The Truth about email marketing in eCommerce

The problem with email marketing is that it’s often sold to eCommerce companies based on totally misleading incentives.

Email agencies sign clients by saying they’d increase their email marketing revenue by 30% by setting up their flows and campaign calendar… BUT, a large percentage of that 30% would have been generated regardless of any email.

Consider that The welcome flow has one of the highest open & click rates of all emails, and usually the most revenue coming thru it. Most first time conversions occur within 24 hours of signup. So was that really “GENERATING” that revenue? Or does requiring people to leave the website and grab their coupon code in the welcome email simply act as another touchpoint in front of sales that would have happened regardless and taking generative credit for them?

My point is that email marketing in eCommerce is less about increasing customer retention and more about sending relevant communications when it’s most likely to affect a conversion.

Retention might be one of the biggest myths in ecom (I used to be fully bought in until I realized this…) 

Marketers cannot control for retention to the degree they like to say they can.

Retention happens when timing + need + perceived value + relevant communication during likely buying cycles are all aligned.

Saying that more emails means higher retention is neglecting timing, need, and perceived value. No email marketing campaign will make someone need or use more of your product. THESE ARE NOT THINGS MARKETERS CAN CONTROL FOR. AND EVEN IF YOU COULD, the reality is that consumers buy several similar products from COMPETING BRANDS which you CANNOT MAP FOR.

All you CAN do is send relevant content during periods most likely to affect a sale based on your brands confidence intervals. Email marketing is about long-term incremental gains, not quick wins. Only about 30% of customers (and decreasing) are returning customers across most ecom brands. People are loyal to discounts more than brands with like 50-100 exceptions. Most brands cannot compete with legacy brands on price or budget alone anymore due to increased costs of doing business and competition.

Email and sms marketing is not generating 30% of revenue, it’s just taking credit for 30% of the revenue based on last click attribution.

And the cold reality is that oftentimes the incremental gains aren’t worth paying an agency $4k per month for most small-medium DTC brands. So next time you hear your favorite email ninja talk about how they can magically increase retention rate and generate additive revenue, ask them about the type of holdout tests they run for clients to prove out the incremental impact of their service. Chances are they won’t be doing that because it would throw a monkey wrench into their entire business.

Anyways, what’s the matter with all this? Can’t you just be better at marketing? Of course, but the point is, there’s no business long term in commoditized skills that are easier than ever to set ups and automate with AI. Email marketing can be done with less resource allocation than what was required a few years ago.

In fact, I made an entire AI email marketing system for eCommerce brands that can build your campaign calendar for a months worth of email campaigns AND create drafts for all your flows - all in more than half the time it would take your agency:

That brings me to a broader consideration… What’s really going on behind the scenes in the ecom space?

Well as of late, a lot of brands have been going under like sinking submarines. Even brands run by agencies known for getting results are unable to make the numbers work amidst rising costs, increased commoditization due to globalization renders most consumer goods a sea of the same. The unit economics given the costs of ads and the cost of doing business in relation to the fiercest completion the space has ever seen creates a huge challenge for everyone in the space.

So what does it come down to? Who will be the winners? It’ll be those with existing audiences to sell into and those with manufacturing advantages (think celebrity-ran brands and legacy companies with manufacturing leverage.

AKA, distribution and production.

Companies overseas are ripping off huge name brands and selling for a fraction of the price, which leads to manufacturing overseas who have a stronghold on production, which leads to an uphill battle as long as consumers continue to buy the cheapest option that meets their quality standards (hint: they will).

So then it becomes a race to the bottom where those who earn the most profit are not the brands but instead shipping, manufacturing, softwares, media channels, even agencies:

• Ads teams incentivize brands to spend more so they can say they managed x spend at x ad spend.

• Email teams add friction to the customer experience so they can take credit for sales that would have happened with or without their email (by gaming an opt-in in exchange for an offer)

So what does the future of this space look like with economic shifts, globalization and AI curtailing the net value of traditional agency services?