 

Although it’s generally accepted that Alibaba is the largest online wholesale and manufacturer database, there are many other sites similar to Alibaba you can use for inspiration and to find product ideas.

Some of the largest competitors of Alibaba include:

• TradeKey
• Global Sources
• Made-in-China

8. Online Consumer Marketplaces

Another rich source for product ideas are online consumer marketplaces. Million of products is probably an understatement so you may want to begin your search with some of the popular and trending items and branch out into other interesting categories that catch your eye from there:

eBay - eBay is the largest online consumer auction site. 
eBay Market Research - A way to find some of the most popular product categories on eBay.

Amazon - Amazon is the largest internet retailer. 
Amazon Bestsellers - Amazon's most popular products based on sales. Updated hourly. 
Amazon Movers and Shakers - Amazon's biggest gainers in sales rank over the past 24 hours. Updated hourly.

Kickstarter - Kickstarter is the largest crowd-funding website.
Kickstarter Discover - Browse all projects by popularity, funding, staff picks, as well as many other options.

Etsy - Etsy is a marketplace for handmade items.
Etsy Trending Items - Check out the current trending items and listings on Etsy.

AliExpress - AliExpress is a new consumer wholesale marketplace from Alibaba that allows you to order in small quantities. 
AliExpress Popular - The most popular products being bought on AliExpress.

9. Social Forum Communities

Reddit is the largest social media news aggregator. It describes itself as the front page of the internet and is enormously influential. Reddit has thousands of “subreddits” which are sub-sections or niches that cater to different topics and and areas of interest. It’s within these subreddits that you can find lots of inspiration for your next product or business idea. 

If you have an idea for a particular industry, niche or product category, it’s worth doing a search and finding a suitable subreddit community to join and actively become a part of.

There are also many product focused subreddits that are packed with ideas.

Here are a few examples:

• Buy It For Life - For practical, durable and quality made products that are built to last.
• Shut Up And Take My Money - Interesting, clever, useful products that that people want… badly.

There are also several subreddits for curated Amazon products, make sure to check out the following:

• The Best of Amazon
• The Best of Amazon Canada
• The Best of Amazon UK
• Find It On Amazon

If you're active on Reddit and pay close attention, occasionally you have come across interesting posts like these:

• Reddit, What is One Product Under $20 That You Recommend Everyone To Buy?
• What $100 Item Has The Single Greatest Ability to Increase Quality of Life?
  No matter which approach you take, Reddit is has been and continues to be a valuable source of entrepreneurial ideas and inspiration, coupled with a great and supportive community.

  10. Instagram

  Instagram isn’t just pictures of food and dogs, it is also an interesting option for inspiring product ideas. Because it’s photo based, it makes it easy to scan through many ideas and photos quickly.
  There are a few ways you can use Instagram to search for product and niche ideas:
  • Hashtag - Once again, if you have a particular interest in a product category or industry, you can try searching for applicable hashtags. Another great option is to do a search on Instagram for applicable hashtags that insinuate buyer interest and intent like #want and #buy.
  • Product Curation Accounts - There are many accounts on Instagram that post curated product content. Like many other examples above, you'll likely want to search for and find accounts within the niches you are particularly interested in. As an example, Shopify curates interesting and unique products from Shopify’s 90,000+ online stores. It might just provide the idea or spark for your next product.

    Next Week's Post

    Surely with all these resources, you’ll be able to come up with a great list of initial products ideas to start. In the next post in this series, we are going to look through all of the resources ourselves and share some interesting product ideas with you.
    This is the second post in a series of articles that will detail the process of getting started in ecommerce. In the coming weeks we will be posting further in-depth articles on other aspects of finding and evaluating products to sell online.