Shutterstock Product VP on E-Commerce Growth
Fill The Funnel: The Business of E-Commerce
During my career, I’ve been fortunate to work on some of the largest e-commerce platforms – including Etsy and Shutterstock. That said, I realize that these marketplaces are fundamentally different from a product perspective from many of the platforms that PMs work with today. With this in mind, I would like to start by taking you through the business fundamentals of online marketplaces and how they impact product development decisions.
First, it’s important to think about any e-commerce marketplace as a funnel. In other words, your primary goal is to fill the funnel with customers from a wide range of sources. For example, you’re not going to focus on just one potential stream for customers. Instead, you’re going to target as many different customers as possible. The reason for this is that marketplaces will offer different value for many different customer segments. As a result, it’s important to cast a wide net and not focus on one user profile.
To expand on this premise, you need to understand that e-commerce is all about low-volume / high-value transactions.
In other words, you’re not going to monetize a large volume of clicks / scrolls / views as you would on a social network. Instead, your ideal outcome is a person who ultimately makes a transaction by paying for something and becoming a customer. That said, this is not an easy decision to drive. Said differently, it’s much easier to get someone to casually “check in” on a social platform than it is to commit to buying something on a marketplace.
Ultimately, people aren’t “hanging out” at an e-store. As a result, product managers must be very mindful of the point-of-sale experience to drive customers toward a purchase decision. Furthermore, user re-acquisition and retention are critical for e-commerce businesses to thrive. Simply put, you’re already at a customer deficit – so holding on to long-term customers will ensure long-term success.