How should ecommerce brands think about customer acquisition based on the down-market?
We hear about how we are in a down-market every day. Yet, when you look at what is happening for the general consumer, it is not obvious that their spending has decreased in a meaningful way. Here are a few interesting data points:
Okay, so it’s pretty clear, people are going to work, and making money, and spending it. Within that, they are still shopping online, as we can see from the amazon numbers.
So what does this mean for the DTC ecommerce brand?
First of all, this is good news, there are consumers out there waiting to buy your product. They just need to hear about it. So you need to spend money on customer acquisition.
This is where the down market starts to matter.
In the past, ecommerce business were able to raise money (VC, and Debt many of the times) to fund the purchasing of ads to acquire customers. But, with the reset in valuations, and increase in interest rates, these sources of funding to do customer acquisition have reduced dramatically.
So the pressure is on to acquire customers profitably.
However, this is good news for the best growing brands. With less competition for ads, since most have reduced spend, acquiring customers is now an opportunity (in fact, Facebook said in earnings price per ad has gone down 23%).
So it’s important to keep in mind that consumers are still spending, and finding opportunities to deploy customer acquisition spend in a profitable way!
What are some ways you are going to take advantage of this opportunity?