The Old eCom Model Is Dying. Here's What Replaces It in 2027

Hey, it's Andrew here and welcome to the EconFuel podcast. These should dedicate to helping seven and eight-figure brand owners build incredible businesses and amazing lives. And then according to this in early November, Halloween just wrapping up had a big Halloween party this weekend was a lot of fun and getting to be crunch time for most people listening to this. Ever Monday they kind of kick off to the holiday madness coming up. So for all the planning, all of the strategizing, the laying of plans that you're doing now, that's the luck. It's a lot happening in the trenches, so so Godspeed with all of it and good luck with the planning. And today is kind of a quick little episode with just me, got a bunch of fun episodes coming out the next two to three weeks, including a bunch of stuff, AI with paid ads, some really interesting things people are doing with that, talking with AI with customer service, some of the fun things people are doing with that. And of course, the end of your predictions episode with Bill Dallas Andrew, which I always love doing coming up soon, but had a little gap in the schedule and wanted to talk quickly about post post, it was the biggest, it was probably the biggest discussion in ECF last month in October. And also one that kind of ties into something I've been thinking a lot about in terms of where Econ is going. So that's where we're talking about today, let's get into it. Before we start, here's a question most Econ owners can't answer honestly. Are your numbers actually good? Not compared to last year, but compared to other businesses at your revenue level. Every year we survey the members of Econ fuel, it's our private community for seven and eight-figure store owners. And this year 300 of them shared everything margins, growth rates, traffic mixes, team sizes, inventory turns, how much they're pulling out of the business, favorite channels. It goes on and on and on. And we built a benchmarking guide that breaks it all down and compares everything and puts it into revenue cohorts. So you're comparing yourself against businesses of your actual size. So it's an apple to apples comparison. It's free. You can download it as a listener and just go to ecommerce fuel.com/blueprint to find out where you're strong and where the real opportunities are to improve your business. All right, let's get into it. All right, I wrote about this in my newsletter this weekend. If you are not on that, you can head on over to ecommerce fuel.com/newsletter. It's called "The Behind the Curtain Newsletter," talking about how to build an incredible business and amazing life, send it about twice a month. And the title of that post and kind of the encapsulation of, I think, the big idea here is that the 2019 Econ Playbook about, you know, five, six, seven years ago needed money for meta. And it doesn't work so well anymore for a lot of people. And the new craftsman model that I think is going to work and is going to be much more popular and something that's going to last needs a product people talk about in patients. And this all came out of, like I mentioned, a big discussion. The Dave Strickland posted in the forums in the CF. He also posted this on X, so it was interesting because there's a lot of conversation in both places. And Dave runs a company called Popsmith along with his founder, Tal, his co-founder, Tal Moore. Amazing popcorn machine. These beautiful, just designer-esque kind of stove top poppers. We have one. We love it. Our kids love it. It's a lot of fun to make popcorn to them. And they've been running it for, oh man, a number of years now. And he, Dave did a really interesting write-up where he compared a lot of his numbers from, you know, 2019, pre-COVID, to where we are today in terms of every, you know, all sorts of different metrics. And I'm just going to jump right to the punchline. Give you the three, three or four biggest numbers that stood out to me. And for him, he said, you know, he looked at his manufacturing costs and they were up 50% in the period. Paid traffic costs were up 80%. Shipping costs were up 63%. And, you know, maybe the most noticeable one. Obviously those numbers alone don't explain it, but net net contribution margin, you know, it's the amount of, they were, not of profit they were seeing after all was said and done after fulfilling every order with down 95%. Percent. And so, you know, you think like, obviously, this isn't new if you're listening to this. Meta has been a challenge. Meta is getting more expensive in e-commerce, right? Like it happens with any kind of maturing industry. And I think, you know, one of the interesting things along this, this too, is the big brands are still getting built, right? Like, you know, you hear about and you see, especially under generations building big shops on TikTok shops, you know, putting up nine figure businesses right now. And you know, I'm sure some of them are doing it profitably, some of them are, you know, I just crushing it and, you know, awesome, more power to them for that. But I also know that some of the savviest people running TikTok shops that I chat with have admitted that the channel turned unprofitable this year. Because I recently, and they're still trying to work out quite what that means. What that means for the long term business, for the strategy. And to me, the more interesting question right now in a maturing industry with the world changing so fast with a lot of other things, including AI, is not how do you build something big, but how do you build something with this durable, that lasts, that has longevity? And if you listen to the podcast for a while, you know, I've been championing this concept of small, durable brands for years, and the branding is terrible. The small, durable brand sounds like, sounds like something you'd, you'd pipe the hardware store to clean your garage. I think the term craftsman brands has a better ring to it. I'm probably going to go with that going forward. And I really think that that's the model that this shift is favoring it and who, you know, the, the MO that's going to work in five years from now. And, you know, when you think about a craftsman brand, I think the things that define that are a brand that is selling a product that the owner, that the team, that the operator's deeply care about, right? It's not just like, hey, go on, finding something, you know, some, some Jim Bro selling skincare products, because he knows it's, he's going to be able to market it to, to women. I think it's Jim Bro's, nothing is women, but I think the people that are going to build real craftsman brands are going to deeply care about the things that they are selling. I think this used to be a liability 10 years ago, because I think you could, there was so much opportunity. There was so much ground for just figuring out a confusing, non mature industry. But now I think passion actually is a huge competitive advantage. So that's one facet of it growth that is largely powered, not entirely, but largely powered by word of mouth, which takes longer to scale, right? But it's far stickier once it is there. And doesn't mean you can't use paid for people listening to the show. They've realized that I've kind of come around to using paid strategically, because partly out of necessity, partly out of past ignorance. But I do think, you know, having a lot of word of mouth is, is good brands, great brands have word of mouth. And the third one is lean, which is why AI showing up right now is a pretty good moment. You know, you don't have lots of overhead, you don't have tons of agencies doing your stuff. You kind of figure out what works, you run a team leanly, you 80, 20 things. So those are the three things, I think, like make up a craftsman's brands. And when I think about craftsman brands that embody this really well, Edward Zimmer's road ID, man, such that guy did a podcast with him this last six months, we'll really get up to that. He has been building his brand along with his family for 20, I think, oh, man. So I'll play a fact check here, but close to 20 years, if not 20 years. It was inspired when he got ran off the road on a bicycle, didn't have any ID on him. And he's very passionate about keeping biker safe, right? And he's still a founder who's in the details after two decades with a passionate fan base at a product that he deeply cares for and people refer and recommend, right? And his business is not going anywhere. Like, you know, maybe he has a little softening if, if meta performance slows down a little bit, but he has a very, very durable business. I mean, another one that comes to mind is Jeff Scheldon's Ugg Monk. I don't know Jeff Well, I think he was probably on the podcast years and years ago. But I've always been impressed with just his Apple-esque productivity and desk products. He designs over them, he obsesses over them, and he has a team that helps him out. But he's, you know, he's kind of the Steve Jobs of his brand, putting out these beautiful products that help, you know, founders and people working at their desk, be more organized and productive and enjoy it more. And I haven't talked to him in a while, taking a couple of guesses here, but I'm guessing even if advertising for him dried up tomorrow, he's got such a long history with such a list and such brand loyalty that he can email that list when new products come out and he'll do just fine. So when I think about, I mean, even Econ Fuel, when I think about the world we're going into, I started to think about, I've always thought about it, or, you know, our community like this in these terms is craftsman brand style thing, but I've been thinking more about it in those terms. Like, I've been spending less time marketing and more time trying to connect with our top membership to really get to know them, to talk to them, to ask about what they need. It's shifting into the way we run our events. I've talked about this before, but Econ Fuel, you know, ECF Live this year is more about connecting people and celebrating and bringing our community together. The people that are active in it as opposed to trying to do a lot of outreach. And so this is kind of, this is deeply influencing how I'm thinking about how I want to run and build our company and our community going forward. And if I'm honest, you know, I'm a huge fan and proponent and supporter of entrepreneurs everywhere, but from the consumer side, I'm much more excited to live in a world where Maybe there are. huge, you know, 100, 200, 300, you know, as many massive D to C brands. But there's more smaller brands that deeply care about what they're doing. And have to, you know, because we're kind of, they're kind of having, we're kind of coming full circle here where people are having to earn their business kind of the old-fashioned way, right? Like you go back 200 years ago to colonial America. If you had a great business, it's probably because you were word of mouth, right? People recommend it to you, you know, there's no, there's very little media. Maybe there's newspapers or pamphlets or things like that. But in general, it was word of mouth. And I feel like with so much with AI hitting and people being coming so skeptical of everything they see online, being sold to so much, I think that's kind of coming full circle for us. So, anyway, all this to be said, and these are kind of macro, macro trends. There's still going to be people who figure out great distribution methods and grow big businesses and grow $200 million businesses and people who are crushing it on TikTok shop. And like I'm not saying this is, you know, the end of big businesses. But I do think these are real macro forces at play. And I think there's kind of three questions that I'm asking that I think maybe you should be asking yourself too. Because if you have a business, you've got some time, right? Like you have an existing business, you have a huge advantage right now and that you have some momentum, you have some reputational credibility, you have an email list, you have products. This is not going to hit you overnight. But I think we are in a transition period. So, three questions for you. One, are you more focused on depth or size? Are you more focused on building something that's durable or building something that's big? Because it's a lot harder to make the hard decisions to build something that's durable than than big because growth feels good, right? Even it always feels good. Building something durable. Those are seeds you're planting that may not pay off for six or 12 months or longer. But I think that depth and that durability is what's going to matter in the era that we're entering. So, are you more focused on depth or on size? I think that's the first one. I think the second one is, are you investing in your own marketing or distribution channels heavily right now? You know, obviously, email is one of these. But there's a lot of other ones. You know, it's interesting, we've had some people in the ECF community. Hopefully, perhaps we'll get them on the podcast here in the coming months. They've talked about how they've been able to use AI to build some pretty amazing retail wholesale distribution in some cool ways. In-person events are hard, but they can work in the right industries. Just looking at something on an X, where a brand state accrues something or other, was able to build some unaffoli run right with with no paid ads. I think just in-person events and organic content. It's going to vary by every by every business, but are you investing your own marketing and distribution channels heavily? And I think the third one is, do you care about what you're selling? And this is kind of a weird one, something I didn't ask myself until kind of more recently. But I think it genuinely makes a difference in the future. Do you care about what you're selling? Because that's going to bleed through to people as as founder led brands as having to earn word of mouth as creating products to actually are are really exceptional becomes more and more important. You can only do that if you really care about what you're selling and building and putting it into the world. So I think that's a it sounds a little woo-wooly because you know the whole don't follow your passion thing and I you know I think there's some merit to that. But in this case I think I think caring about you solid is a huge competitive advantage. Anyway, those are my random ramblings about craftsmans brands, about the future of e-com, all this kind of stuff. So I hope it's interesting, hoping maybe a nugget in or two you in there that you can yeah apply to your own business and it's definitely stuff I'm thinking about a lot as we're growing and looking to build and continuing to build become fuel. Forging what matters when I was nine years old my dad did something that man it took me a long time to get over and fully forgive him for. The little context we lived in on who falls. Home of the braves, a pioneer league baseball team that mattered to nobody really but the people in our town. My mom would scrounge up free tickets often on the back of burger king receipts or something else and we'd head to the ballpark sneak in twizzlers to save money on concessions and would sit along the third base line where my dad would point out the coach of science for me and have amazing memories from that. And our hometown team was named the same as the big league major league baseball club the braves. And so my nine-year-old brain latched onto Atlanta, Atlanta braves and never let go as a big fan of them growing up. And in my youth, October 1991 the braves made the world series came down to game seven. It was scoreless in the seventh inning. This is like every little kid's baseball dream. And as I'm sitting there watching with my baseball cards, you know, I've kind of all spread out in front of me. My dad comes in and tells me it's time for bad. And like, I was like, "Dad, this is game seven. It's my team. It's the world series. Can you make an exception?" No exceptions were made. Brutal. The next morning, like a ran upstairs found out they lost in the tenth, which made it even worse the next morning. It was awful. And you would think that this would have put me off to the sport, but it did the opposite. You know, I grew up playing baseball. I was never very good at it. Basketball was more of my sport. And for regular season baseball games, I'll take basketball most days. You know, I understand a lot of people look at baseball and they're like, "How can you sit through ninenings of that? It's really boring." But I have to tell you, October baseball, playoff baseball is a completely different sport. Because in most games, 10s moments, last a few seconds, maybe a play in football, one in bounds. Maybe if you're lucky, if you fill out shots in baseball, but postseason or in basketball, but at postseason baseball, those minutes of tension and stress can stretch for minutes at a time, two, three, four minutes, one pitch at a time, fouled off. There's no clock. Everyone in the room is holding their breath with the season on the line for what feels like eternity. It's so fun. And it's such a relational sport. You know, in 2023, my dad, my brother and I kind of had a great time checking off a bucket list out. I went to the World Series, finally, forgiving. And we've moved past this at this point, me and my dad. And I was pulling for Arizona, and my dad, it turns out, had been a covert rangers fan for years. It's something he only confessed when he showed up to the game when the rangers were playing the Arizona Dama backs. And we, the two sons got to watch our dad watch his team when the whole World Series in person. It was pretty cool. You know, this year, I was on the road and the brewers were playing and they won it all in my daughter who helped play softball herself texted me to ask if I'd been watching the game. And I had, and so had she. Same game, different cities, still thinking about it and kind of being together. And every year, the night after the final baseball game of the year, World Series wraps up, I still walk into the living room, kind of expecting the habits sit down on the TV and settle them with the family. And then I remember it's over. And it's always a little sad every year in the habits. If you've never gotten into postseason baseball, give next October a chance. And if you already love it, you know, it's a great way to cap off the summer. And hey, one final thing before you go, my research and data this year's surface something I did not expect. Store owners who pay themselves a salary plus small regular distributions or dividends posted the highest net income scores and growth in the entire survey of store owners, 45% growth, above average margins, and the highest hopefulness of any group. Turns out that taking small, consistent bites out of your business doesn't hurt your growth. It actually seems to improve your efficiency, but also diversifying your net worth away from your business a pretty smart move. That sounds like the kind of thing you'd like to get right. The financial mastery series breaks down exactly how to think about distributions, cash reserves, and building wealth alongside your business. It's free at ecomersgoer.com/mastery. And for seven eighth figure owners who want to be around people operating at this level and thinking about this regularly, check out the community at ecomersfuel.com. Work hard, adventure often, and I'm looking forward to seeing you again. Next Friday.