Over two million merchants are now using Shopify as their store site, which has made Shopify the third-largest e-commerce retailer after Amazon and eBay. The Shopify platform and its ecosystem of app partners have made getting your online store up and running super easy, and that’s the problem.
At Merchant Mastery, we see too many beginning merchants build out their online stores to experience one of the following predicaments:
- No traffic or sparse traffic– Where are the customers? Why isn’t my store busier?
- Traffic, but poor sales– I have people coming to the store, but few are buying.
- Sales, but inadequate margins– I have sales, but my profitability is too low to be sustainable,
These problems arise from inadequate understanding or resourcing of the three pillars every online store is built upon.
The Three Pillars
Every online store is built on three pillars of success:
1) Product Market Fit– Product Market Fit is the extent to which your products satisfy strong market demand. A common metric to measure product market fit is whether 40% of your surveyed customers would be "very disappointed" if they could no longer purchase your product. Without Product Market Fit, you don’t have a real business that can easily scale. Generally speaking, if you are generating $5,000 - $10,000 in monthly sales to arms-length customers (i.e., not family and friends) you are on your way to proving Product Market Fit. Once you have Product Market Fit, your customers will chase you and tell their friends to chase you. Most beginning merchants can tell us what they are selling, but few can tell us why their customers are buying. This is the crucial intersection, aligning your product’s value proposition with your customer’s true motives.
2) Product Channel Fit– If a merchant has Product Market Fit, they must now validate product channel fit. Not every product can be sold through an eCommerce store, and merchants must have a method to test channels for the very first thing they sell: the big idea about their merchandise and how it will solve the customer’s motives. If people don’t buy your big idea, they won’t buy anything else. But where should you place this big idea, and in what format? Is this a video, blog post, or infographic? A combination of all three? On YouTube, Facebook, or both? What are the ad formats? Merchants must have a proven method to test Product Channel Fit to ensure frictionless delivery of their message to their intended audience.
3) Merchant Market Fit– Merchant Market Fit can be categorized in the following key traits:
- Deep Market Knowledge– Merchants must have extensive knowledge of their customer’s motives, competitive threats, and market trends. All three of these elements are in constant motion, and your offers must be adjusted to ensure your value propositions stay aligned.
- Resources– We ask all of our clients whether their store is a business or a hobby. Although hobbies can be humored, businesses need investment if they are to grow. While a beginning online merchant does not need hundreds of thousands of dollars to start, they will need the people and enough money to test toolsets, advertising and merchandising strategies. It is essential to invest the time and sufficient funds to gain market traction, especially through paid advertising channels. Organic traffic (e.g., SEO, publicity, etc.) will rarely be the channels to reliably grow the business on their own.
- Technical Ability – While you do not need to be a coding or graphic design wizard, you will need to know how to operate, update, and modify your online store so that it effectively communicates and transacts with your customers. If desired improvements in store design or operations are beyond your own technical ability, you may need to hire this skillset to have the best customer facing experience.
- Character– As a merchant, you will rely heavily on optimism, grit, lifelong learning, resilience, coachability, and perseverance. After product market and channel fit, these personal character traits are the most critical components to ensure success.
Inevitably, when reviewing stories of outstanding merchants, these three pillars of success are abundantly visible. Beyond acknowledging that these pillars are critical to success, merchants must also recognize their customers and competition are in constant motion. Because what works today may not be as effective in a year, merchants must also be versatile and adaptive in adjusting their offers to an ever-changing marketplace.