The Broken State of Ecommerce: A Costly Email Problem

– Ecommerce is broken and small stores have a difficult time in the current market.
– The problem lies in the transactional nature of ecommerce and the focus on sales, acquisition costs, and margins.
– Brands are not paying attention to the low email open rates, high churn rate, and high cost per email, which is unsustainable in the long run.Brands need to shift their focus from pure conversion and transactional approaches to building a community and improving customer retention in order to address the inefficiencies and high costs associated with email marketing in ecommerce.E-commerce is broken. Small stores don’t have much of a chance in today’s market. The biggest problem with it is that it’s very transactional. For everyone preaching about retention and customer experience, the advice is coming from people and agencies that have a vested interest in you buying into that notion. This is backwards. The whole approach is backwards. The problem stems from how ultra-focused brands are on the following:

1. More sales
2. Lower cost per acquisition
3. Improved margins
4. More repeat customers

Of course, everyone wants these things. There’s a three-prong problem that brands face, and the stats have been staring them in the face for years, and no one has noticed.

1. Your email open rate is less than 50%.
2. Your email list is churning out at 25% per year.
3. Your cost per email for a lot of brands is $20+ (ouch).

These are people that had enough interest to take action on your website. These are your high-intent customers. Even they don’t like you. So, for all the hype around email or SMS, etc., brands are leveraging these channels as a pure conversion channel. Not one brand understands the community that I’ve come across.

Now let’s talk about something that is really super frustrating about the above. We’re guessing when we’re emailing people because 99.9% of brands don’t collect data during those high-intent sign-ups. Statistically, over the course of a subscriber’s entire journey, at least half of them will never open an email, meaning every email address actually costs double. YIKES.

This is all ridiculous. 10 years ago, 5 years ago, 3 years ago, when the cost to acquire an email address was cheap, this was an OK approach leveraging volume at scale. Today, it’s brand suicide. YET. It’s what all brands continue to do. (I just saw this across 200+ brands this week during research, also only about 30% of those brands sent me a welcome series email).

This is a basic unit economic lever problem, and everyone’s not paying attention to it. This is e-commerce 101 style stuff, yet it’s a KPI no one tracks…let alone understands how to influence. Because it doesn’t benefit the narratives of agencies, software providers and email is still one of the most efficient channels flush with stats that are questionable at best ($44 revenue for every $1 spent anyone?). Revenue has never equaled profit. The fact that no one is paying attention to this space blows my mind. The fact that most people tasked with doing emails are charging thousands of dollars a month to create content to guess also blows my mind. Of all the inefficient parts or modern ecommerce, this is the biggest gap that brands are currently facing and they just don’t see it.

Federal Minimum Wage in the USA is $7.25
California Minimum Wage is $15.00
ecommerce companies are paying $20+ per email address.

Let me help you out, this isn’t sustainable.For context a 50k email list that’s targeted would be $1 million.#ecommerce #strategy

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