Ecommerce marketing strategies from 5-10 years ago like pay-per-click ads, SEO, and affiliates have become less effective over time due to increased competition. This has driven up customer acquisition costs and reduced margins for merchants. As a result, merchants have shifted focus to retaining existing customers through referral programs, loyalty programs, great service, and memorable experiences which have lower acquisition costs compared to hunting for new customers. Key metrics now include customer lifetime value and repeat purchase rates rather than just acquisition metrics.

1. The Trend Disrupting eCommerce
@sweettooth
and Killing Businesses
Mike Rossi

2. eCommerce has gone pretty
@sweettooth
well so far, right?

3. @sweettooth
But what about the next
5-10 years?

4. @sweettooth
vs.

5. @sweettooth
About Mike
• Co-Founder, CEO of Sweet Tooth
• Worked with Magento during its
beta stages
• Helped hundreds of merchants with
their eCommerce marketing efforts

6. @sweettooth

7. @sweettooth

8. What did eCommerce marketing
@sweettooth
look like 5-10 years ago?

9. Where did online store sales
come from in 2004-2009?
@sweettooth

10. @sweettooth
1. SEM, Pay-Per-Click Ads

11. @sweettooth
1. SEM, Pay-Per-Click Ads

12. @sweettooth
2. SEO

13. 3. Affiliates & Link Building
@sweettooth

14. @sweettooth
4. Content Marketing

15. @sweettooth
What do all of these
have in common?

16. @sweettooth
1. Get a visitor
2. Convert
3. Profit
4. Repeat!

17. @sweettooth
1. Find
2. Kill
3. Eat
4. Repeat!

18. Important Metrics in ~2007
@sweettooth
1. Cost Per Click (for SEM)
2. Marketing Costs per SEO Visitor
3. Conversion Rate
4. Cost to Acquire a Customer
5. Average Margin

19. Example Merchant in 2007
@sweettooth
• Sells apparel
• Cost to acquire a customer
= $5
• Average order = $50
• Average margin = 30%
• Average profit per order =
$10

20. So, what’s been happening in
@sweettooth
the past ~5 years?

21. Source: searchengineland.com
@sweettooth

22. These marketing methods have
become less effective over time
@sweettooth

23. The Law of Shitty Clickthroughs
“Over time, all marketing strategies result in
@sweettooth
shitty clickthrough rates.”
– Andrew Chen

24. @sweettooth
…but why?

25. @sweettooth
2007 Merchant

26. @sweettooth
2014 Merchant

27. @sweettooth
More competition in
every vertical!

28. Side-Effects of More Competition
1. Higher pay-per-click ad prices due to more bidding
@sweettooth
2. SEO is more difficult (i.e. less efficient)
3. Prices are driven down, which lowers margins
4. Commoditization

29. @sweettooth

30. Example Merchant in 2014
@sweettooth
• Sells apparel
• Cost to acquire a customer
= $7.50
• Average order = $50
• Average margin = 20%
• Average profit per order =
$2.50

31. @sweettooth
2014 Merchant

32. @sweettooth

33. So what have merchants been
@sweettooth
doing about it?

34. Source: Monetate
@sweettooth

35. @sweettooth
Marketing Budgets

36. @sweettooth
Important Metrics in 2014
1. Customer Lifetime Value (CLV)
2. Average number of purchases per year
3. % of sales from repeat customers
4. Churn, or the number of customers who never return
5. Some of the 2007 metrics too!

37. @sweettooth

38. @sweettooth
“Hunter” Merchant in 2014
• Sells apparel
• Cost to acquire a customer
= $7.50
• Average order = $50
• Average margin = 20%
• Average profit per order =
$2.50

39. “Farmer” Merchant in 2014
@sweettooth
• Sells apparel
• Cost to acquire an existing
customer = $2
• Average order = $50
• Average margin = 20%
• Average profit per order =
$7.50

40. @sweettooth
1. Referral programs
2. Lifecycle emails
3. Loyalty programs
4. Great customer service
5. Memoriable experiences

41. @sweettooth
vs.

42. @sweettooth
Important Metrics in 2014
1. Customer Lifetime Value (CLV)
2. Average number of purchases per year
3. % of sales from repeat customers
4. Churn, or the number of customers who never return
5. Some of the 2007 metrics too!

43. @sweettooth
&

44. @sweettooth
Questions?
!
@m3rossi & @sweettooth