Mind the gap: E-commerce marketers should revise their TAM and SAM estimates

Mind the gap: E-commerce marketers should revise their TAM and SAM estimates

Ashwin Ramasamy

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Ashwin Ramasamy is the co-founder of PipeCandy, a web-based service provider graph firm that discovers and analyzes enterprise and client notion metrics about D2C manufacturers and e-commerce corporations.

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2021 goes to be one other superb 12 months for e-commerce.

It is that point of the 12 months when most of us are wanting again on the “whole addressable market” estimates to plan for particular campaigns. Unlike us, if you happen to had your 2021 kick off in Q3, bless your soul. You are an enlightened being.

For the remainder of you, for whom e-commerce is a strategic market, I’ve a query — have you ever constructed your whole addressable market (TAM) and serviceable addressable market (SAM) estimates for 2021 contemplating how issues advanced in 2020?

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It’s essential to know the underlying enterprise mannequin dynamics of corporations and visualize TAM from these views.

For most of us, analysis is a mind-numbing, repetitive train of clicking via hyperlinks on Google till all of them flip purple — at which level we begin in search of the only attainable rationalization. For e-commerce, addressable market estimates come within the type of headlines from platforms like Shopify. The firm quotes a service provider rely quantity in its earnings calls and that turns into the premise for guesstimating the present TAM of e-commerce corporations.

The different, fairly simplistic strategy is to have a look at the user-base rely from a number of databases that publish tech platform-level consumer stats.

In actuality, the only reply just isn’t the proper reply.

Mind the hole

Let’s take e-commerce buying cart installations. Shopify, Magento, WooCommerce, BigCommerce and others publish set up numbers that run into thousands and thousands.

Here is the dichotomy that ought to body your TAM discussions.

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E-commerce is long-tail heavy. Yes, there are thousands and thousands of retailers, however e-commerce income is a fat-tail phenomenon — which means, a disproportionate quantity of e-commerce income comes from just a few tens of hundreds of corporations.

PipeCandy publishes bottom-up TAM estimates with detailed information cuts by know-how, logistics and cost system adoptions by corporations throughout income tiers throughout all main markets. One of the widespread misconceptions we see in how corporations misread TAM estimates is that they equate income to spend potential.


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