The Best Way to Grow in Retail Is Through an Ecosystem. This Story Shows Why

Many businesses start by focusing on a single product or a small set of products sold at a single physical location or online. The strategy is straightforward: deliver a specific product to the customer.

Example. Let’s take a small sports store with one location, selling fitness equipment under a niche brand license. The store offers a limited catalog: treadmills, stationary bikes, steppers, and rowing machines.

Revenue growth—minimal. In this case, growth is slow, almost negligible. Options to boost revenue are limited to marketing campaigns, referral programs, or improved sales training. However, these measures rarely drive substantial long-term growth.

As the business gains traction, it often expands by diversifying its product offerings, entering new geographical areas, or adding sales channels. For a physical store, this might mean opening additional locations. For an online business, it’s partnering with online marketplaces.

Example. The sports store expands its catalog to include clothing, shoes, accessories, and gear. It also opens new stores in different cities.

Revenue growth—step-by-step. At this stage, growth remains step-by-step because it happens with each new location or addition of a new product category. However, the growth pace stays the same between the stages of expansion.

To further enhance value and differentiate from competitors, businesses start offering complementary services that enrich the customer experience and generate additional revenue streams.

Example. The store owner notices that regular customers bring a stable profit, but at some point, they start coming in less frequently or never return. It turns out they are moving en masse to marketplaces. To compete with marketplaces, the store decides to add value and complement goods with services—online fitness programs, sports events, expert product reviews, an online media hub, adventure tours, and health check-ups. The services are available online for customer convenience.

Revenue growth—linear. Adding services increases customer value and loyalty, leading to steady revenue growth over time.

A business recognizes that customer needs are limitless, while its ability to meet them is not. To bridge this gap, it invites partners to join its platform, offering a wide range of products and services from its main brand and third parties. This approach transforms the business into an ecosystem.

In this case, the business acts as the core of the ecosystem, earning commissions on partner products and integrating services that complement offerings. This model allows for scalability and adaptability.

Example. The sports store evolves into a fitness ecosystem, inviting third-party sellers and service providers to join its online platform. The ecosystem offers a range of products and services, covering all customer needs related to sports and beyond. Thus, the ecosystem becomes a one-stop shop for fitness, wellness, lifestyle, and leisure activities, keeping customers engaged and loyal.

Revenue growth—exponential. When a business sells multiple products and services under one umbrella, customer lifetime value increases exponentially. There are two reasons for this.

First, customers make repeat purchases and return over time because it’s easy for them to explore new offerings—they already have an account, ID, purchase history, payment information, and loyalty to the brand. Each sale paves the way for the next, driving exponential revenue growth.

Second, the business can add new products and services regardless of its own capabilities. With a strong brand, the ecosystem can continually add new partners who bring in fresh products and services, further expanding the ecosystem’s growth potential.

The ecosystem model is the most effective way to achieve sustainable, exponential growth. Traditional methods that don’t involve diverse product and service offerings are not as effective in the long run. As shown by the sporting retailer case, transitioning to an ecosystem can significantly boost sales and profit.