Customer acquisition for ecommerce: challenges and solutions

Get more digital commerce tips

Tactics to help you streamline and grow your business.

Ecommerce is ever-evolving. And so is the way in which businesses gain their first-time customers. 

In today’s shopping environment, convenience is more of a priority than ever to shoppers. With the dramatic rise of marketplace popularity and the ability to shop while browsing social media, where customers are coming from, and the cost of getting those new customers, is changing.

Marketplaces have seen exponential growth since the pandemic, with that sector growing 80% in the last quarter of 2020, according to Mirakl.

A recent Linnworks study found that 78% of respondents value convenience more than before the pandemic, and 76% consider convenience as a key priority when selecting a retailer. Almost half (46%) say convenience even overrides cost savings, and 38% now expect convenience to be standard with their shopping experience.

As customer acquisition costs are rising, it is becoming increasingly important to keep loyal ones. In this article, we’ll discuss what customer acquisition cost is, how to keep up with customer expectations to keep loyal customers and how to reduce customer acquisition cost. 

What is customer acquisition cost?

Customer Acquisition Cost, also known as CAC, is simply how much it costs a business to get a new customer. This amount is any money spent on acquiring a customer to purchase a product or service. It may include items such as marketing, advertising, sales, personnel, equipment or property. [source: ProductPlan, MailChimp]

Exact numbers vary, but various studies show that acquiring a new customer is anywhere from five to 25 times more costly than retaining an existing one, according to Harvard Business Review.

What do businesses need to do to keep up with customer expectations? 

In today’s ecommerce world, it’s critical for a business to provide convenience and a frictionless shopping journey for both new and existing customers. The seemingly most simple way to acquire new customers is to be where they are already shopping. 

Here are some ways to keep up with the challenges of getting and keeping customers:

Embrace omnichannel.

Staying connected to your customer involves embracing omnichannel retail. This means being a top choice regardless of entry point – in-store, a direct-to-consumer website, marketplaces and social commerce. Whether shopping from their phone or their laptop, customers enjoy a seamless shopping experience between the devices they use. 

According to reporting by Invesp, companies utilizing an omnichannel customer engagement strategy, retain 89% of their customers on average. 

Selling in marketplaces.

According to Linnworks research, 90% of shoppers start their search for a product on online marketplaces, such as Amazon, Etsy and eBay. This could mean that not selling on marketplaces could result in missing out on potential customers.

With selling within marketplaces, it not only allows you to reach a much wider audience, but is a way to test other market areas.

Keep existing customers happy.

There is high value in an existing customer. 

The probability of selling to a present customer is between 60% and 70%, while the probability of selling to a new customer is between 5% and 20%, according to Semrush. In fact, research by Frederick Reichheld of Bain & Company showed that increasing customer retention rates by 5% can increase profits by 25% to 95%, according to Harvard Business Review.

When omnichannel customer engagement strategies are present, the retention rate for customers can be up to 89%. On the other site, it is only 33% among those with weak omnichannel approaches, according to Invesp.

Ensuring an existing customer’s satisfaction may not only increase the odds of them returning, but it can actually lead to new customers as well. According to, 60% of new business comes through referrals.

Ensure a positive customer journey – even after the purchase is made.

According Linnworks research, nine out of ten customers will opt for a website that provides a frictionless shopping experience. But that shopping experience doesn’t end once their product is in the cart.

The check-out process has a big impact on buyers. More than half (67%) of shoppers say they have abandoned a purchase due to complicated check-out features. Nine in ten shoppers say flexible payment options speed up their purchasing decisions. 

Customers expect transparency and accuracy when it comes to shipping costs, a delivery timeline and the process for returns and refunds. At least 62% of customers say they are more loyal to a retailer who is honest about delivery costs and the time it takes to deliver a product. Customers expect accurate delivery information before the purchase as well as the ability to track their package once the order is placed. 

Even upon proper delivery, the shopping journey is not complete. Consumers want a simple return process if not satisfied and accurate information about the return policy. In addition, 72% of shoppers are influenced by an ecommerce business’ return policy, and 89% of customers want returns to not involve a customer service representative.

Sell everywhere your customers are with Linnworks

How to reduce customer acquisition cost with inventory and order management. 

Reducing customer acquisition costs depend on what those costs are to begin with since each varies depending on the business, the product and the customer base. Three ways that recommends cutting down CAC costs, include focusing on boosting conversion rates, utilizing marketing automation and cutting down customer churn.

Strong order and inventory management automation is essential in customer acquisition and retention. This can help ensure stock is available, manage listings, better predict supply and demand, automate workflows and even target copy to audiences.

Here are some ways an inventory management can help:

Avoid overselling. If you’re running an e-commerce business, you understand that keeping track of inventory isn’t always as easy as it seems. An inventory and order management system avoids the risk of overselling a product, which leads to a negative customer experience and ultimately lost sales. This is especially a factor when it comes to first impressions for new customers.

Meet customer shipping and delivery expectations. There are a lot of boxes to check when it comes to keeping customers happy post-purchase. According to Linnworks, 95% of shoppers say that convenient delivery options are a major factor in the online retailers they use, and 62% say that they are more loyal to a retailer who is open and honest about delivery costs and timing (56%). 

A guest check-out option and shipping information stored for future purchases are among the top convenience criteria customers prefer. 

Customers expect orders to ship fast with 61% prioritize brands offering next-day delivery. Nine in ten desire free delivery, even if it means waiting longer. 

A management system can also help facilitate the often-hectic return process. Linnworks research showed that 72% of customers are influenced by a return policy, 89% want returns to not involve customer service assistance and 87% expect a pre-paid return label. 

Avoid underselling. Embracing multichannel can help not missing out on revenue. In this day where convenience is a top priority for consumers, it’s important to be where your customers already are. 

When it comes to acquiring new customers, it’s important not to overlook the foundation of properly managing inventory. Having the available product, an accurate description and up-front information about shipping and delivery are all essential.