How Ecommerce And Tech Companies Can Learn From Each Other Direct-to-consumer brands and Saas companies have more to learn from each other than you might think.
By Patrick Frank •
Opinions expressed by Entrepreneur contributors are their own.
There are lessons to learn every day in the business world. Often, we find ourselves looking to companies in our industry or vertical for winning examples and strategies. This is a great habit, but sometimes you have to look beyond the familiar to find new unique approaches to growth that you can adopt.
As someone who wears many hats and has been part of all different types of online startups — from SaaS healthcare platforms to an ecommerce brand that makes wild pool floats, consumer real estate market places and even card games — I have come to realize that everything and everyone has something to learn from each other.
Nowhere is this truer than in the sometimes disparate worlds of SaaS (software as a service), technology companies, and direct-to-consumer ecommerce companies. Besides the key differences between software and physical products, the way these companies operate can be opposites. Sometimes you need a foot in both worlds to realize how much two industries must learn from one another.
Building brand loyalty
Ecommerce has traditionally been hyper-focused on building brand loyalty as a means to grow. This should always be a priority, with a reported 72% of global customers saying they feel loyalty toward at least one brand or company. These businesses build loyalty with referral programs, freebies, rewards, stellar customer service and all-around great engagement. While each of these perks can apply to tech companies, too, building brand loyalty within SaaS tends to happen more organically through product innovation and efficiencies.
The first lesson tech can learn from ecommerce is that intentionally building a brand to earn loyal SaaS subscribers is critical for retention. That means innovating specifically with user feedback in mind, which can be even more effective when customers and clients are closely involved in the personalization of a platform. That way, these customers graduate from passive users to being completely dependent on what you have built for them.
In SaaS, there has been a movement to open development, which allows users to determine the next best features that should be created. This builds a brand and loyalty, as they feel part of what you are building and stick around to see their ideas come to life. Put a cherry on top, and don't be afraid to throw the odd piece of free merch for great product feedback. On the flip side, ecommerce can learn from its tech counterpart to branch out from the brand loyalty route and adapt its core products to meet market needs.
Related: How This New Style of E-Commerce Transforms Online Business
Scaling up
When we hear about tech companies rapidly scaling, it's often due to Moore's law of network effects — which refers to when more usage lends itself to a better overall experience and greater value for all users. In other words, the more players, the more winners. This allows tech companies to receive free, organic advertising when active customers bring more users to the platform.
In contrast, when you look at ecommerce companies, they have historically scaled through advertising campaigns. That's where the next lesson comes in: ecommerce companies need to learn how to better leverage outside resources. This includes partnerships with influencers, ambassador deals, capitalizing on positive word-of-mouth chatter, and prioritizing organic sales through referrals.
It's easy to get stuck in a digital bubble with ecommerce, where blasting out digital ads and social media promotions en masse into the ether feels like the ceiling. But ecommerce companies thrive when the digital world meets the real, and they can learn a lot from the time and attention tech companies give to their users.
Related: 5 Dos and Don'ts of Scaling Your Tech Startup on a Budget
Efficiency
Every business strives for efficiency, but ecommerce can teach tech companies to be especially lean rather than overly focused on headcount and headlines. For example, ecommerce brands use various tools to outsource human needs to help their companies scale faster. Examples include software platforms for inventory management, data entry, automation, virtual assistants, analytics add-ons, remote website developers, AI customer service and much more.
Ecommerce companies don't run day-to-day operations the same way your typical brick-and-mortar store would, meaning efficiency isn't a preference but a necessity. Tech companies should learn to leverage their own internal tech stack of partners — your software and technologies needed to run your platform — which can also turn into a referral network.
SaaS has been affected by the recent shift in the market demanding massive cost-cutting, leading to recent layoffs with companies getting more capital-efficient and profit-focused rather than growth at all costs. Ecommerce tends to stick to the basics and is naturally required to be profitable to operate. This is crucial now that the market has shifted, and all eyes are on tech companies' financials, not just their growth.
Related: Hack Your SaaS Growth With These 3 Easy Strategies
Synergistic teams
Ultimately, it still comes down to the people when we put aside the tech logistics and business jargon. Yes, we may be reading headlines of AI and automation getting better and more intelligent by the day, but there are no signs of it replacing the core roles just yet. Both ecommerce and technology companies need to leverage the strength of a synergistic and aligned team that can move fast, efficiently, and innovate. The founder's role should always be to steer the ship in the right direction, keep it on course, promote the company, and gain notability.
If there's one thing I've learned, scaling up doesn't happen when you stick too close to the book. Think outside the box, operate like every dollar spent comes from your life savings, and it will push you to get scrappy and force innovation. Some of our most valuable lessons can be right in front of us, primed and ready to be applied in a whole new business setting waiting for lift-off.
