Lessons from OWN IT: how to scale an ecommerce and retail business
High competition, logistics, customer retention, and maintaining satisfaction are the everyday challenges of running an ecommerce business.
As an entrepreneur, how do you navigate these challenges, carve a niche for your brand, and scale your ecommerce business efficiently?
During OWN IT, Klaviyo’s 3-day virtual ecommerce summit, Nik Sharma, CEO of Sharma Brands, and Moiz Ali, founder of Native, spoke with Kyle Cooke, CEO and founder of Loverboy, in a special-edition episode of their podcast Limited Supply about what it takes to build and grow an alcoholic beverage business that’s disrupting industry standards.
Setting the context for Loverboy’s rebellious strategy, Cooke explained, “selling alcohol is challenging because of the legally binding 3-tier system where the supplier needs a wholesaler to get the product to a retailer. So, even if there’s consumer demand, it doesn’t mean wholesalers understand your business.”
Even if there’s consumer demand, it doesn’t mean wholesalers understand your business.
Unlike other alcohol brands, which funnel money into advertising, Cooke believed that by building a strong foundation and continuing to demonstrate consumer demand for the Loverboy product, he would slowly but surely win over wholesalers and retailers—and, eventually, online consumers.
Cooke shared some interesting insights from his journey scaling Loverboy, a bootstrapped brand, to $40M in sales as he sets his bets on quadrupling this year.
What is scaling in ecommerce?
Scaling in ecommerce refers to expanding an online retail business to manage higher sales and demand. It involves optimizing operations, technology, and content marketing to ensure efficient growth while maintaining customer satisfaction.
This often requires investments in infrastructure and resources to support increased business activity and market reach.
8 strategies for scaling your ecommerce business
Scaling your ecommerce business is a critical step toward achieving long-term success and profitability. Based on Loverboy’s journey, here are 8 tried and tested strategies for scaling up in the ecommerce space:
1. Nail your product-market fit
To build a successful brand, you need to have a product that meets an existing market need along with a brand story that’s honest, transparent, and reflective of your brand’s personality.
Launching an influencer-backed brand takes more than having a huge follower list. The reality show, Summer House, gave Loverboy an air of authenticity and a much-needed edge in the undifferentiated alcohol market.
Cooke explained how he carved a niche for Loverboy. “When we started, every alcohol brand looked the same,” he recalled. “Even hard seltzers, which were a new product, were all in white cans with no story. The liquid was almost the same, going from one brand to another.”
Identifying an opportunity to create a brand with a story—one that isn’t pigeonholed into a single category—Cooke sought to create a beverage that was fun to drink but also offered nutrition benefits. “I wanted our sparkling ready-to-serve (RTS) drink to be a lifestyle brand—a zero-sugar, premium beverage formulation in a can that appealed to women,” he explained.
I wanted [Loverboy] to be a lifestyle brand.
2. Build proof of concept
Before you look to raise funding, build a solid foundation and invest in a minimum viable product to get it to a point of relative success.
Cooke, for example, self-funded when he was ready to launch. “I’d advise anyone, don’t spin your wheels trying to send around a pitch deck initially,” he said. “Whatever you’re building needs to be more tangible before you do that.”
After a year, Cooke set out to raise $1M. “We were oversubscribed, so I actually had to stop at $1.25M when we soft-launched in New York in 2019 before the other markets, just to make sure we had proof of concept,” he explained.
Building proof of concept is also a way to identify and address potential risks and challenges early on, while saving you time and resources and preventing potential failures in the long run.
3. Establish a DTC presence for your brand
While there are a variety of different ecommerce business models, one advantage of establishing a DTC product line is that it means your brand is where the people are—online.
Cooke explained this from an alcohol industry perspective: “The only way to do true DTC in alcohol is to sell wine. We needed our products to be classified as wine products to jump over the wholesale and retail requirements.”