concepts to master If you work in E-commerce


There are countless things you need to be aware if you have any desire to be successful in e-commerce

1.LTV to CAC proportion – To Understand this we initially have to understand CAC and LTV first.

a) CAC — Customer Obtaining Cost (CAC) is the average expense of acquiring one new customer. Simply add every one of your Sales and Marketing expenses and afterward divided them by the customer you have acquired.

b) LTV — Lifetime value (LTV) tells you how much benefit your organization can expect from a customer over the course of the relationship.

LTV/CAC proportion is a widely used proportion to determine how much customer value an item provides relative to the expense of acquiring that customer.

To become profitable your LTV to CAC proportion ought to be higher than 3.

Read this to dive deep into CAC and LTV

2. Return to Origin (RTO rate) –

This is the non-deliverability of a package where an item never reaches the customer or the delivery fizzles because of multiple reasons. what’s more, hence the item is returned back to the seller.

This is a major pain to the A**, especially for COD orders. Often seen in developing Asian countries where money is as yet the mode of exchange.

The customers often make excuses like “I’m not at home come tomorrow” or “I don’t have change at the present time” etc.

Measure it and find ways of reducing it.

Click here to read more about it

3. Retention companions –

Companion Retention generally is an indication of how healthy and successful a business is.

They will help you understand the percentage of users who have been retained on your foundation until the defined day/week/month.

To understand this you have to pose one inquiry yourself

“Are we selling pain killers or multivitamins?”.

Retention is higher with painkillers and lower with multivitamins

For example, there is 100s “hair development oil” in the market yet very few “Dandruff hair oil”.

Position yourself to be a painkiller brand instead of a vitamin brand.

4. Average ticket size — This shows the possible upsell opportunity you have for your image. Techniques you can use

Techniques you can use –

a)Usage tracker leaflets where you can cross-promote the item

b)Bundle the item together and transfer the saved shipping cost as a markdown that you will be paying for individual items.

c)Coins and cashback in your wallet every time you purchase the item

d)Double down on your hero item first before scaling your item portfolio

For example, Boat an Indian electronic maker was essentially a headphone brand when starting out now they sell everything from speakers to smartwatches

5. Canal and development channel —

Let’s understand business canal first.

A canal is a deep, wide trench, either dry or filled with water, that is dug and encompasses a castle, building or town.

Business channel — A business canal is a key competitive advantage that sets an organization separated from its competitors.

Web-based entertainment applications like meta use network effect as a canal while Chinese companies use Economy of Scale as a channel.

Read this if you have any desire to find out about Business Channels

Coming back to Canal and development channel.

We all realize that Paid promotions are easy yet expensive. So we have to find strategies for getting around building these business channels.

Hence every successful e-commerce organization have figured out an approach to either fabricate a canal around their image or have multiple development channels which are tough to break in the short run like offline conveyance channels, huge engagement on Instagram reels, natural traffic on web journals or tonn of reviews on amazon.

All of that might sound easy however difficult to duplicate in the long run.

Ex — Manmatters on IG and LLB blog

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