This episode offers a candid look into the decision-making process behind closing an ecommerce subscription business. Christine Nicholson of Divine Legs shares her experience, highlighting critical factors like unsustainable customer acquisition costs, supply chain issues, and product-market fit challenges despite initial success. Ecommerce operators will gain valuable insights into recognizing when to pivot or exit, emphasizing financial metrics and personal energy over perceived failure.
Key takeaways
Regularly analyze customer acquisition cost (CAC) against customer lifetime value (LTV) and profit margins; even high sales volume doesn't guarantee profitability.
Be mindful of product-market fit, especially for subscription models. Products that are too durable can lead to customers pausing or canceling subscriptions due to ओवर-supply.
Proactively address supply chain vulnerabilities, especially for core products. Unreliable supply can quickly undermine customer retention and growth.
Don't be afraid to make the informed decision to close a business. Base such decisions on clear financial data and personal energy, rather than solely on the fear of appearing to 'fail'.
Communicate transparently with customers during a business closure. Offering final sales and clear timelines can convert existing inventory and maintain goodwill.
Occasionally I have a guest back on the show to update us on how things are going – today we have a repeat guest. Christine Nicholson of Divine Legs (Tights subscription business) was my guest back in episode 103. Back then the business was 9 months old, and Christine took us through how she’d launched and achieved 100 orders in the first 100 days. In November 2017 Divine Legs reached 15 months old, and despite continuing to grow Christine made the decision to shut it down. Never an easy choice to make. Not least because despite 100s of eCommerce business owners making the same decision every day – we don’t hear as much about it, as we do about the starting or the growing. So I’m super-pleased to have Christine on today to take us through why, and how she made the decision to exit, and her choice of exit, and how she went about closing it down. ---
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What does this episode say about founder & leadership?
Regularly analyze customer acquisition cost (CAC) against customer lifetime value (LTV) and profit margins; even high sales volume doesn't guarantee profitability.
What does this episode say about finance & fundraising?
Be mindful of product-market fit, especially for subscription models. Products that are too durable can lead to customers pausing or canceling subscriptions due to ओवर-supply.
What does this episode say about customer retention?
Proactively address supply chain vulnerabilities, especially for core products. Unreliable supply can quickly undermine customer retention and growth.
What does this episode say about supply chain & operations?
Don't be afraid to make the informed decision to close a business. Base such decisions on clear financial data and personal energy, rather than solely on the fear of appearing to 'fail'.
What does this episode say about founder & leadership?
Communicate transparently with customers during a business closure. Offering final sales and clear timelines can convert existing inventory and maintain goodwill.
