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  • Hemant Varshney

The 3 Stages of Growth for eCommerce Brands



When you’re building a Direct-to-consumer (DTC) brand, there are four key revenue milestones to keep in mind and work towards.


  1. $0-1 million

  2. $1-5 million

  3. $5-25 million

  4. $25+ million


Of course, there are steps you have to take to reach each stage. Let’s focus on the first three and call them (1) Start-up/Fast Growth, (2) Consolidation, and (3) Renewed Growth. Here’s a breakdown:


Start-up Growth

Getting the ball rolling with your business is always the most difficult part. This is the part where you have to create everything from the ground up: your product (and make sure it’s perfected!), brand, inventory, and every small logistical aspect that goes into building your business. Expect to face the most amount of problems that you hadn’t even considered prior to starting your business, but that’s okay - it’s what start-up growth is all about!


Creatives are your best friends at this stage - you should be creating organic content, curating and sourcing already existing content to maintain your reliability, and build a community around all of your content. Your channel mix will be made up of social, PPC, and email marketing, and you’ll probably rely heavily on Facebook and Instagram since they’re focused on demand generation. Invest in your creatives, they’ll make your business.


Whether you’re in a VC-backed or bootstrap business, there are a set of challenges to get through. If you’re bootstrapping your way from the bottom, here are a few things to keep in mind:


  • Create as much organic content as possible and leverage ALL of the social media platforms

  • Build a strong community around your brand and content (consider reaching out to smaller influencers who align with your brand to get started)

  • Create your eCommerce store and bring it to those communities!

  • Ads, ads, ads - don’t hesitate to spend here

  • Keep your customers coming back for more by staying authentic and giving the people what they want


Venture-backed companies, on the other hand, have expectations to maintain. If you’re raising capital, focus your attention to payback on media spend - so if your payback on paid media is greater than 3 months, it’s probably best to slow down a bit. Zoom out of all aspects of your growth marketing strategy and see what needs tweaking, it could be advertising, conversion rates, your offer, etc.


It’s important that your business stays flexible and ready for anything, because stage one is full of changes, hit-or-misses, and exploring every direction possible that will make your business a successful one.


At some point after building a strong foundation (remember, lots of content creation and community building), your business will be making enough revenue to start reaching a plateau, which brings us to step 2: consolidation.


Consolidation

Congrats - you’re doing it! You’ve made good progress with your creatives and content at this point and are ready for the next phase: $1-5 million in revenue.


At this point you’ve achieved product-market fit, and now’s the time to start thinking about retail and wholesale. Your channel mix is just about the same as it is during the first stage, but it should be backed by a more polished media strategy. Influencer marketing starts to play an important role here as your product becomes more popular and in demand. Try expanding on user-generated content through paid media as well.


Scale, scale, scale! Test out what works and what’s a little less profitable, and refine your strategies accordingly. There’s time during this stage to continuously reexamine your growth strategies - demand planning should be your number one consideration, which means you should be building out organizational charts. Keep them flexible though, change is a constant.


Renewed Growth

We’re at the $5-25 million revenue stage – if you’ve made it this far, take a second to feel proud of yourself. Now hold on to that feeling, because we’re moving right along.


Retail and wholesale are a great opportunity at this stage, but you’ll also want to start implementing some changes to perfect your product, brand, and overall business. Some of these changes can include new platforms, technologies, and updated and refined messaging. All of it comes from listening to your audience and the data.


A lot of this stage requires revitalizing your company’s momentum and growth - dust off your business goals to keep up with the changing trends, new technologies, and updated channel strategies.


As much as you’ve been focusing on demand planning, the people running it becomes just as important in this stage. You’ll want to hire experts in the field, people who have done it before and who you’re willing to invest in. A crucial factor to remember when hiring talent is to be transparent: share your objectives and key results, and set their expectations well. It ends up being beneficial for everyone involved.


90% of eCommerce brands get stuck somewhere between the first and third stages, so this stage of growth is (obviously) the most important step to reach and overcome in order to make it to the $25+ million revenue stage.


Remember, these stages aren’t linear, they’re cyclical. Your business will continue to improve with constant change and revisiting every stage of the process.


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