What does an e-commerce strategy look like?

There are buzzwords for everything in today’s business environment; words extrapolated to sound more impressive than they really are. Some examples: business development consultant or sales executive. What happened to the trusty old “salesman”?

E-commerce strategy is, in my opinion, one of those buzzwords that has become so loosely used that it could mean anything.

After all, the word “strategy” is such a wordy and broad-ranging descriptor, which could mean something as basic as strategizing which way to walk to the local deli, compared to a strategy to invade a country!

Same word yet very different actions and intentions.

E-commerce is somewhat simpler to define. It’s simply the ability to perform business transactions electronically. Let’s stop there.

Now that you realise how far-ranging the word “strategy” is, let’s explore it in the context of e-commerce strategy.

Most wholesale or traditional retail businesses have been faced with the task of considering some form of e-commerce in today’s business environment. For many, an e-commerce strategy is simply the process of engaging a web development agency or creative agency to build a website that allows them to transact with clients over the internet.

In most instances, this kind of strategy results in a very stylish website with lots of bells and whistles, possibly even high visitor rates yet very few sales. Simply put, the development of a website is just a tiny part of an overall e-commerce strategy and is not an e-commerce strategy at all.

In some instances, with the best of intentions and choosing a great web development agency, having a well-optimised site and Google AdWords campaign and affiliates in place, things often don’t go as well as planned. Why? Let’s perhaps start by saying you can’t sell ice to Eskimos unless you package it and market the ice appropriately.

An e-commerce strategy can be quite a hairy beast because there are so many aspects to getting it correct. I could write a book on e-commerce strategy just to give you an idea of its complexity.

What do you want to achieve?

The most important party of any strategy is to start with the end in sight. This is often an overlooked aspect of planning. Ask yourself: What do you want to achieve? Is it perhaps because your competitors have a transacting website? Building a website because your competitors have one is not good strategy, but a knee-jerk reaction.

If you have customers in mass that are requesting a website, this is slightly more reassuring. However, this requires more research. Engage the services of a good search engine optimisation (SEO) specialist or use the Google keyword research tool to find out what the possible keywords or key phrases are that are being used and the volumes there are for those keywords you think will be relevant.

If there are a low volume of queries, this is already a warning to research further. You may have to alter your offering to match consumer demand for what service or product you offer if keyword research appears to have potential volume deficiencies.

A business, for example, selling driveway paving will have little joy selling driveway paving solutions online, and would be well advised to steer clear of e-commerce and focus on using the web as an enabler and promoter for their service or product. Once you have completed this task and assured yourself that there is some potential from natural search, consider your existing capabilities and what effects web sales will have on your business.

One of the most underestimated aspects of e-commerce strategy is the ignorance of resources required to maintain an e-commerce presence. It still amazes me today that small to medium-size retailers will happily spend $50,000 to $500,000 to shop-fit a store, staffing it and happily employing two or more staff to run the store. They are, however, loathe to spend much money on web development, search (organic and paid), and staffing to update and maintain the site. It’s almost as if a website is seen as a self-maintaining clip on to a business.

More often than not, businesses approach their creative agency or a web development agency for advice on a website or even an e-commerce strategy instead of an experienced consultant or another business that is well underway into e-commerce.

The problem here is no different to approaching an accountant for advice on accounting software. The accountant, usually oblivious to other business requirements, will suggest a stand-alone software or cloud-based package. So it is no different that a web development or creative agency will focus on the website, because it’s the thing they know how to do best (in most cases anyway).

This is where very poor, or no advice is given on anything beyond the website. A website that sells in any reasonable volume really needs to have good inventory systems integrated into the website, followed by data feeds into accounting software to ensure money received daily tracks with sales in the system. I cannot reinforce how important these two areas of integration are, yet are so often overlooked.

Stand-alone solutions require support

A stand-alone website offers great flexibility but that’s about where it ends. Think about the following shortcomings of stand-alone websites:

Stand-alone websites require manual control of inventory, so it’s easy to accidently oversell stock you don’t have especially if you have other sales channels such as retail outlets, wholesale distribution, etc.
When sales come through, they have to be manually handed to the warehouse for picking.
Each sale has to be manually keyed into an accounting system to process each sale.
Each address has to be manually keyed into Australia Post’s e-parcel system or a label has to be written up or typed up for shipping.
How are you going to ship your goods, especially if fragile, and how are you going to work out your freight if multiple items of different shapes and sizes are selected? Not many customers are happy to pay separate freight for each item.

The nightmare of managing sales, manual data entry and expensive labour to control this with stand-alone sites making hundreds of sales a day an all too common problem experienced across the word on a daily basis.

If you have your integration under control or a planned methodology to handle your volumes, you will need to consider who is going to maintain the site, offer customer service and support, as well as managing images and content. These roles are often taken up by more than one person in SMEs.

Finally, like any business idea, without marketing the concept is doomed from day one. How will you market your offerings on your website?

Listed is a summary of key points covered:

Know your outcome, what do you want to achieve?
Check to see if the item or service you sell is actually viable to sell online.
Have you thought through your value proposition? People often buy the result of what you sell, not the actual thing you sell. Define what business you are in.
How will your existing infrastructure handle web sales? Have you given any thought to integration with your inventory and accounting system (do you have an inventory and accounting system). What about other systems such as customer relationship management?
Have you thought through the human resources required to manage the content and images on your site?
How will you market your web, multi-channel or omni-channel business, and how will you manage your email marketing?
How are you going to manage and ship goods, which will do your deliveries, and are your goods safe to ship?
Do your suppliers supply goods to online retailers?

There are many other deeper aspects to consider in planning an e-commerce strategy. This article is just a teaser to highlight that there is a lot of thought and planning that needs to happen before an e-commerce strategy can be created and implemented.

This article was first published on February 19, 2013.

Mark Freidin is an experienced chief operating officer, e-commerce pioneer and consultant to fast-growing firms with his company internetretailing.com.au.