Key Takeaways from Nicola Clement’s Session on Ecommerce Profitability

Sydney, July 18, 2024 — Nicola Clement, CXO at Adore Beauty and advisor for Insider, delivered a compelling session on optimising e-commerce profitability at Insider’s Growth Makers Club event. A self-proclaimed “profitability evangelist,” Clement highlighted the critical importance of prioritising profit over vanity metrics like sales.

Ecommerce Sales: A Vanity Metric Clement argued that in the current economic climate, characterised by high acquisition costs, inflation, and increased competition, focusing solely on e-commerce sales is no longer sufficient. She stressed that profitability is paramount for sustainable business growth.

Shifting Focus to Profitability Optimization Instead of solely focusing on conversion rate optimisation, Clement advocated for profitability optimisation, which involves a holistic approach to improving Earnings Before Interest and Tax (EBIT). This encompasses scrutinising operational costs, marketing and channel costs, tech costs, and people costs.

Understanding EBIT and Benchmarks Clement explained the concept of EBIT and provided industry benchmarks for evaluating profitability. She highlighted the importance of understanding industry-specific EBIT norms and running one’s own race.

Operational Costs: A Deep Dive Clement encouraged audience to meticulously analyse their operational costs, breaking them down into granular detail to identify areas for optimisation. She shared a case study where a detailed cost review and supplier negotiation led to a significant increase in profitability.

Marketing Channel Costs: A Profitability Lens Clement stressed the need to evaluate the profitability of each marketing channel, including marketplaces. She recommended separating costs by channel and using a return on ad spend (ROAS) model to make informed decisions about channel allocation.

Tech Costs: Auditing and Simplification Clement challenged businesses to critically assess their tech stack, highlighting that a bloated tech stack with redundant or underutilised tools can significantly impact profitability. She advocated for simplifying the tech stack, auditing contracts and licenses, and exploring opportunities for consolidation and renegotiation.

Clement’s session offered practical advice for e-commerce businesses to navigate the challenging economic landscape. She emphasised that profit, not just sales, should be the ultimate goal. By meticulously analysing operational, marketing, tech, and people costs, businesses can identify opportunities for optimisation and drive sustainable growth. Clement encouraged the audience to challenge the status quo, embrace a data-driven approach, and prioritise profitability in every business decision.

For more insights and strategies from industry leaders like Nicola Clement, stay tuned to Insider’s newsroom.

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