Online shopping has become a part of everyday life, and consumers will spend a considerable amount of their disposable income online. In the last quarter alone, ecommerce business market amounted to near $80 Billion in the US, with a sizeable growth during the holiday season in December.
Globally, the market is expected to reach $500 Billion in sales by next year, and yet only accounts for less than 10% of total retail sales. See how much space is yet there to conquer?
This year, China recorded a staggering $25 billion in one day alone, on Nov 11, during a retail date named “Single’s Day”. The holiday focused on “the lonely hearts” created revenues that were 4 times greater than Black Friday and Cyber Monday combined.
While China is certainly leading the pack with ecommerce, the US and UK are following suite. In fact, 40% of major retailers in the US offer in-store pickup options for online orders, as a way of bringing them closer to the retail shopping experience.
Emerging markets too are picking up steam, with growth rates between 7-10% across regions. With the help of the internet, ecommerce providers can now enter multiple domains and offer many product ranges across different geographies and demographics.
Summing it up, ecommerce is definitely the place to be right now if you’re interested in high growth and bigger margins in the retail industry.
But how can you enter this promising market?
Building/Selecting the Website Platform
Starting off is relatively easy. You need a website based on a solid architecture, with a secure backend that encrypts user data. There are many options online available to anyone across the world, such as Shopify and Magento.
Websites like Shopify make it easier and simpler for anyone to open an ecommerce site on its platform, without the hassles of security, logistics and knowledge about technology.
However, to have a complete know-how about the space, you can also invest in building a platform of your own, that is proprietary and scalable. Creating a brand-controlled backend ensures that you have access to all your data, and that there may be no breaches or problems that may arise from third-party vendors.
For this second option, you can quickly start off with a WordPress website, choose one of its various templates, install a Woocommerce plugin and start accepting orders within a week of initiating. It’s simple like that if you want to start off small.
Selecting the appropriate technology
When starting off, you need to think about the kind of technology that will be powering your website and backend. If you want a fast website, then installing CDNs would be a good option. If your website doesn’t look great on mobile, then you need to ensure cross-platform optimization.
It is this and many other tweaks that make technology an important factor when it comes to creating an ecommerce platform. Technology is key here, and any mistakes in picking the right tech partner or deploying the right backend in the right region, can create long-term problems.
Not only does this include the technology that is appropriate for the niche, but also how the technology interacts with all parts of the website.
Your technology should match your overall goals, regardless of what kind of ecommerce platform you’re building on. Among others, you should ask yourself the following questions regarding which technologies you believe are crucial to your business:
- Do you need one-click checkout?
- Do you need to automatically calculate shipping costs underneath the pricing models?
- Do you need an automated CRM system?
Branding your website
When launching, the first thing you need to think about is the brand. How the brand is reflected in the minds of consumers, how it creates an impact on basket size, and how well does it resonate with the target audience.
- the logo;
- the color scheme;
- the packaging;
- the interactive nature of the website;
- how you will communicate with your customer.
The logo, language and design of the website should make the consumers feel “fun, relaxed and engaged” when navigating and create empathy towards your product.
If you build a generic looking website, you won’t be able to charge customers fair retail prices, as they would be expecting your site to be a wholesale reseller.
Branding is one of the most important factors when it comes to consumer intent and it decreases price sensitivity and attrition. Building a stable, long-term brand has become a top priority across the world, and a lot of players are now focusing on competing in multiple domains solely on the power of their brand.
Another important part of this process is making sure you select the ecommerce business model that better suits your business needs.
Choosing the right product range
An important consideration when it comes to ecommerce businesses, is the kind of products you’ll be selling. It could be anything to do with your niche, or symbiotic industries that benefit from your product range and business model.
Picture you are selling decorative flowers online, you can either sell them to consumers or to businesses. But, you can also look at industries that are related to your business, like event management companies, wedding planners and interior decorators, and plan your inventory accordingly. Some businesses will like certain types of flowers, others will prefer a certain delivery logistics. It completely depends upon the level of competition in your industry, the types of customers out there and how creative you can get with your product range.
In certain cases, you won’t be able to sell off your entire inventory, which is why you need to consider the “lean methodology” or “just-in-time methodology” if you want to procure and deploy strategic inventory units.
Selecting the perfect product range also requires research. You can go online and search for trends, social shares, or what influencers in your industry are talking about.
All of these steps help ensure that you have inventory that is sure to sell, and is a hot-item in the industry at this time. For B2B brands, it helps to talk to industry players about their existing needs and requirements. If you can satisfy them with niche products, then you’re all set to manage your inventory system.
Ensuring on-time fulfillment
Ecommerce Fulfillment is one of the key areas that you need to think about when starting off with an ecommerce business. Fulfillment requires a thorough understanding of how your product is manufactured, where its shipped and how quickly can it ship from warehouse to customer.
Fulfillment requires a strategic approach to ecommerce, as it can make/break your business. There are many complex steps involved in the fulfillment process and you need to have an understanding of how supply chain management works. How it plays a role in overall delivery, and what kind of fulfillment model you need to deploy.
You can drop-ship, go in-house, or outsource to a third-party vendor (3PL). The advantages of either one depends on your current size and revenue model. For brands that want to grow slow, in-house shipping may make more sense. For others that are scaling quickly (250+ daily orders), it would make more sense to drop-ship or outsource.
However, its important to ensure that your brand, your margin-share, and your overall management efforts contribute to the overall growth of the business.
Understanding Payment Processing
Payment processing vendors must be selectively chosen, based on their scale, depth of reliability and overall impact on business models. There are multiple payment platforms available for online ecommerce businesses, many of which have varying payment processing fees and timelines for payment transfers
If there are many businesses across the world using one primary payment vendor, that vendor becomes more reliable than others. If there is a new vendor offering lower fees and faster transaction times, but has lower reliability, then that’s your call to make.
It depends upon how you’re starting off, and whether you have the necessary bandwidth to follow-up with payment vendors and various parties that may be new or unreliable.
If you plan to cross borders, your ecommerce website must accept local payment methods so that your customers don’t face any problems while transacting with your website, specially the international ones. A customer that faces a bad experience once may never come back again to transact with your website. That’s why you need to have multiple payment options and reliable vendors for ecommerce payment processing.
Bet on Marketing
After setting up your website, technology, fulfillment and branding requirements, you need to focus next on marketing. Online marketing is one of the best forms of advertising in the ecommerce space, as you can track everything from clicks, impressions to how many orders you generated from a specific ad creative.
There is a lot of scope in online marketing, and its still an untapped avenue for development. You can easily get setup with a Google Adwords or Facebook Ads account and start generating your first set of advertising. Ensure that your marketing efforts are consistent with your overall brand, and that your ad creative and copy have an impact on your customers’ minds.
Ecommerce businesses flourish on online marketing, which offers many avenues of growth, including tracking ROI, multi-channel attribution, and email marketing.
You can develop multiple modes to increase traffic, going from creating a new video on a YouTube channel, or working with “influencers” to promote your brand. These influencers are often powerful in their domain, and can drive hundreds of thousands of visitors to your website or ecommerce page.
It depends upon your budget and scope of work, but marketing is the number 1 point that you want to focus on after setting up your ecommerce business.
Don’t forget about Customer Services
Customer services is another key factor that you need to think about when scaling up your ecommerce business. Customer Relationship Management tools offer great ways for you to sort, organize and mange customer queries and complaints, and provides you with multiple options for channel management.
Let’s say you have a customer who wants a refund. The CRM tool should be intelligent enough to pick up their details based on their name or IP address, and share their purchase history instantly.
Other times, it should offer a dashboard for you to review and manage customer complaints and provide data for you to sift through and create trend analyses from.
There may come a time where customer complaints may pile up and therefore mapping out “which” product created the most amount of “what” issues is key, a then you can turn customer complaints into real assets to improve your business. Suppose a certain type of belt has been getting the same complaints of tearing too quickly, you can share the complaints with the manufacturer so he can invest in better quality control, which will reduce the complaints rate.
It may be discontinued from your website, but if it’s a hot-selling item then you can negotiate better deals with manufactures based on consumer feedback.
Invest in a Multichannel Strategy
The next step in scaling up your ecommerce business organically is through partners and going for a multichannel strategy, including affiliate marketing. Partnering with existing ecommerce businesses, that may be supplemental to your industry, helps tremendously in overall business development.
Partnering with the right suppliers, websites and vendors makes all the difference when it comes to creating additional value. If you manufacture and sell wallets, then partnering with online fashion designers or fashion brands may be a good idea for you to grow your business.
Most partnership deals work with a revenue share model, where either you pay for virtual shelf-space, or a cut of the profits. Sometimes you can even carve out a special discount for the customers of your partner’s ecommerce website, and create value for them while creating new markets for you.
Partnering with the right vendor also makes a massive difference, as you want to scale up your ecommerce business with the right logistics provider. When your vendor, payment partner and technology partner can scale up with you, it’s a great deal for everyone.
Don’t be afraid to Outsource
When a growing brand creates exceptional value for its customer, it must push the accelerator on what makes it special. By outsourcing the non-essential elements of your ecommerce business, you can create more value by focusing on “product development”, “branding”, or “technology”.
You have to find your inner business strength, usually something that other businesses aren’t doing, and scale that part of the business up.
Let’s imagine you have an ecommerce business that focuses on B2B educational equipment. You can, for instance, focus more on brand building and outsource manufacturing, technology and shipment, while you create more brand awareness for yourself.
Other industry players may focus more on technology as a long-term differentiator and offer the best website experience for customers. These customers might also find the best deals for educational equipment on another ecommerce website, which creates more value for them.
Outsourcing non-key elements of your business helps free up time and resources and you can focus on expanding your brand or developing your customer-base.
Growth and Maturity
Good Management is essential
Growing now has shifted towards more becoming a mature business, with multiple income streams and large and small customers across geographies. Your ecommerce business has become more management-centric and you need to focus on overall strategy and development.
Your marketing, partnership and technology has matured to a point where it has become self-sustainable. Your role as a CEO has transformed along with your business. Focusing now on hiring the right managers and introducing a corporate environment to the ecommerce business is the next step in growing the business into a well-oiled machine.
Here is where you will be setting sights on the Alibabas, Zapoos, Amazons of the world and competing in key markets that they are incumbents in.
The Legal/Policies matter
Apart from the logistical challenges that ecommerce businesses may face, there must be a strong focus on legal and policy related issues that may arise from time to time.
Issues related to HR, financing, usability, promotion, etc. must be dealt with, along with creating policies and legal boundaries that both employees and company must follow. Everything from consumer policies to shipping/returns must be figured out legally and presented to all stakeholders in a manner that’s transparent and mutually beneficial.
Aspects like shipping, delivery, payment and trade agreements, must be looked at from a 360-degree legal perspective and given due diligence where needed. That’s the sign of a truly mature ecommerce business – one that has taken care of all legalities and functionalities.
Here is where you can attract some really talented individuals and corporations to work with you to grow further.
Thinking about Expansion
After a few years in the business, if you do happen to achieve meteoric rise in a short time, you may even consider expanding through acquisition, or aqui-hiring from an existing company.
If, for example, you have an ecommerce brand that sells speakers and headsets, you may acquire a fast-growing accessory for electronics website to expand your product line quickly.
You should always be on the lookout for great opportunities to expand through acquisitions, as you never know what avenue works best for your brand or company.
Many ecommerce brands are acquiring smaller startups to expand their own technology base, or even enter new markets that were high-competition and difficult to enter traditionally. That’s why a lot of businesses turn towards ecommerce expansion through acquisition.
You can also consider expanding into new markets, and even taking your ecommerce worlwide through partnering with supplementary industry players and creating value for them as well as for their customers as well.
There are many ways in which ecommerce businesses initiate, scale and grow their businesses. Brands with a unique revenue model, a strong positioning strategy, great product development and payment partners can stand to benefit immensely from the growing ecommerce space.
Ecommerce may not be limited by B2B or B2C business models, whereas they should be viewed from the lens of initiation, scale and maturity, as each stage requires a unique set of skills, understanding and strategy.
Ecommerce businesses have flourished over the last 5-6 years owing the internet and smartphone penetration and demand rising from consumers for differentiated products and unique services.
It’s fundamental to highlight as well that online businesses that follow best practices and ecommerce trends have a depth of knowledge of their industry, stand to gain a lot regarding growth, market penetration and overall ability to flourish under difficult situations.