New Thinking in E-commerce Management: 3 Reasons to Replace "Sales Targets" with "Efficiency Targets"

E-commerceEntrepreneurs, stop being bound by annual sales targets!

This course provides an in-depth analysis of the hidden risks associated with annual sales targets and offers practical alternatives to help you break free from performance constraints, build a sustainable and profitable e-commerce model, and understand how to optimize your strategies to achieve true long-term growth.

Do you know how many e-commerce business owners have been ruined by annual sales targets, losing everything?

I've seen too many entrepreneurs set ambitious sales targets of hundreds of millions at the beginning of the year, only to find by the end of the year that their profits were less than those of a street-side milk tea shop.

The harshest truth in the e-commerce industry is that sales revenue and profit are two completely different things.

Why is it said that annual sales targets are poison for e-commerce startups?

The lifecycle of e-commerce products is frighteningly short.

The product you promote today might be completely copied by your competitors tomorrow, leaving you with nothing.

Remember that viral air fryer from last year? It made a 30% profit in the first month, 15% in the second, but by the third month everyone was selling at a loss.

In this environment, who can guarantee that a product can continue to sell for 12 months?

Sales targets can distort team behavior

When the boss is focused on sales figures, employees will naturally work hard to boost sales.

To meet their KPIs, they would rather achieve 1000 million in sales and earn 50 than achieve 200 million in sales and earn 80.

What's even more frightening is that this distortion will permeate every operational detail.

You'll see teams frantically signing up for events, throwing money at advertising, and even losing money to boost sales.

In the end, the sales target was met, but not a single penny was added to the account.

The true lifeblood of e-commerce is capital efficiency.

You have two choices:

1. Earn 500,000 with a principal of 1 million, and turn over the money 3 times in 6 months;
2. Or you could use 5 million as principal to earn 1 million, with the turnover only once a year.

Smart people would choose the first option.

In reality, teams that are held hostage by sales targets are always looking for the second option.

E-commerce company's human resource management method

Instead of setting sales targets, we focus on one number: profit per employee.

A team of 10 people must achieve an annual profit of over 100 million.

If the number is below this level, optimize the workforce; if it is above this level, consider expansion.

Specifically regarding product selection strategies:

1. Products with a gross profit margin below 30% are immediately rejected.
2. Products with an inventory turnover period exceeding 60 days should be immediately disposed of.
3. All channels with promotional expenses exceeding 15% of their revenue have been suspended.

Reconstructing e-commerce operations with a profit-oriented mindset

Imagine the company as a cash flow machine.

Your task is not to scale up, but to maximize the efficiency of every dollar of capital.

This means that:

1. Focus on high-margin product categories, even if they are niche.
2. Establish a rapid response mechanism to immediately stop losses if any signs of trouble are detected.
3. Always maintain sufficient cash flow so you can act swiftly when opportunities arise.

Write at the end

In this rapidly changing e-commerce era, sticking to annual sales targets is like navigating a minefield with a compass.

The real winners are playing the game of capital efficiency: leveraging the smallest amount of capital to generate the largest profits and completing the cash-out cycle as quickly as possible.

Remember, in e-commerce, it's not about who sells the most, but who thrives.

Starting today, forget about sales targets and focus on embedding profit and employee productivity into your team.DNAThis is the survival rule for navigating economic cycles.