Jake Stein of RJMetrics just announced a 30-day e-commerce class which pulls together “the most valuable things we’ve learned from working with hundreds of e-commerce businesses.” The welcome email links to a report comparing traditional online retailers versus flash sale sites, with three noteworthy insights:
- Customer Value: first-year revenue increases more quickly on flash sale sites (+385% of first-month spend) than traditional online retailers (+94%).
- Frequency: 2x higher rate of purchase on flash sale sites accounts for much of this difference; also, lower median time to repeat order of 50 days versus 90 at traditional retailers.
- Order Value: drags down impact of frequency, with 50% larger Average Order Value (AOV) at traditional retailers.
The other side of the customer LTV equation is lifetime duration. I would be interested to learn if early purchase frequency is predictive of duration/churn. Hopefully they cover this topic and the inherent trade-offs during the class. If high frequency comes with high churn, you’re most likely doing a disservice to the ultimate goal of maximizing cash flows over time.
Looking forward to the second installment.