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April 14, 2021
Ecommerce is the business golden-child of our era—over the past year alone it’s experienced spectacular growth and is tipped to hit a cool $6.54 billion by 2023.
This expansion has gripped companies all over the world: these days 45% of US businesses, 60% in the UK, and 66% in Australia sell overseas. The number of online buyers is rising each year too, predicted to reach a whopping 2.14 billion in 2021.
With so much money up for grabs, it feels like everyone’s after the secret to securing the top spot.
But there’s a pressing question on the minds of eCommerce sellers:
Will a linear or exponential growth model give the greatest odds of success?
Both models are powerful but there are some major differences, and they both come with a unique set of advantages and pitfalls.
Choosing the right one for your goals will put you on the path to scaling over failing, so let’s dive into the debate to uncover which model will help you fulfill your eCommerce dreams, along with some real-world case studies to keep you inspired on your journey.
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The linear growth model (aka pipe model) takes a more ‘slow and steady’ approach. It’s simple to grasp and is the first choice for many eCommerce owners—which is probably why it’s the more popular of the two models.
Here’s how it works:
Businesses using the exponential growth model shoot for the stars. 🌟
They aim to 10X their value output, growth and reach by continually releasing new products into the market.
Some businesses combine the exponential growth model with lean methodology to scale faster and more efficiently. It’s an exciting approach that keeps your company fresh and on the pulse of current trends. It also enables you to grow your business by using customer feedback to optimize products.
The exponential growth model involves a race to the top to be the quickest to market. Often whoever reaches the market first with a killer product gets the most significant reward.
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The great thing about these models is that although the linear vs exponential functions differ, you can make a killing with either.
Whether you’re successful depends on many factors like your resources, experience and timing, and whichever model you choose can change as your store evolves.
Problem is, these facts tend to breed confusion as eCommerce sellers try to figure out which camp they fall into.
Both the linear and exponential growth models can be wildly profitable, but neither is perfect. Let’s take a look at the upsides and drawbacks of both:
We couldn’t round off the linear vs exponential debate without sharing some real-life eCommerce businesses that use these models to crush their growth.
Let’s take a closer look:
This brand started as a supplements dropshipping business before switching into producing its own gym wear in 2013. With the help of the exponential growth model, Gymshark built itself up to become an eCommerce Titan, growing at a rate of 193% for three consecutive years with an envy-inducing value of $1.3 billion.
It’s secret? Social media.
Gymshark began by sending merchandise to well-known bodybuilders and invited them to become brand ambassadors. Noticing that their influencer marketing campaigns were gaining traction, they doubled down on their efforts. Instagram was a major marketing avenue that helped Gymshark enter multiple countries at once, and they now ship to an impressive 131 countries.
Gymshark’s results make a strong case for the exponential growth model, quite literally. 💪
This success story started with one product: apple cider vinegar gummies (who knew?), and a strategy that resembled the linear growth model but is actually a hybrid approach.
Goli launched its product in the US, but technically made it available to the world via Amazon and its eCommerce store. It marketed the flagship product through influencer campaigns using testimonial style videos and photos, high profile PR, and a concrete email marketing strategy. Plus, the company encourages bulk and repeat orders through various discounts and promos.
It worked. In less than two years, Goli has become a showstopping success, experienced exponential growth, and developed a cult-like following.
Goli is now an Amazon best-seller, the biggest health product SKU worldwide, and its new spin-off Ashwa gummy reportedly sells 200 bottles per minute.
Goli succeeded because it saw a major problem and ran with it. They’ve zapped the pain out of consuming bad-tasting but nutritious substances (and if you ever try apple cider vinegar, you’ll understand why this product is total genius!). 👌
This next brand kicked off using the linear business growth model, and was an instant success. SkinnyMeTea launched in 2012 with one product: cleansing tea.
They tapped into the popular trend at the time, the ‘teatox’, and combined it with the power of Instagram influencer marketing and high-level engagement, to go from $0 to $600,000 in sales each month in the first six months.
While there was no opportunity to cross-sell or upsell at the time, the volume of customers and sales SkinnyMeTea acquired each month offset any missed opportunities. They forged a tight knit community around their product and built such a large customer base that their sales soared to $1 million in their first year of business.
SkinnyMeTea has now branched out of Australia and launched more products. Not bad for a brand started by eCommerce entrepreneur Gretta Van Riel when she had just $24 in her bank account.
Whether you choose to go down the linear growth path or opt for the exponential growth model, there are a few universal tips you should follow to become the next ‘it’ brand.
Let’s break these down:
Congrats, you’ve launched your brand! 🙌
Here lies one of the few opportunities in life where you have full permission to be a total control freak, so give it all you’ve got.
Control everything in-house, from product development to after-sales care, as early as possible in your eCommerce journey. Each time you add an external party to your supply chain, you make it more vulnerable and put your business at risk of issues you may not be able to fix. For example, if your third-party logistics company (3PL) suffers a flood that destroys all your stock and makes operations grind to a screeching halt.
To give you a real-life example, we needn’t look further than Gymshark. One of the ways Gymshark was able to gain early success was by locking down its supply chain. Gymshark manufactures its own designs and sells them on a custom website. Plus, it’s even got a warehouse and ships every product in-house to ensure they stay on-point in every area.
Basic software, aged laptops, and clunky processes may have sufficed initially, but they can only take you so far.
Ecommerce is a fast-paced world, and you’ll need to keep up to succeed.
It’s always a good idea to look to other industries for inspiration on how to become more efficient and productive. Commit to updating your SOPs regularly to ensure it doesn’t lag in strategy or information, and don’t be afraid to bring in the pros if you need a hand nailing your strategy. For example, Goli recently invested in help from Atos, tech consultancy, and digital transformation experts to improve its productivity, product quality, and capacity.
Don’t fall into the trap of listing a bunch of features on your product page and calling it a day. Think of your product pages as mini salespersons for your store that spring into action as soon as visitors land on your website.
Here’s how to optimize your product pages and attract more customers from day one:
While the linear vs exponential growth debate is an interesting one, don’t feel pressured to pick a side. Instead, you can take a hybrid approach and combine the best features of each.
For example, you could launch a product using the linear business growth model in one territory. Then create new products to complement your flagship product that fit the trends in the regions you want to expand into.
In action, this could look like launching a healthy lentils chips brand with one flavour online in the UK. Once you succeed, branch out to other countries and use their vegetables and seasonings to create healthy snacks like chips, health bars, and booster shots.
While the linear vs exponential debate has its place, regardless of which model you choose, it’s down to you whether you climb to the top with your eCommerce store.
Don’t spend a lifetime trying to work out when to use linear vs exponential. Instead, focus on executing your business growth plans with precision and speed to ensure you get to market in time with products your target customers actually want and need.
It’s great to look for inspiration but resist the urge to compare your store to others as it can be a deadly distraction. Your journey will be different from the competition’s path, even if you’re serving the same niche with an identical growth model.
Finally, be bold and take calculated risks. This will help your store get ahead and win.
Now get out there and build a brand to be proud of!
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