AOV is the key to success
Tanner Larsson is a serial businessman that has worked for his entire career building a reputation in the field of e-commerce. Therefore, it may be shocking to find out that this expert on e-commerce believes that online stores shouldn't be around.
If Larsson had not been as successful business coach, it could appear easy to dismiss his methods. However, the truth is that Larsson is the founder of the highly popular e-commerce educational company Build Grow Scale, which has allowed Larsson's students to achieve an estimated $75 million total product sales. Larsson is the founder of the exclusive Black Label mastermind group for the top sellers in the e-commerce industry. In addition, he is an author for E-Commerce Evolution: The Complete Guide to Building, Growing and scale a successful eCommerce Business.
The most important thing is that Larsson does the principles is taught. He's been involved in the world of e-commerce since 2001, and during this time, he's faced every affliction and challenge faced by anyone who wants to find the right path to success with online shopping. These experiences led him to believe that that sales funnels have a higher rate of profitability than online stores.
Larsson is now in the process of sharing the knowledge he's gained to the most people he can. "I have a skill set that is duplicable," Larsson says. Larsson. "People are achieving success with it. We continue to refine it. It's what I do 365 days a year."
The problem is E-Commerce Stores
According to Larsson E-commerce stores are to little more than catalogs. "They're not designed for conversions or usability," Larsson says. Larsson. "They're just designed to display products. It's why they have such a low conversion rate."
In reality, only five percent of the online sites have an average conversion that is greater than 3 percent, and the median rate is just a little over one percent. "It's just awful," Larsson says. Larsson.
Additionally, many e-commerce companies have difficulty getting customers to visit their website This is why the most common method of expanding an online store is to make utilization of advertising. However, with costs for media increasing, this is usually not an option that is cost-effective for businesses with lower conversions. "If you paid $100 to get people to your site and you earn less than $100 from those visitors, you have no opportunity to scale your traffic," Larsson adds. Larsson.
In the end, as far in Larsson concerns, the last nail to the coffin of e-commerce stores is have limitations in terms of average order value, or the amount customers pay at the checkout process. "With an e-commerce store, you're limited to getting [customers] to add more items to the cart or getting more of one product. A lot of the time, [customers] just purchase that one item. After checkout, that's it."
That means that many ecommerce businesses end up with an average order amount which is insufficient to allow them to spend money on advertising that scales and even earn profits. Therefore, they're forced to live off a sluggish existence without much opportunity to grow.
The antidote to E-Commerce Stores
Larsson isn't suggesting that the end of all gloom and doom with the world of e-commerce. Instead, he's suggesting online retailers shut down their stores and instead invest in planned sales funnels to increase sales instead also by using BigCommerce app.
"It's much more cost-effective to send traffic somewhere that's specifically designed to capture sales and maximize average order value," Larsson says. Larsson. "A sales funnel is designed as a continuing sales process that maximizes both conversions and average order value."
There are chances to increase conversions and the average order values at each phase within the process. Customers may move from the sale page to the checkout page, which offers an option to purchase a bump. After they've finished the purchase, they'll be redirected to a suitable sequence of upsells, for example an individual who has just bought an LED flashlight could be prompted to buy rechargeable batteries as well as the charger.
This strategy is derived from direct response advertising, and has has helped spread the notion that consumers are at their most open when they make purchases. "This puts you in an excellent position to float related offers," Larsson explains. Larsson.
And it actually is effective. Larsson says that sales pages that are designed to convert typically have conversion rates ranging from 8 to 15 percent. And when coupled in a funnel that is well designed customers can expect to spend 4x to 6x more on each order on average. With this increased average value of orders comes more profit, which can allow for an even greater investments in the acquisition of customers.
"We've proven over and over again that sales funnels are more effective than a store," claims Larsson. "They're more streamlined, provide higher revenue, and make acquiring customers easier."
Yet again, Larsson is quick to insist that this isn't just speculation. "There's no theory," Larsson says. "I'm not an academic or an ivory tower guy. Everything we teach [at Build Grow Scale] is backed up by in-the-trenches information complete with statistically relevant data." He's witnessed these principles implemented to a range of online-based brands including Fortune 500 brands, to major supplement retailers like Organifi to smaller companies, including seven- and six-figure specialty retailers.
"We've had crazy success stories and normal success stories," Larsson says. Larsson in a quote from the typical case of a student who changed from an online store to a sales funnel , and increased the sales of their store between $10,000 and $150,000 per month. "A proper e-commerce sales funnel is the fastest way to take a six or seven figure e-commerce store and add a zero to its annual revenue."
These stories of success are a major reason the reason Larsson is so dedicated to his job. He is passionate about helping his students get out of the monotony of their lives and develop a lifestyle that offers them more flexibility and pleasure. "I see so many people who work a job they hate or are working tons of hours trying to make ends meet, and I feel like they're missing out on life," Larsson said. Larsson. "There's nothing that makes me happier than helping somebody else design and build a business that allows them to live life on their terms."