To identify high-potential ecommerce businesses for investment or acquisition, focus on unit economics and optimization opportunities. The ideal target isn't necessarily a perfectly optimized business, but rather one with strong underlying financials (high margins, good LTV) that is currently under-optimized across key areas like customer acquisition, conversion rate, and retention. By fixing these "structurally broken" elements, investors can unlock significant growth and profitability.
Key takeaways
Prioritize businesses with high product margins and strong customer lifetime value (LTV) even if current performance metrics (like ROAS) are low, as these indicate significant untapped potential.
Identify under-optimized businesses by evaluating their performance against the 'six dominoes of conversion rate optimization' (e.g., busy restaurant test, trust and credibility, offer architecture) and retention strategies.
Focus on businesses with a large addressable market and long runway for growth, avoiding niche products with limited customer bases or licensing restrictions.
Assess current customer acquisition cost (CAC) and ROAS, looking for opportunities to profitably increase ad spend by improving underlying unit economics.
Seek out businesses with clear customer identification and problem-solving, even if they are 'boring,' as this simplifies marketing and customer acquisition.
Most ecommerce businesses are not worth investing in. Not because they are bad businesses. But because they are structurally broken. In this episode, Mark and Ian break down what actually makes an ecommerce business investable and why only a small percentage truly stands out. They cover: Why do only 1 in 10 ecommerce businesses have real scale potential?
The difference between a lifestyle business and a scalable asset
What “structurally broken” actually means in ecommerce
The three key levers every serious investor looks at
How to spot an unoptimised business with huge upside
Why high margins and repeat purchases change everything
The role of conversion rate, average order value, and lifetime value
Why boring problem-solving products often outperform trendy brands
How to think about market size and long-term growth potential This is not a theory.
These are the exact lenses used to evaluate real ecommerce businesses doing millions.
If you are building a brand, this episode will show you what makes it valuable and what holds most businesses back. P.S. Whenever you’re ready... here are 3 ways Ian and I can help you grow your ecommerce business: 1. Talk to us. Book a call with us and let's talk about accelerating your growth - https://go.hammersleybrothers.com/scheduleuk-ant 2. Grab a copy of our book - https://gohigh.hammersleybrothers.com/get-the-book
3. Join the Ultimate Guide To Ecommerce Facebook group and connect with e-commerce owners who are scaling too - https://www.facebook.com/groups/924567391291786
What does this episode say about finance & fundraising?
Prioritize businesses with high product margins and strong customer lifetime value (LTV) even if current performance metrics (like ROAS) are low, as these indicate significant untapped potential.
What does this episode say about dtc strategy?
Identify under-optimized businesses by evaluating their performance against the 'six dominoes of conversion rate optimization' (e.g., busy restaurant test, trust and credibility, offer architecture) and retention strategies.
What does this episode say about conversion & cro?
Focus on businesses with a large addressable market and long runway for growth, avoiding niche products with limited customer bases or licensing restrictions.
What does this episode say about paid acquisition?
Assess current customer acquisition cost (CAC) and ROAS, looking for opportunities to profitably increase ad spend by improving underlying unit economics.
What does this episode say about finance & fundraising?
Seek out businesses with clear customer identification and problem-solving, even if they are 'boring,' as this simplifies marketing and customer acquisition.
