2023 was in some ways exactly as we expected and in some ways very surprising. Let's break down what we can take away from the past year.
I traditionally reread my "recap of 2022" and this time I must immodestly note that I wasn't that out of place, you can judge for yourself:
"Personally, I think 2023 is going to be the most challenging year for e-commerce in a decade. I will be very happy to be wrong, of course. I view it a little masochistically, as just another opportunity. The grain is separated from the chaff. The companies that will win will be those that are more efficient and take advantage of the few opportunities for growth in 2023. Again, expansion is an opportunity even in difficult times, think about it."
At Expandeco I think that we are winning because:
- we are becoming more efficient (increased automation + processes + cost control = increased margin and room for scaling)
- we found room for growth after 9 years on the market (new product: Numbyx)
- we are successfully expanding (Poland +80% year-on-year growth; we are preparing to enter the German market)
Q1 – the key period that dealt the cards for 2023
We had a very solid first quarter thanks to David's (CFO) financial plan. Unfortunately, the whole market was taking a beating from the crises that continued to attack from all sides in early 2023. Sometimes you can stand on your head, but you just can't beat the market. When you realize this, it can have a reassuring effect on you that "all e-commerce is f......!"
The fact that you are not growing as a company like you expected may not seem like such a problem. It becomes a problem the moment you don't quickly adjust your own increased costs to the dropped income. We were trapped in a strange delirium. We have been filling new jobs and increasing overall investment costs like crazy.
Here at Expandeco we keep very precise track of the numbers, and always know exactly how we ended the previous month's economy to the penny no later than the 25th of the month. When we saw that we "missed" January and February and made a loss in the order of a few tens of thousands of euros, we were still convincing ourselves that we would break even. But March sucked again. All the lights came on and suddenly an innocent 2 months was a negative trend. And that's when it’s time take action. In our case, that meant reassessing the plan, cutting costs and holding ourselves and people accountable.
And that was the first moment when we seriously rolled up our sleeves as shareholders, slept a few nights and had to cut about €20,000 in monthly costs in the company in order to stabilize and regain profitability in the shortest possible time.
The company will pay you back everything with interest, for better or worse.
A good investment appreciates in value in the long-term, stupid decisions also hurt for a few more months. Fortunately, thanks to very quick action, in May we were already in the black.
We eliminated the COO position, 1 sales position, 3 translation colleagues, 1 back office and 1 marketing colleague, including the cutting of operations – thanks to synergies we could afford to eliminate surplus space and a few other reverse logistics positions in Brno and Budapest. With our revised structure, we entered the next period. In hindsight, I assess our decisions as difficult but correct. Remember. You're building a business (in our case, supporting over 70 people), so you can't be "soft" at all times. No hard feelings!
After Covid, the first quarter of 2023 was another test of our entrepreneurial prowess. And I think we did it. I've been monitoring the surroundings and I see that a lot of companies in the e-commerce segment missed the opportunity to reset their business plan earlier this year. This could have had negative impacts on their business. Please let me know how it went with you. I'm really interested.
First and last insight, along with unsolicited advice
My big mistake at the beginning of the year was that when the COO, or anyone else (sales, marketing, etc.) came up with the idea that we were busy somewhere and needed to add a person to the infrastructure, I uncritically nodded. Friends, I'll let you in on a secret. When someone has a lot of work, it doesn't automatically mean that we have to add another colleague. Take a closer look at the process, reflect on efficiency, confront the person or department in question. Why do they need reinforcements? Why don't they do it differently? How would they be able to cope with the current situation without changing numbers? The more WHY and HOW you ask, the more in-depth you can go and gradually find answers to problems. Of course, you must keep sound judgment and hiring is sometimes necessary. We typically still have a shortage of smart developers here.
Let's cut it short
After a challenging Q1 and a successful "pulling of the rudder" in a better direction, I've been pleased with the following things so far:
- Significant progress and development in reverse logistics.
- Numbyx brand launch – we lease out foreign numbers, which are more accessible to expanding entrepreneurs thanks to our long-established infrastructure.
- Expansion of the call center with French, Spanish, Italian and Lithuanian teams. We are currently fully serving customers in up to 14 European languages!
- Creating unique content like ESHOP TALKS.
- Significant growth in Poland (over 80% YoY).
- A long-standing, healthy foundation for the Expandeco team.
- Investor interest and belief in our vision.
- Good company vibe, energy, desire to develop yourself and the company.
Expandeco in numbers
We should reach roughly EUR 2.9 million, which is about 20% growth. Circumstances reassure me that this is great because the market is down +/- 10%. Okay, I accept it, though our ambition was greater and we will try to make even better use of the opportunities in 2024 to drive growth. We have the means to do so, and the following should and could help us to do so:
- the launch of an online return form
- an improved business strategy and reinforced team in the Czech Republic
- the strengthening our position in Poland
- expansion into Germany
- the potential admission of a strategic investor into the company
If you're interested in any details from the Expandeco kitchen, please ask, I'd be happy to share.
Finally, let me thank my colleagues for their years of support and positive attitude at work. Together, let's make 2024 an even more successful year than the last.