Business owners are constantly bombarded with clickbait and buzzwords promising to help “scale your business overnight!” But as any experienced e-commerce entrepreneur can tell you, sustainably growing an e-commerce business takes time, effort, and a strategic plan.
E-commerce has experienced significant growth (as well as a significant reset) over the past few years. The landscape has become increasingly competitive. How can you differentiate and elevate your business in a way that sets you up to win long term?
Today we’re diving into real-life examples of brands that have experienced healthy and not-so-healthy growth. Whether it’s a lesson for your own playbook or a cautionary tale to prevent a misstep, tapping into the experiences of the brands that came before can help keep you on the road to success.
Growing an E-commerce Business: Lessons in Good vs. Bad Growth
- Go Viral (and Stay There) Like Scrub Daddy
- Wrapped Content for Individuals: Personalize Like Spotify
- Seller Beware: Cautionary Tales from Grooveshark and Quibi
- HelloFresh vs. Blue Apron: A Tale of Two DTC Meal Kit Subscription Services
1. Go Viral (and Stay There) Like Scrub Daddy
If you’re looking to grow an e-commerce business, you already know a strong social media presence is essential.
The right social content does more than get you in front of the right shoppers. It also helps to generate incredible product content, build a loyal community of followers, and deliver priceless insights into customer behavior and preferences.
From Shein unboxing videos to top Amazon finds on TikTok, fast-growing brands know how to get shoppers buzzing about products. But not all brands have marketing budgets to rival that of Shein or Amazon.
As the cost of advertising continues to rise, growing brands are getting both smarter and scrappier in terms of how they leverage social media.
From TikTok to Instagram, you can find creators everywhere serving up genuinely entertaining videos using new products they found online. Even the professional ads are starting to look more and more like user-generated content.
This brings us to our first growth lesson, one of the best ways to go viral and stay viral is to simply entertain.
Scrub Daddy’s “Cleantok” Takeover
A masterclass in disruptive marketing videos created by Scrub Daddy.
Just a couple of years ago, America’s favorite sponge was nothing more than a dream and a Shark Tank pitch. Today it’s a $100M brand that has seen 80% revenue growth from 2020 to 2021.
This is due in no small part to the fact that Scrub Daddy’s social media accounts are filled with hilariously relatable memes and video content, all with their trademark sponge featured. Scrub Daddy is killing it when it comes to marketing to Gen-Z shoppers.
Where others have failed to tap into influencer marketing with any lasting results, Scrub Daddy has partnered with creators like Vanesa Amaro to create “Cleantok” content shoppers actually want to watch and special-edition products they actually want to buy.
With a viral everywhere-at-once approach to social media marketing, the digitally native brand is on track to grow another 50% to reach $100 million in sales.
Similar to legendary e-commerce brand Gymshark, Scrub Daddy seems to have not only tapped into the right social tactics at the right time but it’s also managed to keep its momentum by taking social seriously. The brand has invested in the right resources and influencer relationships with the long game in mind.
2. Wrapped Content for Individuals: Personalize Like Spotify
Nothing makes customers feel more seen than the right kind of personalization.
After figuring out who your customers are and how best to cater to them, the next major growth tactic is figuring out how to leverage that data to further elevate the customer experience.
If you’re an audiophile, you already know where we’re going with this.
Spotify Wrapped debuted in 2017 with about 30 million users tapping into the annual wrap-up of their favorite songs. By 2021, Spotify Wrapped inspired nearly 60 million shares.
And while self-proclaimed T-swift stans may not be shocked by the results, with Spotify Wrapped neatly tying up all your listening data — from how much time you spent per genre to your #1 most played song — this is one customer marketing tactic that definitely gets them talking.
“The heart of the entire Wrapped campaign is that we are telling stories through data,” explains Spotify’s Senior Product Manager Anshu Das in a behind-the-scenes video on how it’s made.
By understanding your customers and using data to delight shoppers, you not only grow customer loyalty and brand reach, but you also increase your sales and brand valuation.
With over 200 million paying customers, Spotify has outpaced Apple, Amazon, and YouTube in paid subscribers. This Davis vs. Goliath growth play is largely attributed to Spotify’s ability to identify opportunities in the data and quickly make a product that caters to those.
3. When Growing an E-Commerce Business, Seller Beware! Cautionary Tales from Grooveshark and Quibi
While we’re on the topic of streaming platforms, does anyone remember Grooveshark?
The online streaming service debuted months before Spotify and saw huge growth in both the company and customer base. However, Grooveshark dissolved in 2015 due to licensing issues and expensive lawsuits.
Though the concept and customer base were sound, Grooveshark did not have the funds to make the right deals with labels and struggled to pay its employees. The brand could have avoided this with SellersFunding Working Capital. Needless to say, Grooveshark was overtaken by Spotify, which had raised more funding and taken the proper steps with licensing.
Grooveshark’s story is a sobering example of how a business can have all the right ideas and still end up failing. Grow too quickly, and you risk losing the ability to keep up with consumer demands and operation costs. This in turn leads to a poor customer experience and financial instability.
Then there’s Quibi.
Gunning for a place next to Hulu, Netflix, and YouTube, the short-form video streaming platform came out swinging with a $2 billion funding raise and a gang of celebrities to promote the brand.
But the promise of “Quick Bites. Big Stories.” wasn’t what consumers wanted. Quibi suffered even with a celebrity roster featuring everyone from Zac Efron to Queen Latifah. The market simply did not need or want a vast selection of unwatchable content under 10 minutes in length.
Though Quibi saw hundreds of millions of users at its peak, it quickly became obsolete due to competitors adopting short-form video as a standard feature. Of course, it didn’t help that Quibi all but refused to make its content watchable outside of mobile devices or respond to consumers’ desire to screenshot and share content.
A failure to adapt made Quibi the biggest brand failure in recent history. It’s still a glaring reminder that short-term gains don’t always equal long-term momentum.
While “hockey-stick” growth is generally seen as a positive thing, it’s not always the best strategy for a growing brand. Whatever your business model, brands like Grooveshark and Quibi remind us how important it is to strike the right balance between growth and sustainability.
4. HelloFresh vs. Blue Apron: A Tale of Two DTC Meal Kit Subscription Services
The idea of being a disruptor is often glorified in e-commerce circles. However, sometimes the straightest route to success is simply working with the market rather than against it.
That’s where the right strategic partnerships can play a big role in hitting the next growth level.
Take HelloFresh, the meal-kit brand. This DTC subscription service partnered with supermarkets like Walmart and Kroger to allow customers to pick up products in stores. Why? Because customers signaled a desire for in-store pick-up
“The addition of retail . . . allows us to better address the everyday needs for even more customers, adding what we view as a highly complementary customer segment,” said Tobias Hartmann, then President of North American Business, in the brand’s 2018 retail product line announcement.
By simply stepping up to listen to customers and meet the evolving needs of its shoppers, HelloFresh has also achieved increased brand visibility and sales with 4.25 million active customers in Q1 2022. Perhaps more important is that HelloFresh’s keen ability to adapt has also given the brand the edge over competitor meal kit subscription brands like Blue Apron.
Similar to Quibi and Grooveshark, Blue Apron hit the market with high hopes and even higher valuations. But unlike HelloFresh, it failed to make the right partnerships at the right time. This resulted in a major plunge in subscribers from 879,000 to 336,000 between 2016 and 2021.
User retention is notoriously tough among meal kit services. But with HelloFresh, shoppers have the option to purchase meal kits in-store without subscribing. This offsets customer losses by giving shoppers the flexibility they crave.
Growing an E-commerce Business: No Two Experiences Are the Same
Whether it’s leveraging social media marketing, using data to optimize the customer experience, or making the right partnerships at the right time, perhaps the biggest lesson we can take from these examples is that no two growth stories are ever the same. Nor should they be.
Even in its fourth decade, e-commerce remains a sandbox for testing ideas and acting on the results. With multiple business models and growth strategies, there simply is no one way to go about it.
When you’re ready to grow your business on your terms, SellersFunding is here to help.
Our e-commerce funding solutions are built for merchants who want to achieve their goals, no matter how or when. Whether you need flexible funding to invest in inventory or cross-border payment solutions to expand into new supplier and customer markets, we’re here to help make it happen.
Register today with no strings attached to learn more about getting funding for your business’s sustainable growth. And read our customer success stories to find out how entrepreneurs like you are actively scaling their brands with SellersFunding.
