Why e-commerce profit is built beyond the first purchase

The economics of direct-to-consumer (DTC) e-commerce have fundamentally shifted. Today, the brands that successfully scale are not looking to make their profits from a multitude of one-off first purchases; they’re building relationships and creating communities that deliver repeat sales.

According to Intuit Mailchimp’s ‘The Ecommerce Playbook’ report, customer acquisition costs have grown dramatically – making it even harder to break through as global economic volatility continues to squeeze consumer spending power.

Against this backdrop, brand, trust, and channel choice can be the difference between success and failure in shifting from high volume single purchases to growing the lifetime value of the customer.

Let’s explore the key tactics behind this shift.

Brand trust is the price of entry

Having a legitimate brand is one of the biggest trust signals for consumers. It has an impact even before they engage with a business, and it is what enables small companies to compete on a large scale.

As a result, the brand must be treated as a core part of the organisation’s identity rather than just a cosmetic filler. In the Ecommerce Playbook report, Emily Ryan, co-founder of email marketing agency Westfield Creative, describes how “sending an email is like being able to walk into the living room of someone’s house.”

That means generic positioning won’t cut through. Brands must explain to the customer why the company exists, and why they should buy their products. For smaller brands, that’s an advantage as they can focus on their identity and target audience first, and use that to scale by building relationships.

Email and SMS are fundamental

Social media may help brands acquire customers, but email and SMS are owned channels that DTC brands can leverage to nurture and retain those relationships. They’re the direct line to the customer that no algorithm can interrupt or de-prioritise, and they can help to alleviate customer acquisition costs. They are fundamental to success and need to be treated as the basis to drive engagement.

Encouragingly, according to Intuit Mailchimp’s Art of the Opt-In report, 83% of businesses globally report having an SMS list – and investment in SMS matches email nearly one-to-one (approximately nine in 10 businesses report moderate to significant investment in each).

Harnessing channels that deliver relevance, immediacy and measurable impact is one thing – but getting outreach frequency right is another important part of the process. According to Art of the Opt-In, receiving too many messages ranked as the top reason consumers globally unsubscribe from emails at 68%. Establishing the right cadence of engagement therefore enables a brand to bring value to customers, supported by structured, behaviour-based flows rather than one-off sends.

Data collection happens as the relationship builds

Zero-party data – the information a customer intentionally and proactively shares with a brand – is incredibly valuable. It establishes understanding from the very beginning, and it’s how DTC brands should be building every audience list.

However, that does not mean large scale popup forms appearing as soon as the consumer lands on the page. According to Art of the Opt-In, consumers globally are most likely to subscribe during high-intent moments like browsing (50%) or checkout (39%), and they reward simplicity, restraint, and a clear value exchange.

For DTC brands who want to build truly engaged audience lists, they must collect further customer insights with each touchpoint. A list with tangible data such as customer interests and shopping habits – combined with basic information such as email address and age – is rich and personalised.

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It’s much more useful to build relationships, deliver relevance and gather behavioural data that can compound efforts over time. Otherwise it’s only a contact database, and that is of limited use.

Retention is the road to profit

Building repeat customers is the most cost-effective strategy for brands in the current economic climate. They therefore need to focus on retaining audiences, not just securing a high volume of one-off buyers.

Feras Khouri, co-founder of New Standard, estimates that at least 30% of a DTC brand’s day-to-day revenue should come from returning customers. They are the safety net that brands need to ensure they continue to operate, and play a critical role in survival and growth – even becoming brand advocates who can convert more new customers into long-term buyers. For that reason, they need to be looked after through loyalty schemes and relevant marketing that’s personalised to their long-term needs and interests.

Building for the second and third purchase

A customer’s first purchase cannot be the win for DTC brands anymore. Focusing just on this and hoping for volume is too time consuming, resource-intensive and expensive to justify. Instead, a unified model that leans into second, third or even fourth purchases is the true path to growth and will be more successful in the long-term.

The brands best positioned for success in the future are those that have built a retention infrastructure capable of converting one-time buyers into repeat customers. Businesses planning to profit on the second and third purchase by building trust and relevancy will drive more valuable conversions over time.