Just try to survive long enough (4)
Business is about survival. And ecommerce is no different from any other business in that respect.
Because you know shit is coming, just just don't know when, what it will be and how big the pile will be.
Which is why a lot of it is really about solving problems and managing risk.
On the risk side, you want to give yourself opportunities for an upside, while protecting your downside. This means making small bets, so you can test. A lot of tests will fail, but that's OK.
You're looking for the thing that works, so see the fails as part of the selection process.
Being in business means you need to be comfortable to a certain degree with risk. Especially since that is where the opportunities are. They aren't found in what everybody knows, but in the new, the unexpected, the alternative approach.
The problem is that you don't know when they will come, these opportunities. But they will. But so are problems - the shitty ones. So you are in an endurance race. You need to be able to endure long enough, while making small bets, to win.
And what you want to avoid is ruin. Which is the equivalent of dropping out of the race altogether. Because if you can't continue your business, there is no opportunities to profit from anymore.
Because people refer to opportunities as if they are equally available to anyone. Which is a great ideal to have, but it's far for reality.
To be more specific, if you generate a lot of profit, you could for example buy 10,000 products in bulk, which would be impossible for someone who has a small business and doesn't have the money to buy that number, nor the capacity to sell.
But here comes the real kicker - if both businesses sell the same product, the bigger company can flood the market with a lower priced product and take over completely.
The nature of ecommerce is that it's largely a winner-take-all market, as you're either number one or you barely survive. There's only one buy box in amazon, only one top position in Google, only one top ad location or highest bid for a placement. And between the top position and the rest, there's usually a large drop off in sales / clicks etc
So that's the theory, what does it in in the real world?
1. Don't rely on 1 supplier
I have personal experience with this and so has a member of my ecom mastermind - that one supplier that gave you bonusses and trips. That was so happy with your growth and always singing with praise.
That supplier is no different from any other in the sense that they can do a 180 on the spot and become an adversary.
It often has to do with a perceived loss of power from their view. When you become too big, they become too relient and want more control over what you do.
In our case, they wanted to control prices. For the other guy, the wanted even more control and wanted to buy a business. So they started a trademark lawsuit to lower the value of the business
2. Generate profit and keep it in cash
It's tempting to spend your hard-earned money on a nice car. And I am all for enjoying the fruits of your business.
But it shouldn't limit your opportunities to take bets nor the reserves you need to have when your business has encountered the inevitable shit.
So how much is enough?
There's no limit to that and is dependent on the size of your business as well as on how aggressive you are with the opportunities you want to chase (in other words, how growth oriented you are).
Larger size business and more growth requires more cash to work with.
Why do I say cash and not profit? That's because in ecommerce for example, you can be profitable, but have limited cash. Because it's tied up inventory for example.
3. Don't think that you know
We had a promotion from a supplier that we were all sure would do well. They bought tonnes of the free items (resell value of €50) for the promotion.
We made a promotional video, put the offer in the newsletter and on the site.
Result: 1 unit sold.
Called them to check whether it was just us. Nope. Stuff just isn't moving at all.
I've been in this business for 6 years. They have been for 50. So we should know what works and what doesn't?
Clearly, we can be wrong.
That's why the small bets are so important. You test to see if your assumption is correct. If you are, you scale up. If you don't you kill it.
The opposite can be true as well. Things that you would not think would sell, will.
4. Everything is fleeting
In business, the environment is dynamic. Which means that things interact and change over time.
That means that the product that was doing well, some day no longer will. The competitive advantage you have, will not be there forever. Or can actually become a hindrance.
The realisation that your in that sort of environment is important. You shouldn't hold on to your old ideas. Develop your ideas and business with the market. Adjust to the changes.
Example here is the changing attitude of people with regard to food. If you're selling the best beef burger in a town that now mainly has vegans, you better adjust and not hold on to the assumption that there's a big local market for beef.
5. Your role is to solve problems
If your the owner / founder / main guy in your business, your role is to solve problems.
Some examples of things I had to solve:
- Rules for the holidays for employees
- More complicated tech support issues for customers
- Software / app selection for Amazon
- Product selection and account set up for AMZ Australia
- Tech stack for our new M2 site
- Evaluating new products
- Determining which new roles to hire for
My kids think I just boss people around and sit behind my desk the whole day. Which is what a lot of people think too when they hear the business is doing multi-million figures a year and is growing in double-digit percentages.
The reality is very different.
You need to pick up the slack and solve what others can't solve.
And you know there will be shit. But good things too.
So you have to endure the shit and enjoy the good stuff. And survive long enough.
To live another day.
Great post, I would say that applies to AM in general too, not just ecommerce.
make smart tests with managable risk, keep a reserve of cash for them, don't spend profit - reinvest in tests.
The game is to make multiple hypothesis, test them as cheaply as can, learn from results (failures or successes)
@katim - agree - it's not just for ecom, but applies to business in general as well.
Great tips, pekadis!
What I think is also very important when in comes to survival ... traffic source diversity.
Especially when it comes to ecommerce, too many people rely just on Facebook and Google. When they change policy/algorithm/... they can ruin you business overnight.
Something similar happened to us last December, a few days after we hired our first full-time employee Facebook shut-down my Business Manager. Of course, our revenue dropped for 90% percent the very next day. 
Luckily we found a workaround in a week or two, but more important is that this situation forced us to think about other traffic sources. Now after almost one year, we have two strong user-acquisition channels with 50-50% revenue wise. Now it’s easier to survive if one of them got busted.
If FB wouldn’t ban my accounts, I don’t think I would push so hard to get into offline stores. 
Great shares man, keep'em coming!
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