In e-commerce, growth often feels chaotic. Founders juggle ads, new product launches, customer service, and supply chain hiccups — only to wonder why profits still lag behind. But step back, and you’ll find a simple truth supported by decades of business research: the 80/20 rule.
Also known as the Pareto Principle, it suggests that 80% of results come from 20% of inputs. In e-commerce, that often means:
– 80% of sales come from 20% of products.
– 80% of revenue comes from 20% of customers.
– 80% of operational problems come from 20% of inefficiencies.
The power of the 80/20 rule lies in its ability to focus founders on leverage points — the small areas where changes deliver outsized results. And the data backs it up.
1. Products: The Hidden 20% That Drive Revenue
A 2023 analysis by Shopify found that in most small to mid-sized online stores, less than 25% of products generate more than 70% of revenue (Shopify, 2023). This aligns almost perfectly with Pareto’s principle.
👉 Why it matters: Many founders waste resources marketing their entire catalog equally. The truth? Doubling down on the core revenue-driving SKUs often brings higher ROI than chasing long-tail products.
Action Step:
– Use order history to identify your “power SKUs.”
– Prioritize them in ads, email campaigns, and inventory planning.
– Consider phasing out low-volume, low-margin items that tie up cash.
At Modonix, we’ve covered this strategy in:
https://modonix.com/how-to-build-smart-campaigns-around-product-margins/
2. Customers: Your Top Buyers Shape Growth
Not all customers are equal. According to McKinsey, the top 20% of customers generate between 60–80% of revenue in most retail businesses (McKinsey, 2022). Repeat buyers are especially valuable: they spend 67% more than new customers, and they cost far less to retain than acquire.
👉 Why it matters: Many brands pour money into new customer acquisition while neglecting the profitable core — loyal, repeat customers who already trust the brand.
Action Step:
– Segment your top 20% customers and create VIP programs.
– Offer exclusive deals, early access, or loyalty points.
– Track customer lifetime value (CLV), not just first-time purchases.
3. Marketing: Most Results Come from Few Channels
Marketing is another arena where the 80/20 rule applies. This summary, based on Statista, shows that in 2021, approximately 20% of all global retail sales were made online, with expectations of almost a 25% share by 2025. (Statista, 2024).
👉 Why it matters: Spreading yourself too thin across every new platform dilutes resources. The majority of conversions often come from a handful of channels.
**Action Step:**
– Audit your acquisition channels: where do the majority of conversions come from?
– Double down on those, and automate/report the rest.
– Don’t chase shiny new platforms unless they align with your audience.
Example from Modonix:
https://modonix.com/automate-your-weekly-ad-report-with-google-sheets-ga4/
4. Operations: Bottlenecks Follow the 80/20 Rule Too
Operations often feel like “death by a thousand cuts.” But a closer look shows most inefficiencies cluster in a few areas. For example:
– 20% of SKUs often account for 80% of stockouts.
– 20% of suppliers cause 80% of delays.
– 20% of workflows create 80% of bottlenecks.
A World Bank study on SMEs in Africa showed that companies with streamlined supply chain processes grew 2x faster than peers relying on manual workflows (World Bank, 2023).
👉 Why it matters: Small changes to your core bottlenecks (inventory alerts, automated invoicing, supplier tracking) deliver exponential gains.
At Modonix, we explored this in:
https://modonix.com/the-truth-about-how-to-build-an-inventory-alert-system-with-zero-dev-skills/
5. Data: The Compass for 80/20 Decisions
The hardest part of applying the 80/20 rule isn’t the theory — it’s knowing which 20% matters. That’s where data comes in.
Companies that track SKU-level profitability, customer segments, and marketing efficiency can see where leverage points are hiding. Without this clarity, it’s easy to optimize the wrong 80%.
👉 Why it matters: Data-driven founders scale faster because they know where to focus.
At Modonix, we believe in making this data accessible to small founders, not just enterprise
Wrapping It Up: The Power of Focus
The 80/20 rule isn’t a magic formula. It’s a mindset — one that helps cut through the noise of e-commerce and focus on the areas that actually move the needle.
– Double down on your best products.
– Protect and nurture your top customers.
– Focus on the marketing channels that really convert.
– Fix the operational bottlenecks that cause the most pain.
E-commerce founders don’t need to do everything. They need to do the right things.
As the data shows, those “right things” usually live in the vital 20%. Ignore them, and growth feels impossible. Focus on them, and growth compounds faster than you thought possible.