Tables Have Turned

Times are Changing

Shopify shares tumbled last week by a whopping 18%. This was the equivalent of $20 billion in value for the company (NBC). The ecommerce giant recently altered their revenue outlook (WSJ) and appears that investors weren’t pleased.

Now - this has brought me to the all important question.

What does this mean for the general ecommerce landscape?

Does this mark the beginning of the end for online commerce as we know it? Do companies need to tighten up? Are all things ok and this is just overblown?

There’s a lot to unpack here.

What in the World is Happening?

The best part about working at Luminous is being able to interact with ecomm founders and operators every day.

And there seems to be a mounting headwind on small-medium sized brands.

In the past 2-3 weeks, I’ve spoken to brands about:

• Rising fulfillment costs
• Increased competition in certain niches
• Decreased traffic to website
• Retail partners tightening budgets

Brands that sell primarily wholesale felt the sting of decreased sales for wholesale accounts. Some are experiencing fewer sales through previously reliable sales channels such as Walmart or Target. Others, can’t seem to find ways to reduce cost and turn a profit each month.

Either way, it appears that a mix of economic factors and consumer spending has made it difficult for brands.

Only time will tell what happens.

Changes to Think About

A few things to think about.

1. Do you stand out in a crowd?

It seems like everyone nowadays wants to start an online business with the hopes of “passive income” or building a “dream side hustle”. Obviously, most of them fail. But, the more that succeed leads to higher competition.

Are you on unstable ground with a product that is generic or like the rest? Maybe content needs a little refresh as well? Any new value props to help us stand out?

I definitely don’t have all answers and am no expert, but these are questions I find myself asking when discussing with troubled brands.

2. Are you lean?

Everyone is scrambling over the next AI tool that will “tell me everything I need to do”. From what I can tell - this doesn’t exist yet. First thing I’d reevaluate is current tech stack. Is there something you can live without?

I’ve seen many brands make the most of things by becoming spreadsheet experts. At some point, that becomes impossible so - maybe you can hop off your NetSuite or SAP contract! Not a huge fan of massive ERP’s that take an army to run…

Also, think about outsourcing certain functions.

Don’t over hire, if possible 🙂

Overall, the brands I’ve seen weather the storm, are the ones with a differentiated product/brand and those willing to adapt their needs.

P.S. - Made a bunch of pivots on my side projects, because I didn’t believe they would stand out in a crowd. More to come soon!