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The E-Commerce Gold Rush Is Drying Up: Here's How the Best DTC Businesses Are Prevailing

POST WRITTEN BY
Fynn Glover

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On January 24, 1848, in the foothills of the Sierra Nevadas, miners discovered gold at Sutter’s Mill in Coloma, California. For the next several years, the California gold rush attracted more than 300,000 people from all over the world, looking to find their fortune.

But by 1857, the boom was over. Many gold rushers were bust, but there was still a fortune to be made by those who could pivot their plans.

In recent years, a similar boom has occurred in e-commerce, fueled by cheap advertising and distribution through Facebook, Google and Amazon.

As with any gold rush, the e-commerce companies seeking their fortunes were not rewarded for caution. Instead, they were rewarded for being first to the field—for funneling more and more cash into digital ads to acquire as many new customers as possible.

In the past few years, over a million new online stores have launched on Shopify alone—most of which are selling commoditized products. They’re all advertising on the same platforms, to the same audiences, and advertising prices have been rising rapidly.

And now, the companies that bet their growth on temporarily deflated customer acquisition costs are struggling to grow sustainably.

The blog—long essential for B2B marketers—is the most underutilized tool in e-commerce. It sits at the heart of sustainable marketing moving forward.

Blogging Is The Holy Grail Of Differentiation

E-commerce blogging has three primary benefits: audience growth, engagement and retention.

But these benefits only matter if you appreciate the importance of your store’s email list.

From a transactional standpoint, it’s a database you can market to directly without paying a third party. From a brand standpoint, it’s a community, a tribe you can nurture and grow.

Email has always been the most profitable channel for e-commerce, but it’s only as good as the content that attracts new subscribers and fuels each campaign.

Blogs are essential for growing an e-commerce business for three reasons.

1. Blogging Grows Email Lists

Blog content is super efficient at driving traffic from social media and organic search, and when blogs are optimized well, they’re incredibly effective at converting readers into email subscribers.

Our research shows that e-commerce brands can consistently convert 1 in 5 readers with the right content and tools.

2. Blogging Nurtures Subscribers

Blog content has the power to entertain, inspire and educate your subscribers in ways that flash promotions simply cannot. Shoppers don’t want you to sell to them at every interaction. They want you to give them a reason to engage, beyond just another discount.

3. Blogging Retains Customers

Just as you need to nurture email subscribers who've never purchased from you, you also need to nurture existing customers. If you can extend your customer lifetime value, you can create a multiplier on your company’s ability to grow sustainably.

Blogs nurture past customers in the same way they nurture subscribers who haven't purchased, creating ongoing value and keeping you top of mind.

Digital Advertising Gold Mines Are Drying Up

As venture capitalist Mary Meeker has written on our blog, we’re in the midst of an SMB revolution.

Just as publishing was democratized by the internet, e-commerce has been democratized by the emergence of self-serve advertising and platforms like Shopify.

But how many online stores are actually growing sustainably and profitably? How many would go out of business today if they could no longer rent customers from Facebook or Google?

In reality, it’s easier than ever to become an online merchant, but the channels and tactics facilitating the boom aren’t sustainable, and they’re changing rapidly.

Daniel Gulatti sums it up nicely: “As digital e-commerce brands became more reliant on paid marketing, [customer acquisition cost] became the new rent. This made Google and Facebook digital landlords.”

And the cost of renting that real estate is skyrocketing. According to David Perrel and Austin Rief, “Advertising on Facebook became 70% more expensive between 2017 and 2018 ... Cost per click is growing 23% month-over-month...”

Today, the success of e-commerce companies is largely a function of their communities. 2PM founder Web Smith says, “Sizable, loyal audiences will be of the most coveted ‘products’ over the next decade.”

E-commerce companies don’t build loyal followings from their carousel ads. They do it by delivering excellent content that fuels the entire customer experience.

Blogging In The Era Of Owned Marketing

Despite the end of the advertising gold rush and the shift to owned marketing, many small businesses still aren't blogging.

Why is that, when content has proven to be such a powerful tool?

There are three challenges that we as an industry are overcoming together.

1. Blogging Is An Investment

Blogging requires an investment of time, creative energy and money that can feel more resource-intensive than churning out ads. But this roadblock has become more of a speed bump, especially as the costs of content continue to decline, thanks to licensed content and freelance marketplaces.

2. Businesses Must Learn To Prioritize Sustainable Growth

We live in a culture that prioritizes immediate gratification. In some ways, blogging can provide this in the form of website traffic, email subscribers and sales. But the real benefit is how these results compound over time. Winning e-commerce businesses moving forward will prioritize long-term growth over short-term gratification.

3. Measuring ROI Is Critical

Blogging will need to prove its worth to e-commerce marketers as it has to publishers and B2B businesses. At the end of the day, business owners must be able to see how their blog influences revenue with sustainable unit economics over time. Fortunately, e-commerce tools are becoming more tightly integrated and data silos are being eliminated, making attribution data more intuitive.

Blogging isn’t a silver bullet that makes building a good e-commerce company easy. Building a sustainable business will always be difficult. But blogging does serve as a tool for a type of customer acquisition, engagement and retention that differentiates your brand and reduces dependency on large platforms and marketplaces.

As the e-commerce gold rush ends, e-commerce blogging will propel small businesses into a new era of owned marketing.

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