Defining Your Ecommerce Business Strategy

Launching an online store can be a foreboding exercise, no thanks in part to the deluge of technology questions you will need to answer along the way. However, before you jump into choosing the right ecommerce system for your online business, it pays to first take a close look at your needs and expectations from a business point of view.

Research your marketing needs
A common mistake is to assume that the revenue will start flowing the day you go live. The reality is quite different. Most online stores require considerable effort to promote. It’s crucial to gain an understanding of which online channels make the most sense as a promotional medium for your particular venture.

Will you focus on search marketing, social media channels, banner advertising on content sites, press releases or participating in forums? These and many other possibilities exist.

Part of your initial investigation into the very feasibility of your business must be to understand how difficult it will be to buy your new business the exposure it needs to generate customers, usually through an investment of both time and money.

Determining the right way to measure and manage each activity you embark upon within these channels will typically require either outside expertise, or a significant learning exercise to understand the space. It is not unusual for a new site to take 3-6 months to ramp up visitor levels and in many cases it can take up to 2 years to reach profitability.

So, be sure to allow a proportion of your initial budget to launch and maintain your online marketing through this growth period. Once operational, the business will also require a monthly investment of time to maintain your visibility.

Identify the specific marketing mechanisms you need to use – such as discount coupons, gift certificates, shopping comparison sites, product review aggregators, social media channels (Facebook, Twitter) and search engines.

Review competitor sites
Take the time to search out competitor sites, in the same way your customers will.

Make a note of how you found them, as this can be a strong indication of the sort of marketing that is working. Also look at how products are being depicted – including the number of photos, descriptive detail, specifications, reviews, ratings and comparisons. Consumer expectations are continually rising in terms of the amount of information and quality of presentation.
Examine what kind of assurances are made regarding product returns, warranty, support, service, shipping costs and satisfaction guarantees. Some market segments extend consumers extraordinary levels of protection from wrong choices. Be aware of the difference between what you are obligated to provide from a government regulatory point of view and what you need to add in order to be competitive.

Analyse freight costs
Analysis of abandoned shopping carts has shown that shipping costs are one of the major factors in lost sales. If unexpectedly high, buyers will abandon their orders without hesitation. Seeking out ways to simplify freight calculation, reduce freight costs and eliminate cost shock must be high on your list of priorities. If possible, let customers know the freight cost up front.

Compare payment gateways
Getting ready to accept online transactions can involve several steps. Check out the requirements of gateway providers in your market. Many gateway providers have raised the bar on the standards that must be met before they will activate your account. In some instances, they will want to review the finished website to check for appropriate security measures, privacy statements, return policies, business information and branding. It pays to know exactly what will be required before you get started, so you can factor this into the project time-frame and progress application details early on to allow for processing delays.

Check out risks and hidden costs
You should factor in consideration in budget projections to cover for product returns, shipping losses and transaction fraud based on current industry norms – which can be researched at the time you start the business.

Also thoroughly investigate the payment options you intend to offer, to fully understand the costs, fees and extraordinary charges in the event of processing issues. There are many payment services available, and costs can vary considerably. Be sure to shop around, and look at how costs may change as your payment volumes rise or fall.

Check product complexity
Deciding how your product catalog must be organised is a fundamental requirement of your new business. Some products are simple – just a price, description and photo. But others can add complexities such as variations in sizes, colours, specifications, options and personalisation. Many simpler ecommerce systems cannot easily handle such requirements.
Furthermore, your product catalog may require items to be in multiple categories, or perhaps even to have more than one way of being categorised. For example, you might initially present items by categories of uses, but then also let people browse by manufacturer and brand. Work through these needs ahead of time, and also consider the value of being able to offer a list of similar products to help with cross selling (offering complementary products at the time of product selection) and up selling (offering better products or additional items after the purchase decision has been made).

Finally - process of elimination
The planning you have just completed will provide you a clear list of needs that must be met by the systems you consider. Doing a little homework will often reveal that a budget end option you were looking at is actually too limited. Having to upgrade to a new system down the track can be costly both in terms of budget and lost business momentum. The key is to have a clear strategy guiding your choices so you can rationally eliminate ecommerce solutions that don’t meet your requirements.

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