The idea of E-Commerce is very attractive. The E-Commerce industry is growing at almost 20% per year and, at this rate, will outpace traditional brick-and-mortar stores within the next five years. Find out what it takes to run a successful E-Commerce or Catalog store.
In this world of technology, it is easy to think that E-commerce success is given to those who understand the latest technology. Well, you are right in that technology does have its part to play, but running a successful E-commerce business is mostly about developing the business strategies that underpin it.
So, if you have not run an E-Store before, there are many aspects that must be considered before you start. These aspects are integrated and of equal importance. The four main pillars of E-Commerce success are Business Strategy, Marketing Strategy, Operational Strategy, and Website Management.
BUSINESS STRATEGY
- Market Size
- Customer Analysis
- Product Analysis
- Competitor Analysis
- Financial Analysis
Market Size
The market size for your product or service determines the revenue you could earn. Estimating the market size is tricky but can be done through research, both offline and online, industry sector statistics and other sources. Once the total market size is determined, you need to work out what share you could grab and why you think you could grab it. Competitor analysis, discussed later, will help you gauge how you can take market share.
Customer Analysis – nothing is more important
Many would-be e-commerce businesses think of themselves in isolation. They do not consider the actions of the most important people in this arena. The customer. A very savvy customer when it comes to buying anything online.
They are just like you! First, they research what they might want to buy and then having narrowed their choice down, they decide from whom they are going to purchase it. They probably have many pages open on their computer or phone. These are all your competitors providing the desired product.
The company that gets the deal is the one that solves the customer’s requirement the best. The chosen company could even be more expensive, but the perceived value offer is better. They press the right buttons, answer all questions and generate trust.
How do they do this? They talk the customer’s language, understand his needs, offer the best solution, and come across as trustworthy.
Most businesses have many more than one customer type – like a car company that sells to families, contactors, off-roaders, corporates. You need to identify them and speak to them in a way that solves their problems.
Product Analysis
You first need to decide which products you will sell online. Choose only your best sellers to start. You must research how best to describe your products to answer any questions the customer may have. These days E-Commerce sites include copy, photos, videos, Q&A, specifications as well as product descriptions. You cannot copy generic product descriptions off the internet, as Google will ignore you if you do. To generate product descriptions that are customer and SEO friendly can be a lengthy process that needs to be factored in.
Competitor Analysis
You need to do a thorough competitor analysis to ensure you are in the game. It is interesting analysing your competitors as you can get some great ideas as well as realise if you are falling short or exceeding their offers. You can fix where you fall short and play on where you are better. If you are way better, you can work out a strategy to grab market share from them.
Financial Analysis
What currency will you sell in? If you are doing international business, you can only use PayPal as a payment gateway, and PayPal does not work in Rands. Your site will have to be in dollars or some other major currency, and the transactions can only go through an account at FNB due to exchange control regulations.
Inventory – how much stock must you invest in to meet the delivery requirements. Where will you keep it?
Pricing – how will you price your product to make a profit, cover shipping and still be competitive. Will you offer customers a discount based on order value, line quantity? You could offer: buy one get one free: buy one, get the second at half price. Offer discount coupons for orders with a value of XX or on any first-time purchase.
MARKETING STRATEGY
You find the right customers and drive them to your website or landing pages from your marketing campaigns. Marketing is an expensive exercise, so you need to make sure you are not trying to sell to the wrong customers. Potential customers must be in the right frame of mind, have an idea what they are looking for, find the best solution, see if they can trust the vendor and then buy. That is why the customer analysis stage just discussed, is so important and is the basis of your marketing strategy. Without the correct marketing strategy, you will not get sales.
Leads from search engines: to find out if you will benefit from Search Engine Optimisation (SEO) or paid ads on Google (PPC), you need to establish the keywords that people would use to find products like yours. Once you know the keywords, you must identify how much traffic goes to those keywords from Google each month. If your product is new, or not well known, there probably will be few searches for it. In this case, although you make sure your website is optimised for keywords, you will have to look at other platforms to bring in visitors.
Marketing platforms – choosing the correct platform depends on the type of product you have, and your ideal customer. Facebook, Instagram, YouTube, LinkedIn, Twitter, Pinterest and TikTok all have different markets. You are unlikely to get an older person doing much on Tiktok or Instagram for example.
E-mail – you may have an existing mailing list which could be a good place to start. Less expensive and higher conversions than most other marketing platforms. Not only can you communicate new products and services to existing customers and mail out product promos or newsletters, but you can collect new e-mail addresses on your website. E-Mail is also used in E-Commerce to try and convert abandoned carts or to tell customers their purchase is on the way. You would need to investigate mailing companies to see which one best suits your requirements. Mailchimp is pretty good and has a marketing slant.
Direct contact – some businesses in a niche market where there are relatively few big customers like hospitals for example, would do best to contact each hospital directly. Not all businesses can rely on digital marketing alone, and some of the traditional marketing methods like brochures, store demonstrations, TV, radio, trade shows can all send customers to your website.
BUSINESS OPERATIONS
Inventory Control – the management of your physical stock. Customers who order and pay online expect goods to be shipped the same day. They have paid you money and are worried that the goods will not arrive (until you establish trust with them). Not only do you need to dispatch immediately, but you need to inform the customer that the goods are on the way and send them the tracking number. The customer needs to be able to contact you with any queries regarding the delivery.
Shipping – Distribution, more widely known as Shipping, is the unseen element that can cost you a fortune and make e-commerce unprofitable. These days customers expect you to ship FOR FREE or for a very small fee. This concept means shipping must be worked out to ensure the customer is satisfied and you don’t lose money. It is particularly difficult if your product is generic as your pricing will be compared with competitors. The problem is also compounded for businesses whose customers return goods. This is especially applicable to products like clothes, shoes, furniture, where the customer receives the product, tries it out and does not like it. Customers even order several sizes of the same product to see which suits best. If you are in this type of business, returns can be well over 30% and must be factored in. The costs of re-stocking them and checking for damage are additional to the shipping expenses.
Part of shipping includes packaging costs, customs requirements, and expenses to get the product to the shipper. There are parcel weight restrictions, entry restrictions like fumigation, breakage control, insurance, and returns management.
You must research your shipping provider very carefully to ensure you can rely on them and that they will meet the shipping time promised on your website.
Admin and Customer Service – You also need to answer customer queries around your business, besides delivery queries. Many businesses cannot sell directly to the customer as they need a lot of information about the customer’s requirements in order to price their product, like generators, custom curtaining, and flooring for example. These types of business would normally have an online showroom with an enquiry facility which must be managed.
You can also get post-delivery queries like problems with the product installation, additional products to be purchased to improve the purchase made – the list goes on.
Do you need to create customer invoices from the website? Do you need to create packing documents from the website? Will you integrate into an accounting package?
The backend of your website must be managed consistently and timeously. This is an area that can cost you big-time. Excellent service earns you repeat business and word of mouth referrals.
WEBSITE DEVELOPMENT
Your website becomes your salesperson. You want your website to lead the customer to take the action you want – like buy your product, subscribe to your mailing list, place repeat business and refer you to friends. That is a winning website.
A winning site cannot be created with some unstructured copy and a few poor quality photos. The site must be structured in such a way as to perform, based on an in-depth understanding of your business. Each page on the site must speak to the visitor, appeal to their emotions, solve their needs, answer their questions and create trust – just like you would when selling to a customer.
Creating a winning website does not happen by magic. The website designer needs information to make your website convert to sales. We can assist you in creating a winning brief.
Performance Monitoring – once your online store is running you need to find out what is not working. How many customers are coming onto the site and never going to the cart; how many customers are going to the cart and then abandon it. Exactly where are customers dropping off, and why?
You need to know how much it costs to get a new customer, what you can expect them to buy from you over their lifetime as a customer, and how this impacts your return on your marketing expenditure.
OUR SERVICES
You understand your business best. You can put together a good business strategy and website brief, double-checking most aspects with the help of this document.
Should you need any assistance, we have all the necessary skills to properly implement your E-Commerce business. To find out more information, give Beverly a call on 082 772 0324 or e-mail bevt@showme.co.za.
