Inflation is up and consumer confidence is down, which is why e-commerce startups that hope to weather the ongoing downturn should expand their product offerings.
Does that sound counterintuitive?
“The more complementary and additive a product is to your catalog, the larger your cart size and the more likely a customer is to return,” says Bennett Carroccio. Prior to co-founding Canal, he worked with hundreds of companies as a consumer investment partner at Andreessen Horowitz.
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In a post for TechCrunch+, he identifies two cost centers that are the easiest to control (user acquisition and product R&D) and shares three tactics for “staving off the brand-pocalypse.”
Dialing up your marketing budget during a downturn is the wrong call, since “margins are everything” and consumers are more skeptical than ever.
Instead, look for ways to increase LTV with a larger catalog and use third–party suppliers to reduce the cost of goods sold.
Landing a new customer is several times more expensive than retaining an existing one, “and that multiple is likely growing as acquisition costs rise,” Carroccio says.
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