How Buyer Behaviour, Financial Management, Taxes and Market Research Affect your Brand
In the competitive world of corporate finance, strategies centered around financial growth and effective management are essential for scaling high-value companies.
Recently, Matthias Walter Eser, the CEO of Eser Capital, shared his insights at the Two Ecomm Experts Podcast (a podcast hosted by the founder of Markademics, Viktor Stoilov, you can check the episode here)
Eser Capital excels in supporting 7- and 8-figure growth companies in overcoming financial challenges. They are doing that through their CFO as a service model. They have a proven track record of guiding companies through investment banking strategies.
While previously working in investment banking, Matthias Walter Eser has supported numerous high-growth companies, offering expertise in areas like taxation for e-commerce, market expansion and strategies to adapt to changing buyer behaviors.
At Eser Capital, Matthias’s approach involves a strategic blend of personalized financial planning, market analysis and the use of the right financial instruments.
By adopting a comprehensive financial strategy, companies can reduce risks and seize growth opportunities across both traditional and emerging markets. Matthias Walter Eser’s results show how important is the CFO’s role in e-commerce. With the right expert a business can achieve great success.
What is the right approach towards the ever-changing buyer behavior? Can we overcome it through effective financial management, proper taxation and thorough market research?
Buyer Behaviour and its impact on E-commerce
Matthew Eser says:
“The entire market is developing in two very hard directions – either you’re living and growing or you are dying and there is pretty much nothing in between”
In recent years, two major trends have significantly influenced buyer behavior.
Firstly, interest rates have risen up heavily. Today interest rates are around 5%-7% depending on the market. In contrast to the past that were about 0.25% to 1% which multiplied by the time by four.
Secondly, there’s a lot of inflation in the market. This means that people have the same amount of money in their pockets, but they cannot buy the same things. That’s because prices have risen massively.
If people are in an economically restricted period in their lives, they buy stuff they need, rather stuff they want. People are still buying stuff that they don’t really need that looks flashy, however if they used to have the money for three things per month to buy, today they’re buying one, maximum two wanted items per month.
A trend that went unnoticed, but nevertheless occurred was the impact of Covid-19 and the resulting restrictions. With people staying at their homes, many had savings from previous years to spend.
However, as time has passed, it’s evident that people are now much tighter on finances compared to four years ago.
The host, Viktor, asked Matthias which are nowadays the companies that are dying and which are the ones growing.
Matthias refers that the companies dying right now are the ones who didn’t have a stable customer base beforehand. They are the ones that benefited from the very cheap customer acquisition prices and were reliant on a them for a long time.
Matthias then makes a parallel between the companies that are dying and the ones that are growing. He continues by saying that the ones who are really growing have a very strong customer base. He explains that real fans increase the customer lifetime value and that’s why these brands are succeeding in tough times.
Our guest continues the topic about successful businesses by explaining that the influence of the pandemic has helped an industry drastically rise in popularity.
Everything related to health is growing much better than the rest. Health related shops are working much better, because in terms of the pandemic and the restrictions, people became more aware about the question: Am I healthy or not? and they are investing more into the health part. We are living in a lot of crisis and the only thing people can really control is their personal health.
The Critical Role of Financial Management
Nowadays, the most asked question in the e-commerce industry is: What am I doing to protect my eCom store/brand in 2024 from crashing?
Matthias starts by saying that the first step is cutting costs as much as possible.
External CFOs have observed the cost structures of many e-commerce brands built between 2020 and 2022. These brands often had overly optimistic and excessive expenses, such as high CEO salaries, luxurious cars, extravagant lifestyles, numerous assistants and large office spaces.
In the past, high profits made these expenses less of a concern. However, today, it’s crucial to avoid wasteful spending. The first step is to immediately cut down on unnecessary costs to protect your profits.
The second step is to focus on improving your existing customer base by using strategies that enhance profitability.
Matthias gave an example based on his experience that effective WhatsApp and newsletter marketing has helped a lot of the businesses he had seen.
His clients often say:
“We don’t have the budget to acquire new customers.”
Therefore, it’s essential to double down on marketing channels that haven’t been that much used in the past.
By cutting costs, improving retention and exploring new customer acquisition opportunities, you can significantly boost your business’s profitability.
Nowadays, acquiring new customers can be done more cost-effectively. Influencer campaigns, in particular, have become much cheaper.
In the past influencers have been booked by all the brands. Today, the budgets of the brands are much much lower and the influences of course, reduced their prices for the same marketing activity as in the past.
He explains that those are three steps that were pretty smart in the last months to cut costs, improve your retention and get access to new customer channels.
Then, our podcast guest continues by saying his most colorful phrase during the episode, namely:
“CEOs don’t like CFOs but CFOs like CEOs”
He explains that CFOs will tell you what you’re not allowed to do in your own business and CEOs are used to doing whatever they want to.
The CFO has to be willing to question your decisions and ask you for a good argument about spending money on X Y Z despite the fact that 100% of the business is theirs.
The CFO’s role is to direct you to the position of being responsible, to watch out if you are telling yourself nonsense and to be honest to tell you if you have the tendency to do that.
Taxes and Market Research
Today, the main problem of many brands is paying taxes in their first three years, leading to massive tax liabilities later on. Then, this results in multiple lawsuits.
He continues by sharing his experience of how he has restructured multiple brands because, while they excel in marketing, product sourcing and branding, their main problem is struggling with managing taxes and finances.
It’s easy to grow rapidly if you’re not paying taxes, but this approach is unsustainable and can lead to serious financial trouble. Brands need someone to handle their taxes and finances properly.
Additional factors that play a big role in keeping many businesses alive are:
- Ego of the owner: Sometimes, the ego of the owner can blind themselves to the realities of the market or prevent them from seeking help when needed.
- Lack of discipline: Without discipline in operations, finances and decision-making, a brand can quickly fall apart.
- Suboptimal structures: Inefficient or ineffective organizational structures can also shake sustainability
- Frequently changing market conditions: Markets are a dynamic place and what worked in the past may not work in the present due to shifting consumer preferences, technological advancements or economic changes.
- Lack of entrepreneurial experience: Entrepreneurship is complex and goes beyond what textbooks may teach. Without practical experience or mentorship, entrepreneurs may struggle to navigate challenges.
To prevent crashing your business, market research plays a crucial role.
Market research involves more than just collecting data. It’s about understanding the real behaviors and attitudes of individuals within your target market.
In order to conduct effective market research:
Firstly, observe and analyze the typical behavior of individuals within your target market. Understand their actions, preferences, and challenges.
Secondly, talk to potential buyers within your target group directly. Ask them about their goals and preferences. This helps you understand their culture and mindset.
Thirdly, dive deep into the culture of your target market. Understand their values, beliefs and motivation. This insight guides your marketing strategies.
While data is important, it only provides part of the picture. To truly understand your audience, you need insights into individual behaviors and motivations.
The role of a CFO in e-commerce goes beyond managing finances. It involves financial discipline and managing taxes. By focusing on these areas, e-commerce brands can thrive even in challenging times.
In summary, the e-commerce landscape is continuously evolving, and businesses must adapt to survive and thrive. The CFO plays a pivotal role in guiding the business through these changes, ensuring financial stability and driving strategic growth. By understanding and addressing the challenges related to buyer behavior, financial management, taxes, and market research, e-commerce brands can position themselves for long-term success.
If you want to hear more of this story and many others that give practical advices to implement in your business, check the “Two Еcomm Еxperts” podcast on YouTube, Spotify or Apple Podcast.
