5 areas to boost growth and profitability

In the current macroeconomic climate, it’s important to consider how to maximise profitability so you have room to manoeuvre and grow your digital commerce business.

Juni’s CEO and Co-Founder Samir El-Sabini and DTC ecom entrepreneur Björn Påhlman Spenger share their advice for businesses in digital commerce who want to focus on growth and profitability in the current challenging climate.

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Strive to be cash flow positive

When focusing on profitability, you need to start with the right KPIs to guide your decision making.

“Your primary KPI is to be cash flow positive. Then you can have a secondary KPI which could be to grow as fast as possible,” says Björn.

You need to consider how you’ll bridge the gap between money in and money out. Effective budgeting, negotiating payment terms and building cash reserves can all help increase cash flow positivity.

The most common areas where you need to invest to make sales are ads and inventory. Carefully managing financials can’t always bridge this gap, so instead a capital solution can come in handy – we’ll delve into that later in this article.

Another solution is to improve inventory turnover, which can both bring positive cash flow and profitability.

“Tying up a lot of capital in inventory isn’t good for one’s financial position,” says Samir. “We see many customers who are trying to increase turnover with various methods. That is something I think all CFOs must focus on right now.”

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Supercharge your sales

There are several tactics you can employ to increase turnover and sell your products.

Samir’s advice is to focus on your fastest selling goods to free up capital. Offering discounts can also be an effective way to make sales, but you need to be tactical.

“I find the customers who work on trying to raise the average customer basket value interesting,” says Samir.

One way of doing this is by encouraging secondary buys: when a customer orders something, and is then offered several other products that they may not have been interested in, but at an attractive price.

“Most often, secondary buys can be an effective way to turn over stock faster while increasing basket value,” says Samir.

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Streamline your operating model

Your operating model will have a huge impact on how you invest into the business without risking profitability.

“You have to start by being as financially efficient as possible,” says Samir. “How strict you are with your operating model, how efficient you strive to be and how much you compromise on the numbers that are best for your business will maximise your room to manoeuvre.”

When putting this advice into practice, it’s likely that you’ll need to focus on your operating model first.

“Streamline everything, including your financing set up, how you pay FX, how your inventory is turned over, and your logistics,” says Samir.

Although this task can seem daunting, it’s an important step to ensure you’re in a strong position to grow. Find out more about improving operational efficiency, cutting costs in your business and when to consider credit solutions here.

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Bring down CAC and increase ROAS

Media spend is essential to bringing in new potential customers in a bid to increase turnover, but you need to keep your customer acquisition cost (CAC) as low as possible and maximise your return on ad spend (ROAS).

“If you maximise organic marketing you will get more free traffic,” says Björn. “But, if you maximise paid marketing, you can work with traffic, conversion rate, average order value and retention.”

To get the most value out of your CAC, look at your mix between ad channels like Meta, TikTok and Google. “Then, you can start to chip away at customer lifetime value by sending emails,” says Björn.

Another way to bring down CAC is to focus instead on reactivating customers, and fostering loyalty in the customers you do acquire. “It’s about loyalty and cross selling, especially if you have several brands,” says Samir. “For the amount you spend on marketing, you can get more if you cross sell. Become good at giving the customer a product they’ll come back to.”

Email is a great tool to do this: “If you have good content with products that suit that target group, they will certainly buy a lot more,” says Samir.

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Focus on your customers

“In the wrong economy, businesses can be too heavy on investment while perhaps forgetting to focus on what their winner is today,” says Samir. “I think you should be very careful about trying to do new things when uncertainty is this high and instead focus on improving what you know your repeat customers want.”

When focusing on growth and profitability you don’t want to lose customers that you’ve already spent money on to acquire. Instead, when they’re reactivated and loyal, focus on keeping them. This will bring a much needed boost to ROAS and higher lifetime value.

It’s important to have the right metrics and insights to understand your customer demand. A centralised dashboard like Juni where you can see your data for platforms including Meta, Google and Shopify can give you the information you need to inform your retention strategy.

Getting investment right is a balancing act of the different elements we’ve spoken about: “We see that the DTCs that really succeed are those who increase their margin through a number of efficiency measures while at the same time keep their returning customers and build upwards at a slower pace without over investing in growth,” says Samir.

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Boost cash flow with capital

Sometimes getting some extra capital can be a good solution to boosting your cash flow. Unfortunately, in an uncertain economy, loans can be quite expensive and difficult to secure. Instead of giving you the help you’re looking for, it could become a burden to your business.

“The reality is that many companies are struggling because they have very expensive loans,” says Samir. “They have a financial setup that is very costly,which reduces the value of the entire company and makes it very difficult to actually get a free cash flow.”

If you’re in this position, Samir’s advice is to focus on rescheduling your loans or paying off your loan and finding a better deal. If you don’t already have a loan, it may not be the best solution for your business. Instead, try looking for alternative capital solutions to free up your cash flow – like Juni.

With Juni Capital for invoices, customers in the EEA* can finance their inventory and media invoices on terms of up to 120 days. That means you’ll get the money you spend in your pocket to invest back into your business without waiting to sell your products.

You can get even more cash flow freedom with Juni Capital for cards, which offers flexible business credit lines, and you can effortlessly allocate funds across your virtual Juni World Commercial Mastercards and streamline your cash flow management.**

Juni can give you a unified view of your funds, multi-currency business accounts, corporate cards and unparalleled insights and analytics – all in one place. By centralising your spend

management, you can save valuable time and have the information you need to manage your cash flow at your fingertips.

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Get more insights

Want to hear more about how ecommerce in the current macroeconomic climate, which businesses are great success stories, and what you can do to grow profitability? Our CEO and co-founder Samir El-Sabini and ecom entrepreneur Björn Påhlman Spenger discuss it all on the Framtidens E-Handel podcast. Listen here in Swedish.

*Inventory financing is available for companies registered in NL, SE, DE, ES, IT, NO & FR, upon eligibility. Fees and terms and conditions apply.

**Capital for cards is available for companies registered in UK, NL, SE, DE, FR, ES, IT and FI, upon eligibility. Fees and terms and conditions apply. Click here for more details.

***Capital for invoices is available for companies registered in NL, SE, DE, FR, ES, IT and FI, upon eligibility. Fees and terms and conditions apply. Click here for more details.