eCommerce as a Revenue Driver
Economic considerations to make your eCommerce channel profitable
As the holidays approach, expect an influx of gift purchases across the next few months — an annual event that’ll only be heightened by the post-COVID e-commerce shopping boom.
Even more so, broader delays in global supply chains are trickling down to affect availability and shipping for e-commerce brands across all segments. Our recommendation? Beat this year’s slowdown by getting a head start on your seasonal campaigns, promotions, and more.
We’ve laid out four steps below that every alcohol brand should take to beat the annual gift rush, while also maximizing the profitability and potential of this concentrated shopping period.
Step One: Time Blocking
First, you can start building out a major messaging campaign by looking ahead on your calendar and selecting key dates to lay out a time frame from early November up until Christmas.
Specifically, we recommend blocking out three primary phases for your campaign delivery.
Pre-Black Friday
By pushing messaging campaigns out as early as mid-November, you’re gearing folks up for the holiday season around the corner, as well as letting potential buyers know to keep an eye out for a promotion in the works.
More importantly, you’re setting your brand up to start the season on a strong note — and to not get caught unprepared by the sudden arrival of Thanksgiving crunchtime.
Thanksgiving & Late November
From Thanksgiving onward, particularly that first weekend including Black Friday, you’ll want to host and advertise some kind of actionable event, i.e. a special release or promotional discount, to jumpstart customers into their seasonal shopping cycles.
Cutoffs for Christmas
Finally, you’ll want to round out the season by selecting a cutoff date for placing new orders.
Seven to 10 days before December 25th is a safe bet for buyers to receive a bottle at their door by Christmas Day, and reminders should be sent out in the days leading up to this cutoff.
In terms of the broader time crunch that’s anticipated due to global supply chain slowdowns, you should emphasize the convenience of purchasing from a domestic brand paired with the reliability that you offer for a timely, safe delivery of your product.
Step Two: Spice Up Your Specials
Once you’ve laid the initial groundwork, it’s time to elevate your campaign by crafting it into something creative and exciting for the spirit of the season.
In other words, your buyer’s inbox may be flooded by holiday deals, but you can capture their attention and help them recognize the thoughtfulness through your core brand messaging.
For instance, Far North Spirits is offering a holiday two-pack for drinks that’ll warm you up in the colder months. Imagine a whiskey, rye, or bourbon for your spicy cocktail or mulled wine.
Ultimately, you’re working with the inventory you have and considering which themed products can play into people’s holiday spirit — even better if it’s in a bundle to boost your AOV.
On the other hand, this period offers a practical opportunity to look back at the year’s releases and offload any remaining inventory through a unique discount or exclusive holiday promo.
Step Three: Ramp Up Your Promotion Game
Next, consider the tactical logistics of your promotions. After all, it can be tricky to time promo launches, depending on whether your customer pool skews toward early or late gift grabbers.
There are two general approaches you can take: 1) offering enticing deals early on to preempt other sales or 2) holding off until late in the buyer’s window to pull the trigger on your promo.
The former can snag early shoppers, or at least convince late shoppers to try an early purchase, but could also lose its appeal by mid-December when fresher deals are dropping every day.
The latter can appeal to buyers who play the long game and wait it out for the most optimal deal, but can still ultimately result in you losing out on early or average shoppers.
Ultimately, there’s no gold-standard method and you’ll need to use your judgement depending on what aligns with your brand’s target demographic, metric goalposts, and even inventory.
For instance, returning to your campaign calendar, you can skew discounts away from marking down products and toward offering cheaper, faster shipping as Christmas creeps closer.
Step Four: Email Marketing On Deck
As we pointed out in our advice for email marketing, setting up your email flow so your comms can run seamlessly is a simple yet essential step of the process that’s easily overlooked.
We recommend starting with a quick info sweep: pull last year’s seasonal purchase data and make sure that customer cohort is consistently re-engaged early on.
In turn, your team won’t be stressed out and frantically attempt to piece together the perfect layout in MailChimp just a few days before Thanksgiving — which circles back to our larger point: the holidays are a time of year with promise of high ROI for your alcohol brand.
You can utilize this opportunity to the max by planning thoroughly and creatively, not stressfully executing a last minute, makeshift campaign.
If your brand has these moving parts staged within the first weeks of November, you should be ready to hook the earliest seasonal shoppers and take full advantage of the holiday rush.
Sit Back and Enjoy the Holidays!
Once you’ve got these steps locked in — a killer campaign calendar, creative promos, and ready-to-launch email marketing — you’ll be the one leading the holiday rush, not falling behind.
Whether your user base is composed of individuals shopping for friends and family or corporate customers with high-volume needs, Accelpay is the platform of choice for your alcohol brand.
To get access to our instant storefront setup and stress-free bulk ordering, get started here.
After last week’s posts outlining some of the costs and complications that can come with eCommerce fulfillment in the bev alc industry, we received a flood of requests for more information on how to further optimize the channel. Below is a rundown of the most common advice we give our 600+ suppliers using the AccelPay platform.
More SKU’s = More Problems and /= More Revenue
The most successful sites tell a clear story, have a clear purchase path and limit opportunities for customers to get distracted and lost. Analyzing AccelPay's hundreds of brand customers and hundreds of thousands of orders, it’s clear that offering 3-4 SKU’s is the sweet spot.
That’s enough variety to create bundles and pairings to drive up cart value, but not so much that it creates decision fatigue or OOS / supply chain issues.
The worst product is one that sits on the shelf for more than 10 -30 days.
Each of those bottles was ordered with somewhere between 10-30 day payment terms. A dusty bottle is one that represents tied up capital that can’t be used to purchase something else that might turn over 2-3 times within a payment period.
We often have brands that want to represent their full catalog on their website, if that catalog has 10 skus and the retailer has to bring in 1 case of each of those skus before the site is even live then it represents a significant financial commitment.
There’s an even bigger issue of OOS at distribution. We all have frustrations with distributors at times, but being in the middle of the chain it’s harder to respond to consumer trends.
Making it easier for all tiers involved, by limiting your sku count (at least to start), experimenting with bundles and new products throughout the year, and keeping the supply chain simple is the easiest way to make sure your channel is healthy and fulfillment complications are kept to a minimum.
Determine your budget first
Brands run promotions and campaigns without a clear budget in mind. If those campaigns require a relatively high marketing subsidy and those campaigns are wildly successful, then they could end up with unanticipated marketing bills.
In the last holiday season, we have had two brands with hugely successful eCommerce campaigns that ended up with $40K+ marketing bills. This is perfectly normal for many of our brands, and if planned correctly will result in positive ROI. However, in both instances these new-to-world brands underestimated their demand, over spent on fulfillment subsidies, and not allocated budgets correctly.
Brands should look at both budget line items and determine how much they want to invest in marketing, knowing their consumers and building those relationships. They can work with AccelPay to develop campaigns that are first-order profitable, so there’s a positive ROI for their efforts.
Understand your unit economics
Every day we speak with brands that don’t actually understand their COGS
For example, we worked with a large multi-national beer brand that, until speaking with us, was unaware that they were spending more to fulfill eCommerce orders than they were making off of it. When a brand knows the profit from a single unit or case, it makes it easy to create a long-term, viable eCommerce program. AccelPay has walked clients through this a hundred times, and there’s several marketing partners that we work with that can create this out easily with you in a spreadsheet.
eCommerce can be a legitimate, non-trivIal revenue driver for brand, not just a marketing-expense, if you build your model from the ground up, based on your COGs.
Create a Listing that’s Profitable
Once you know your budget and unit economics it’s time to shape your desired cart. Most 750ml bottles or 18-24 packs are solid candidates for single-unit orders. It’s just a matter of making sure the COGS are in balance with your revenues.
Lets look at this example:
Canned RTD brand A has a DTC price of $22/4 pack.
- The retailer purchases those 4 packs for $15.39 (30% margin).
- That is a $6.61 gross profit per 4 pack.
- Most retailers use a rough calculation of $6 fixed cost per order to fulfill (box, overhead, platform fees) that means if a retailer was fulfilling an order for a single 4 pack they would make $.61/order.
- The remedy for this is to set a 2 x 4 pack minimum order which allows the fixed costs to be absorbed by the first 4 pack and the profit to be realized on the 2nd.
- It’s not hard math.
You now know your COGS and your individual order economics. Put these two datapoints together and you know how much the brand stands to make off of each order when originally sold to the distributor. You can then factor in how much could be invested to grow the channel to meet your goals.
Conclusion
The single most complained aspect of eCommerce is fulfillment costs. AccelPay’s been able to drive costs down with its partnerships with Gopuff and Doordash for local on demand delivery, as well as our Dynamic Shipping Reduction (DSR) program. Regardless there’s some fundamental unit economics to make this channel work that every success brand in our platform considers as they launch their digital experience. As always, reach out to success@accelpay.io to talk more.
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Braxton Freeman
Grolsch