Four Myths of Ecommerce

Any industry that experiences such rapid growth in a short period of time is an easy target for false assumptions. Sales in every category are skyrocketing! No, some are tanking. Sponsored ads in marketplaces are the only way to get new customers! No, there are other proven methods. It can be easy to get lost in the advice and short-term data trends.

Below are four ecommerce misconceptions that we often see and hear – and what the truth is, from our experience working with over 150 brands on our platform.

Myth: All SaaS platforms connect data automatically.

When you first set up your ecommerce tech stack, all of your data will automatically integrate across functions (sales, marketing, ops, finance) and channels (Amazon, Walmart,Shopify, etc.)

Truth: Your data doesn’t automatically start working together.

All too often, data is trapped in black boxes, siloed from each other and hence not effectively working together towards a common business outcome.

Myth: Demand planning in the current volatile consumer market is impossible.

We all saw the effects of uncontrollable world events on product demand. Some companies struggled to meet increased demand, while others saw it plummet.

Flip-flops are a great example. Searches for flip-flops online surged 53% in June 2020, as COVID-induced lockdown and work from home clothes meant people were dressing more casual. Denim sales tanked as those same flip-flop wearing professionals opted for stretchier pants.

Truth: You can get up to 90% accuracy in demand forecasting.

You just need the right data and AI-driven insights that tie together external factors like the economy and current events with internal factors like advertising campaigns and price promotions.

Myth: Return on Ad Spend (ROAS) is a solid indicator of my success online.

If I’m spending $1 and my advertising platform or partners shows me that I’m getting $2 or even $4 in return, that’s a good thing, right?

Truth: ROAS doesn’t give you the full picture.

You might be getting more money back than you’re putting in on sponsored ads on some products, but not others. Depending on your sales volume, the low-performing SKUs could sabotage your overall success.

Additionally, ROAS doesn’t factor in all of the other costs that you might see across different marketplaces, nor does it “connect the dots'' across all areas, such as finance or retail operations. In the image above you can see how many different variants there are that one single metric cannot consider! Read more about our take on ROAS here.

Myth: Selling more products means making more money.

An increase in revenue always translates to an increase in profit, right?

Truth: Not always.

The many costs of doing business online can erode your margins. In some cases, you can easily be losing money on each sale – and not even know it until it’s too late!

Being able to see one complete picture of your ecommerce business enables brands to make tactical and strategic actions to increase sales and grow profits across digital marketplaces, in time for it to matter. To learn more about how Tradeswell can help your brand succeed, let’s talk!

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