Ecommerce Rollups, Acquisition Criteria, and Autonomy with WeCommerce
Elise DeCamp is the VP of Acquisitions at WeCommerce, a team of Shopify veterans buying, building, and operating ecommerce SaaS companies. As a founder, operator, and investor, Elise shares her learnings from scaling and selling her own marketplace while diving deep into WeCommerce’s evolving growth and acquisition strategy.
Ecommerce Rollups, Acquisition Criteria, and Autonomy with WeCommerce
Elise DeCamp is the VP of Acquisitions at WeCommerce, a team of Shopify veterans buying, building, and operating ecommerce SaaS companies. Previously, Elise spent time at Bloomberg Beta, Hawkfish, and Yotpo, and in 2017, she founded Ocelot, a marketplace for artisan products.
As a founder, operator, and investor, Elise shares her learnings from scaling and selling her own marketplace while diving deep into WeCommerce’s evolving growth and acquisition strategy.
Launching, Scaling, and Selling a Marketplace
The marketplace operating model is complex, and most investors aren’t huge believers.
When she launched Ocelot, Elise took the curated marketplace route. For her, user acquisition proved to be one of the most difficult parts of running her business. Scaling Ocelot month over month and reaching a consistent growth rate wasn’t easy, especially when only 5% of SKUs drive real revenue on marketplaces.
From her experience as a founder and an investor, she has empathy for both sides of the table. As a founder, she struggled to receive no’s, and now as an investor, she struggles to deliver no’s. The key is transparency from both viewpoints.
“As a founder, you need to be upfront with the challenges of your industry. Clearly communicate that you’re aware of why someone might not want to invest in the company, and then address those pain points head-on.”
Evaluation Criteria: Profitability, Retention, and Growth
WeCommerce looks at both qualitative and quantitative factors when evaluating companies.
On the quantitative side, future retention, growth, and profitability are key to getting an understanding of a business’s viability. Additionally, Elise points out that their internal criteria isn’t solely based on quantitative data.
Her team also evaluates the opportunity’s potential growth trajectory depending on the competitiveness and maturity of its vertical at large.
In terms of metrics, the WeCommerce team ensures revenue retention is strong and average revenue per user (ARPU) increases in a healthy way. Then, they evaluate the trial to paid conversion rate and the distribution of users. Notably, Elise doesn’t put too much weight on LTV or CAC to LTV ratios. As she points out, they’re only a small part of a larger narrative.
“As we analyze acquisitions, it’s critical that a company’s price matches customer value in a scalable way. We rigorously prioritize pricing models and how a company can grow alongside the success of its customers.”
Behind the Scenes: End-to-End Diligence Workflows
WeCommerce’s acquisition flow starts with a combination of inbound interest and active cold outbound. Regarding verticals, the team is currently focusing on personalization, AI, and on-site merchandising. Plus, they go out of their way to invest in or acquire potential leaders in attractive categories.
Regarding process, Elise first hops on a call with the founding team to understand their core business model. She leans into a three opening questions:
- Why did they start the business?
- What growth stage are they at?
- Where is the business headed?
Then, to get a better understanding of their growth, retention, and churn, Elise digs into the past few years of financials, preferably back-end data from their Shopify or Stripe accounts.
Based on that initial diligence, the team moves into modeling to gauge how quickly the business will grow over the next handful of years. At this point, they work on valuation ranges or an offer.
Once both parties reach a point of alignment, they’ll move forward with a LOI, which leans into a deeper diligence process. Elise’s team runs through the backend of the ecommerce platform, conducts customer interviews, meets with key team members, and digs into the org chart with the hopes of reaching a place where they feel deeply ingrained in the business. While that’s happening, there’s a parallel process of legal and tax structuring.
If and when the deal ultimately closes, WeCommerce will then start to transition key accounts and payroll over.
“At WeCommerce, we dive deep into the core team dynamics and what the future of the team might look like. Moving forward, this helps inform our projections and operating expenses around the potential acquisition.”
Post-Acquisition: Autonomy, Flexibility, and Capital
Autonomy—both in terms of how they operate and how they want their portfolio companies to operate—is key for the WeCommerce term.
They’re flexible about deal structure and how they work with founders.
Elise also points out that there’s a ton of value in the WeCommerce platform. The team has access to markets and can fund new opportunities in a way that’s similar to venture but even more transparent.
She also notes that post-acquisition, founders have access to the larger WeCommerce network and resources, especially in any areas that aren’t in their wheelhouse.
“We structure acquisitions by reverse engineering what the founder wants. For example, if they want to leave the business or prefer to stay but need strategic help, we’ll take those inputs and work backwards from there.”
Tactical Advice for Founders
For ecommerce SaaS founders, one of the biggest challenges is that they’re often making decisions without access to complete and transparent data. Instead, Elise recommends using different metric sources including data leads to make smarter strategy decisions across all functions.
More specifically, Store Leads and PipeCandy have helped the WeCommerce team enrich and benchmark new opportunities and gain actionable, data-driven insight into their portfolio companies’ customer bases.
As they acquire and operate businesses that are both sub $1M and over $10M in ARR, she notes that benchmarking data is useful in both revenue stages.
When Elise was scaling Ocelot, data tools weren’t readily available for her team. Now, the tools are available.
It’s not about spending endless capital on paid advertising. Instead, WeCommerce prioritizes working with founders who focus their energy on deeply understanding their customers using data.
“Ultimately, we advise founders to focus on making a few great decisions based on the data they have. That’s a much better strategy than spreading their focus across all parts of the business to pursue growth at all costs.”
- What to pledge
- How to improve
- Which tools will set you up for success
I think the most important thing brands can do in 2023 is to better manage their customer data—both ethically and effectively. There’s an opportunity for brands to know their customers better than ever before—a clear benefit for both the customer and the brand. When you manage your data correctly, you’ll create stronger and more personalized ads, creative, site experiences, and so much more.
This is a classic: Let the data guide you. Go where the buyers for your products are and communicate with them on a personal level (i.e. by persona and funnel position) and nurture those relationships (past, present, and future customers). It’s possible—all through data.
We recommend that Shopify brands analyze and update their websites using data-driven decisions. Using analytics tools such as heatmaps and scrollmaps can help brands better understand how customers are interacting with their store.
Store owners tend to make assumptions about the way customers interact with their website. Most never go back and analyze their design choices to find pain points or areas of opportunity. By using heatmaps and scrollmaps, they can see where real customers are clicking and concentrating their attention. Leveraging this data, brands can start to iterate on design and make their online store experience streamlined and intuitive.
Hotjar provides a simple way to implement heatmaps, scrollmaps, and recorded user sessions on your site, helping you acquire incredibly informative user data. Additionally, it gives you the ability to create on-site surveys, which allows you to obtain direct and often critical feedback from users about their experience.
Test various attribution models and analyze the impact on your business. At Fifty Six, we are always here to help our clients identify and optimize their approach—a critical step in any successful marketing strategy.
If I’ve said it once, I’ve said it a million times–Customer Lifetime Value. And even more importantly, Future Lifetime Value (FLTV). With the ever-growing importance of first-party data, it is crucial that brands take a good look at their CRM and FLTV metrics.
OrderlyEmails is our go-to tool for transactional emails. It helps us level up our brands’ email aesthetics with customizable, quick-to-implement Shopify templates.
Lately, I’ve been really interested in Smile.io’s loyalty platform. Their UX is fantastic for teams with low bandwidth!
Stop allocating budgets to low-hanging fruit that doesn’t move the needle on conversion. Think about what’s really going to improve your CX and the return of undertaking different initiatives—not just on what’s top on your list of bugbears on the site!
One of the best ways to understand your customer behavior is by using HotJar. Their heat-mapping and screen recording tools shine a light on where customers are navigating to and from on your site, where they're rage clicking and experiencing frustration, and where conversion is dropping off within real life customer journeys and flows!
Understanding your customers’ pain points via data and analytics , will allow you to work with your CRO/CX Agency to solve customer frustrations and improve conversion.
Rewind backs up all product, customer, and order data for Shopify sites—essential since Shopify itself doesn’t provide this solution. It's saved so many of our clients time and money from administrative accidents.
Never miss an update from Tydo
33% of customer service inquiries are pre-sale questions. What does this mean? If you’re not investing in customer service, you’re missing out on revenue-generating opportunities.
The benefits of elevating your customer experience:
- 10% to 25% increase in AOV for customers who engage with live chat pre-purchase
- 21x higher conversion rate for customers who reach out via Live Chat or SMS compared to other site visitors
- 87% of customers who have a great customer experience will make another purchase
- 72% of customers share positive experiences with 6 or more individuals
Gorgias is our favorite Helpdesk platform. They can reduce costs by 35%, primarily by decreasing the average ticket handle time. Their machine learning algorithms are trained on millions of ecommerce-related interactions across Gorgias’ customer base and provide accurate, automated replies for the most common ecommerce inquiries. This helps our agents resolve tickets faster, which provides the customer a seamless experience.
Trust your agency! Agencies do the same things across multiple brands and niches, so we see the trends and have the practice and experience!
Don't be afraid of data and insights. If customers aren't clicking on your emails, try a new CTA. If your ads are driving good metrics at a small spend, start scaling. If your customers are complaining about a product, look into QA! If the data tells you something isn't working, let it go and try something else!
I'm supposed to say Tydo, right? 😉
Double down on differentiation. There will be a lot of headwinds this year and standing out from the crowd will set you apart.
A picture is worth 1,000 words. A video? Probably millions. In ecommerce that value translates into engagement, acquisition, and retention—everything you need to impact your bottom line.
At soona, we've seen the we've seen the impact of creative and the continuous split testing of it yield results. Our resolution is to challenge ourselves and double down on innovation and creative optionality so that each brand we work with can distinguish themselves in a crowded sea of D2C ecomm. We'd love to see our brands share this resolution and keep pushing the creative limits.
Klaviyo. We're using it to power our email and newsletter at soona too!
Optimize your returns strategy! This can lead to valuable customer insights, enhanced user experiences, and increased revenue and customer loyalty.
Brands need to dive deeper into understanding their customers to set themselves up for success. Conduct research to gain insights into customer needs, preferences, and behaviors. By doing so, you can develop targeted strategies that will enhance customer experience and boost overall retention.
Right now I would say Gorgias. Having a good customer service tool is crucial to building strong customer relationships.
Start paying heavy attention to data, specifically around retention. We see a lot of effort put towards acquisition with the assumption that once someone buys, they are your customer forever. Instead, get to know your customer, understand their needs, and analyze their behaviors once they are on-site and judge their sentiment after they have visited. Work with a retention focused and data-driven agency to implement tools that contribute to repeat business and customer delight. It will pay dividends.
When surveyed, about 80% of ecommerce merchants think that they are delivering a great experience to their customers. However, when the same customers are surveyed, only 8% of those customers think that they are getting a great experience from the merchant. Now, more than ever, retaining loyal customers is an essential part of any online business and you should spend time with your customers to judge their experience with your website and products and offer improvements based on that feedback.
Tydo's report cards are an essential tool, along with Klaviyo for email and SMS, Recharge for subscriptions and memberships, Okendo for reviews and surveys, Rebuy for AI driven collections and upsells, Loop for self service returns... each tool is great on their own, but their strength as the ultimate tool comes from when they are used together!
Never miss an update from Tydo
Report Cards is a customized glimpse into your business, delivered to your inbox for free.
Report Cards consolidates all your key metrics across platforms for an at-a-glance pulse of your business.
Discover metrics for every team member so they can stay updated with the right data on a daily, weekly and monthly basis.
It's free because we believe everyone should have access to the basics.
Portfolio is a hub for analytics across multiple Shopify stores. The perfect tool for agencies.
See an aggregate view of all your data for all your stores in one place.
Make real time assessments on marketing initiatives across every storefront you manage.
Analyze the performance of one store versus another in seconds.
More about the project
Here at Tydo, we try to highlight DTC founders who run their business in various ways. And, that's because there's no "right" way to run a DTC brand.
This project illustrates exactly that. Whether it's how a founder supports their team or how they talk about mental health in the workplace, every founder has a different approach. How do they discover these different approaches? One way: reading. Discover the greatest books that have changed the way 15+ founders think about or operate their business.
You can also listen to these book picks on Spotify or Anchor.fm.