We work with and coach ecommerce companies every day, and there are a few questions that come up often. How do you build an ecommerce company to $100 million or more? How do you create a brand that retains customers to keep purchasing? And how do you grow a business to be valued at upwards of $1 billion?
At Metacake, we’ve been fortunate enough to be involved in building brands that have done all these things over and over. And in this post, we’ll share the ecommerce growth framework that these successful companies are built on.
The Ecommerce Growth Framework: How to Grow to $100M Realistically and Profitably
Contrary to what you might think, the recipe for success has nothing to do with being a specific product, industry, or even level of innovation. While these factors can help, we’ve seen so many brands do well with product, design, innovation, and more and still get stuck at certain levels. Many brands will come to us having attained $300k, $1M, $5M, or even $20M, but are finding it hard to break through.
The key here is leveraging what we call the three levels of ecommerce business mastery. Part of why this is so powerful is that most businesses are only playing at the first level. While you can establish a good business there, elevating to the other levels will exponentially increase your probability of success.
As a note, the ecommerce growth framework that we’ll outline below doesn’t just work for physical product businesses. It also works for digital products, software, and even service businesses like agencies or consultants.
The 3 Levels of Ecommerce Business Mastery
We will unpack the 3 levels of this ecommerce growth framework below. Along the way, we’ll be using Apple as an example since they are a top example of a high-achieving business model in the product world.
Level 1: Products
The product level is where almost everyone begins. At this level, you create a great product that solves a pain point. Maybe you’ve invented something, or you’ve innovated off an existing product because you saw a way to design it better. Most start here and never leave. This could be because they love creating products, or it’s all they know to do. But to be honest, staying here is the lazy route.
The problem with staying at Level 1 is customer retention. No matter who you are or how great your ecommerce products are, you are some form of a commodity if you’re only operating at the product level. You’ll be easily duplicated, and more importantly, in the eyes of your customer, you are just a tool to solve a need. That is a problem, because when a better tool comes along, nothing is stopping your customer from jumping ship and trying a different brand instead. The other issue with staying at Level 1 is you’re in a price war. If someone copies your products and makes it cheaper, your customer will buy from them instead.
Let’s look at Apple as an example. Their Macbook is a tool that solves a basic problem, nothing more. There are many other laptops out there that serve the same need. So if Apple only operated at the product level, you probably would have purchased a less expensive laptop from somewhere else. And Apple would definitely not be the brand we all know today. So what other levels are brands like Apple playing on that make them stand out?
Level 2: System
The system level (also called your process) is one that often gets skipped, creating a powerful opportunity for businesses that intentionally play here.
To understand the importance of the system, we’ll need to take a step back to understand your customers’ mindset when purchasing from you. What is the reason behind any purchase? It’s because a customer has a need or a result they want, and your product is in line with getting them there. The customer doesn’t actually want your product. They want the result your product creates. This could be a simple tangible result, like a knife that’s great for food prep, a backpack that keeps you organized for travel, or a sound machine to help you sleep. It could also be a feeling they get from having your product (think about the status symbol that comes with wearing a Rolex or the belonging and accountability that comes from membership to an exclusive community). Either way, the only reason someone buys your product is because it’s one step on the path to a result. The faster or better your product can help them achieve that result, the more customers are willing to pay. And oftentimes, that result has potential to be expanded to a larger result, whether the customer realizes it or not.
All of this psychology informs Level 2, the system level. The path to success here is creating a system under which your products fall. This system is your unique philosophy for solving the need or problem your customers have, and the products are what they will use to get results. The key is to not just be a product company, but a solution system. If you can sell someone on your system for achieving the results they want—convincing them that your way is THE way—your products can mostly sell themselves.
Let’s refer back to our example brand, Apple. From the very beginning, they had a unique philosophy for solving tech needs. While other computers at the time were clunky and required a good amount of tech know-how to operate, Apple began creating products anyone could use and enjoy. They made products that were simple, elegant, and creative. This became their system, and for the people who appreciated that philosophy and still do, there is no going back to other brands.
You can go very far working at this level, but to do this, a few things must be in place. You must deeply understand your customer avatars and their psychology, as well as the problem you’re solving. You’ll also need a unique approach to solving that problem which resonates with your avatars specifically. Once brands achieve this, they are often able to break through revenue barriers in a way they never saw before.
Level 3: Purpose
The purpose level is all about your brand. And remember, when we’re talking about your brand, we’re not referring to your logo and colors (although those are a component). Your brand is the essence of why you exist. It’s your company’s purpose, intention, and character. All of this is delivered and communicated in a way that tells a story customers want to see themselves in. This is the most valuable part of what you do and it’s the only thing that can’t be copied.
Many people think they’ve developed a brand, or they might have made an attempt at branding their company unintentionally. But this will not be enough to move the needle for long-term growth and stability. It’s critical to intentionally develop a brand your customers can connect to. This creates an opportunity for customers to buy into your overall brand, not just your products or system.
If someone buys into your brand and purpose, along with your system and products, they are much more likely to remain loyal to your company. When they subscribe to your philosophy and what you stand for as well as enjoy the result of your products, it’s pretty difficult to lose them.
Achieving this is very powerful. It’s actually how you build a monster business with massive profit and growth, because being rooted in purpose that raving fans connect to introduces the ability to influence profit at a level that nothing else can. Being a real brand also gives you the opportunity to charge more for your products, deliver more value, and create impact with the solutions you have.
Think about the people who really love Apple. Apple has gone beyond providing a good product, or even a solid philosophy for how to solve a problem that lends itself to a whole system of products. Apple wraps all of that up in messaging, design, and experience that communicates creativity, energy, and inspiration. Because of the brand they’ve built, customers can’t get enough. They’ll watch or attend their events, anticipate new releases and wait in line for them, and upgrade to the latest models without much thought. This is all because customers have bought into who Apple is as a brand, not just the tangible products they sell.
Level Up Your Approach to Ecommerce Growth
This ecommerce growth framework we’ve developed is the most powerful business plan you can find. It’s an approach responsible for generating massive amounts of revenue and building extremely valuable, profitable, and sustainable companies. But remember, the key is that it must all be genuine. A manufactured, thin version of any one of these levels will be easy for customers to spot and will absolutely backfire. Take the time to master each of these levels with intention and authenticity, and you will earn raving fans and unlock that next chapter of growth.