What Have the Romans ever Done For Us?

Reg: All right, but apart from the sanitation, the medicine, education, wine, public order, irrigation, roads, the fresh-water system, and public health, what have the Romans ever done for us?

PFJ Member: Brought peace?

Reg: Oh, peace? SHUT UP!

Reg: All right, but apart from the sanitation, the medicine, education, wine, public order, irrigation, roads, the fresh-water system, and public health, what have the Romans ever done for us?

PFJ Member: Brought peace?

Reg: Oh, peace? SHUT UP!

We have been working with false prophets to deliver, well, no profits. Commerce and Retail has been, for decades now, chasing a North Star that is, at best a fallacy. We have these socially accepted norms as being the way "customers expect". I'm calling time on it. All votes are in but the decision is not unanimous. Who is to blame? Marketplaces. My bastion of hope has led us astray with false customer aspirations.

Differently The Same Individuals

Brian: Look, you've got it all wrong! You don't need to follow me. You don't need to follow anybody! You've got to think for yourselves! ?

You're all individuals!

Crowd: ?Yes! We're all individuals!

Brian: You're all different!

Crowd: Yes, we are all different!

Man in crowd: I'm not...

Crowd: Shhh!

We have been working with false prophets to deliver, well, no profits. Commerce and Retail has been, for decades now, chasing a North Star that is, at best a fallacy. We have these socially accepted norms as being the way "customers expect". I'm calling time on it. All votes are in but the decision is not unanimous. Who is to blame? Marketplaces. My bastion of hope has led us astray with false customer aspirations.

Differently The Same Individuals

Brian: Look, you've got it all wrong! You don't need to follow me. You don't need to follow anybody! You've got to think for yourselves! ?

You're all individuals!

Crowd: ?Yes! We're all individuals!

Brian: You're all different!

Crowd: Yes, we are all different!

Man in crowd: I'm not...

Crowd: Shhh!

Free Shipping For All

I do not remember any mass customer movement demanding that we have free shipping on all orders, for next day delivery. Amazon and to a lesser extent, eBay brought this in as an extension to their Trust lever. Remeber what Rick Watson said, you can trade on either "Trust or Price". Next day delivery, with the guarantee it will happen is a pretty big lever to pull when trying to grab market share. Better still if you wrap it into a prime bundle. I am sure somewhere along the way, there were some numbers crunched to suggest the average number of orders per year is less than the total cost of prime (which has gone 50% over the last 5 years or so my auto renewal bills show). There have been years where, I am sure that I am paying for your orders.

This became the norm - the vogue.

We all followed. It has become one of those accepted costs that has done some damage to the industry:

Created an unrealistic business objective for many (cost wise).

Suggests all consumers want this in all categories, all the time. - We don't. We just don't.

Brought a decade of conversations with carrier partners to a glib - how much lower can you get on cost.

Blessed are the CheeseMakers.

Man: I think it was, "Blessed are the cheesemakers"!

Gregory's wife: What's so special about the cheesemakers?

Gregory: Well, obviously it's not meant to be taken literally. It refers to any manufacturer of dairy products.

Fortuitously though, ZIRP dollars flowed throughout this industry in a hope to capture last mile money. Why? Little pieces of revenue on lots of orders - simple, right? Wrong. The industry has been forced, for the sake of retention to invest in building either OMS, WMS or CRM solutions to become sticky. Not to mention numerous and seemingly endless integrations. This part of our industry has now become sophisticated and has improved its foothold. Switching services still seems to be the norm, service levels now seem to be the problem. A human one - so this, can be fixed.

Free Shipping and Free returns should be paid for by the consumer. Your product should be able to support this, margin wise.

Could Be Worse

Centurion: You know the penalty laid down by Roman law for harboring a known [offender]?

Matthias: No.

Centurion: Crucifixion!

Matthias: Oh.

Centurion: Nasty, eh?

Matthias: Could be worse.

Centurion: What you mean "Could be worse"?

Matthias: Well, you could be stabbed.

Centurion: Stabbed? Takes a second. Crucifixion lasts hours. It's a slow, horrible [end].

Matthias: Well, at least it gets you out in the open air.

Centurion: You're weird!

Resellers are not in good shape. This, in part, is why #DTC seemed so good. More margin, right? Brand Building is expensive. DTC 15 years ago would have been an interesting concept, it still is today, but borne out of improved margins paying for all the other costs. Mostly, this should work, except we look east to manufacture and then we have got all these steps to get the product home. Then there is competition.

We learned, and forgot, a lot during COVID. The competitive landscape absorbed an enormous increase in the numbers of ecommerce led retailers and brands into the mix.

Determining the exact number of new e-commerce companies established during the COVID-19 pandemic in the UK, US, and Europe is challenging due to varying data collection methods and reporting standards across regions.However, available data provides insights into the growth of the e-commerce sector during this period:

United Kingdom:

• In 2023, online retail was the most popular activity for new businesses, with over 82,000 companies created in this sectors.
• Times and Sunday Times UK

United States:

• As of 2024, the U.S. hosts nearly 14 million e-commerce sites, reflecting a highly developed and digitally advanced economy.
• Doofinder

Europe:

• In total, 636,688 entities operate in e-commerce within the EU27, Switzerland, Norway, and the United Kingdom
• HIT Horizon

While these figures illustrate the expansion of e-commerce during the pandemic, specific data on the exact number of new companies formed solely during the COVID-19 period is limited. Nonetheless, the pandemic has undeniably accelerated the shift towards online retail, leading to a significant increase in e-commerce ventures across these regions.

Could Be Worse

We decided during this that this process was going to work, like we landed on some secret sauce no one had ever spoken of. There have been many businesses who have succeeded. But what is success after 5 years or even 10. Some of the worlds largest brands, particularly in CPG were slow to see the sense in DTC or ecommerce. What swayed this was perceived Shopper Insights. 90% of your customer base will not buy again and your conversion rate will not get higher than 3%. Back of the envelope maths only needed here. They, like many things don't add up. Consumers now though are gravitating to other things, subscription, grocery delivery both becoming a part of the weekly shopping routine for certain sectors of our society. But the jump into commerce was the wrong step for many. I expect a contraction for the sensible among you and then there will be those battling the juxtaposition of being "where your customers are".

Could Be Worse Maybe it coudn't be. Maybe this is rock bottom - we just don't realise it yet.

Art of Haggling

Brian: How much? Quick.

Storekeeper: What?

Brian: It's for the wife.

Storekeeper: Oh. Uhhh, twenty shekels.

Brian: Right.

Storekeeper: What?

Brian: There you are.

Storekeeper: Wait a minute.

Brian: What?

Storekeeper: Well, we're-- we're supposed to haggle.

Brian: No, no. I've got to get--

Storekeeper: What do you mean, "no, no, no"?

Brian: I haven't time. I've got--

Storekeeper: Well, give it back, then.

Brian: No, no, no. I just paid you.

Storekeeper: Burt!

Burt: Yeah?

Storekeeper: This bloke won't haggle.

Burt: Won't haggle?!

Brian: All right. Do we have to?

We have been sold this conversion rate promise for 20 years. 3% on average is not good enough, never was, never will be. We need traders. If you have not got a trading manager, you are leaving money on the table every day. What is a trader I hear you say? There is the exact problem. We have been hiring wrong for that first key hire and it is hurting us over and over again.

Lessons in Latin

Centurion: What's this then? "Romanes eunt domus"? "People called Romanes, they go the 'ouse"?

Brian: It — it says "Romans go home".

Centurion: No it doesn't. What's Latin for "Roman"? Come on, come on!

Brian: "Romanus"?

Centurion: Goes like...?

Brian: "Annus"?

Centurion: Vocative plural of "annus" is...?

Brian: "Anni."

Centurion: "Romani". "Eunt"? What is "eunt"?

Brian: "Go".

Centurion: Conjugate the verb "to go".

Brian: Ire, eo, is, it, imus, itis, eunt.

Centurion: So "eunt" is...?

Brian: Third person plural, present indicative. "They go".

Centurion: But "Romans go home" is an order, so you must use the...?

Brian: ?Eeeh, imperative!

Centurion: Which is…?

Brian: Uh, uhm, "ii"! "Ii"!

Centurion: How many Romans?

Brian: Aah! Plural, plural! "Ite"! "Ite"!

Centurion: "Ite". "Domus"? Nominative? "Go home", this is motion towards, isn't it, boy?”

Brian: Dative! Ah! Not dative! Not the dative! Aah! Accusative, accusative! "Domum", sir, "ad domum".

Centurion: Except that "domus" takes the...?

Brian: The locative, sir!

Centurion: Which is...?

Brian: "Domum"!

Centurion: "Domum". ?"Um". Understand?

Brian: Yes, sir.

Centurion: Now write it out a 'undred times.

Brian: Yes, thank you Sir, Hail Caesar.

Centurion: Hail Caesar. If it's not done by sunrise, I'll cut your balls off.

Brian: Finished!

Centurion: Right. Now don't do it again.

We have over complicated this. Added costs have crept in as somthing of a norm and we again accepted it as something that is right for our industry. Ads. Necessary evil and it has been a blood bath. But it is improving.

But the cost and mindset are ingrained. I asked our partner from StoreHero - Thomas Gleeson ?? for some insights. Am I way off the mark?

In terms of the benchmarks for COGS or Gross profit?for many of the StoreHero brands, these typically break?down into 2 clearly defined buckets. Brands, that?control their own supply chain and sell their own branded products and brands that are resellers of more established? brands. The former typically?has gross margins?of 55-65%, anything over 65% puts you in such a strong position to play the paid media game at scale. You need more margin points to be able to market yourself to create the demand for the product.?

The?latter, brands that are resellers of more established brands are typically operating?on a full loaded gross margin of 25%-35%. These brands, have much lower margin to play to paid media game, but naturally are selling brand's?that have global?awareness eg Lifestyle sports selling Nike runners.?

Below is a make up of a sample brand:

If we go back 4 years, ad inventory was really cheap?as everyone was at home on their phones and physical retail was closed. This was GRRREAT?for ecommerce, but, it has unfortunately?bred some terrible habits?and expectations into the brands. As the world re-opened?and ad inventory has got a lot more expensive there is margin compression across the board.?

The rock bottom ad costs of 20-21 are a pipedream?right now, and the focus has gotten back to brands growing profitably and sustainably, the growth at all costs mindset doesn't fly in a world where interest rates are much higher?and Meta CPM's are up 30-40%.?

?We hear it everyday that?Meta and Google are money grabbers and making it impossible to do business online, and while there is certainly truth?to that statement, there's?a lot of things that brands can do to improve?their COGS & Gross margin in order to set yourself up correctly. Some?of the biggest culprits?of margin waste are ill thought discounts being thrown around, the free shipping and unlimited free returns policies (many of which are now rescinded) irrespective of your AOV.?

Put Simply, it is down to you to control your controllables.

There are more relevant places to go an place ads, we just have not had these chances before. CPG, as mentioned above is building there own ads industry, blindly, funding the Retail Media world. This is not something a customer asked for, outside of us industry nuts, not one person I know has ever said, "Do you know what would make my shopping journey better? Relevant ads. For many shopping is a chore and for the few a ritual of socializing. Sure, we had malls to hang out in, but this was to be social or catch a movie or food. Shopping was the vehicle.

Completely Pointless - It's Shopify's fault but the Competition are Lazy

Reg: Right. Now, uh, item four: attainment of world supremacy within the next five years. Uh, Francis, you've been doing some work on this.

Francis: Yeah. Thank you, Reg. Well, quite frankly, siblings, I think five years is optimistic, unless we can smash the Roman empire within the next twelve months.

Reg: Twelve months?

Francis: Yeah, twelve months. And, let's face it. As empires go, this is the big one, so we've got to get up off our a****?and stop just talking about it!

Loretta: I agree. It's action that counts, not words, and we need action now.

Reg: You're right. We could sit around here all day talking, passing resolutions, making clever speeches. It's not going to shift one Roman soldier!

Francis: So, let's just stop gabbing on about it. It's completely pointless and it's getting us nowhere!

Loretta: I agree. This is a complete waste of time.

More than most Shopify have done alot for the industry, making it cool, simple, accessible. Huge credit is to be given to them but they should not get off lightly. They have brought pricing down to baseless, small numbers. Value is all but eroded and "cost prevails."

Starting at $39.99 for access to commerce is staggering. Still, when I think about it, i get chills, a la John Travolta. They have leveraged access but limited the cost of every other piece of software to be be monthly and less than $50 bucks. The devaluing of amazing technology is interesting because now our profile of costs is in a much narrower window and our expectation for what it can power is way too high also. Another false economy.

This is not a doomsday email but when I look at the areas for improvement in an industry looking for better answers, I think we need to ask better questions. But fear not, there is hope. We are but, at day 1.

The consumer is not tapped out.

There is still growth in Ecommerce

We have done the research so you don't have to.

You can download for view on the 5 Forces Impacting commerce here.

So what to do?Always look on the Bright Side of Life.

Man: Cheer up, Brian. You know what they say: some things in life are bad. They can really make you mad. Other things just make you swear and curse. When you're chewing on life's gristle, don't grumble; give a whistle, and this'll help things turn out for the best. And... always look on the bright side of life...