The 7 Most Important Components of an Ecommerce Business … that are usually ignored

When it comes to ecommerce most of the information you’ll be able to find online is marketing related. Because marketing is the easy part. That’s why almost everybody assumes that all it takes to build an ecommerce operation is good marketing, a technological sound shopping catalogue solution and a lot of luck.

Marketing and frontend ecommerce solutions are just the tip of the iceberg and in this post I’ll walk you through the most important areas you need to focus on (and you probably don’t) when building an online commerce business. Not site, not catalogue, business.

ecommerce-iceberg

What does it take to build a great online store?

No successful store was ever built on luck and marketing alone. Top online retailers got where they are selling great products at great prices, delivering fast and making sure that customers are well rewarded for their choice. That takes a lot of work in areas most of us never notice, areas such as:

1. Suppliers and supply chain management

You are or plan to be a retailer in an increasingly competitive market. It means a lot to come up with a great idea, drive good traffic and convert it to sales but you can’t do that without the right products, delivered at the right time, with a price the market is willing to pay.

Suppliers meant a whole lot when ecommerce was not around. Now – even more so. When it comes to ecommerce, suppliers can provide you with the right merchandise but they can also take the stocks burden off your shoulders. Amazon, for example, relies heavily on its marketplace partners to increase listed products number, without buying stocks for those products.

Key take away: before starting an ecommerce operation make sure:

  • you have enough and the right merchandise suppliers
  • they are financially and operational safe
  • they are able to provide real-time stock inventory
  • they are able to deliver purchased products fast

[Read more Supply Chain Management in Omnichannel Retail]

2. Warehouse operations

Post brick-and-mortar retail relies on electronic communication and product display. But when a product is bought it has to come from somewhere, right? Seal the deal with the suppliers and it’s off to the Warehouse, that magical place where online retailers pick products from the shelf, pack them neatly and prepare those products to be delivered.

Sounds simple? Well, usually, it is not. A decent store with its own warehouse operations has thousands of products at any time on its inventory, employs at least a couple of dozens of people to store products, pick and pack, and prepare for delivery. That’s why so many large companies choose to outsource their fulfillment operations to “third party logistics” suppliers such as Anchor 3PL or the ever-growing Fulfillment by Amazon so they can focus on what they do best (usually purchase the best assortment of merchandise, service customers and marketing).

Key Take Aways: A much larger post regarding 3PL/YPL (third party logistics) will soon be available on Netonomy.NET but until then, let’s have a look at things to consider when developing your own warehouse operations:

  • technology is the key – all 3PL service providers use technology (warehouse management systems) to know at all times where the products are, what’s the most efficient way to pick those products, who should be the person in charge for each package and others
  • think about the season – some seasons (such as the Holidays) are more operationally intensive then others. Be ready to employ temporary workforce to fulfill your orders
  • everything needs to be tracked and monitored – security and accountability are the key to handling large numbers of orders and workforce

3. Shipping and returns

Just as mentioned above your merchandise may be displayed and marketed online but it has to be packed and reach its destination in the real world. That’s why you need a good warehouse management and that’s why you need a great shipping service.

Shipping is usually an outsourced service. The best thing to do, unless you’re swimming in cash and you want to start competing the likes of FedEx and DHL, is employ one of the shipping providers and negotiate your way to a marketable shipping cost. Such a cost is likely to be, in the future, one you will be paying yourself – so pay attention.

Once you’ve contracted these shipping providers integrate their system with yours so you can streamline packaging and delivery.

Once in a while customers do not like what they’ve bought. You will need to handle the returns and reimburse customers for their purchase. Here you can team up with the shipping provider but your store has to handle all the communication.

Key take aways:

  • hire a shipping provider – It’s probably not worth it to have a shipping service of your own
  • pay attention to systems integrations when it comes to online store – warehouse – shipping flow
  • handle your returns as gracefully as possible – it may mean the difference between an unsatisfied customer and a lifetime brand ambassador

Before we skip to the next component I just wanted to make sure you’ve noticed I haven’t yet mentioned anything you would expect would be ecommerce related or innovative. So far – it’s just plain ol’ supply chain management and logistics. Got it? Great. Let’s move on to …

4. Client Relationship Management (CRM) – software and policies

Before even considering selling – you need to think about how are you going to treat your customer and keep him coming back. That’s where CRM comes in. While the term is usually used to describe a type of software, it is actually the term describing the whole policy on how are you going to handle interactions between you and your customer.

CRM needs to be “customer-centric”. Big words – but what do they mean? It just means that everything you do needs to be done “for the customer, by the retailer”. You need to understand the customer purchase patterns so you can recommend the most suited products. You need to record purchases, interests, preferred channels and basically all there is to it when it comes to understanding your customer.

Then act on that – after you’ve analyzed data make sure customer care, warehouse operations, shipping providers and even your purchase operations – all know who the customer is and what it wants.

Key Take Aways:

  • CRM is not just software – it’s a company policy on how to treat clients
  • Profiling is a must – understand as much as possible about your customer so you can serve better
  • “Customer-centric” is not a buzz-word – it’s common sense
  • There is no “client service department” – everybody working in an ecommerce store needs to know who the client is, record interactions and treat customers accordingly

5. Ecommerce catalogue and product display

Here’s one you surely expected, maybe not so down the list: your online store catalogue. Of course – this one is important. Without one we would be back to mail orders and inventing the wheel. However, as you’ve probably seen so far – it is just a small part of the whole ecommerce store business.

When it comes to it some things you really should be taking into account:

  • make sure you don’t over-design your store – your products are the most important items. Make them shine.
  • analyze and predict: predictive analytics is the practice of analyzing users behavior and predicting what would they rather buy at any given time. Read more about it here.
  • search, search and let’s not forget search: most of your customers will be using a search engine to navigate to your store (1) . Make sure your store is optimized. Once there, when in doubt, they will want to search for products (2) – make sure your site search works. Finally – when their order was shipped they will want to search for its location (3). Show them.

6. Marketing and loyalty programs

I know, i know – one includes the other. But for the sake of the argument let’s just assume that maybe loyalty programs online are so important that they should be a separate item to marketing. Because they are.

Loyalty is really hard to acquire these days. Especially when it comes to ecommerce. Most users will be searching for the lowest price and buy from whomever the seller is. But you can fight the trend with loyalty programs such as:

  • rewarding purchases – reward your users with points they can spend on your store. It’s really effective in keeping your customers tied to your brand, as well as making them feel great about it
  • social shopping – make your customer feel like a king when he can give out discounts and freebies to its peers and friends
  • reward social media – most online users have some kind of influence in their micro community of friends. Encourage them to take part in your story, share your products and reward them with freebies, discounts and … well …sometimes “Thank you” is enough

As for marketing at large – there is an increasing number of marketing solutions you an use to market your products and store but not all are alike. Not all are as efficient. Focus on:

  • Search engine optimization and paid search results
  • Email marketing
  • Social media
  • Branding

They may not look like much but together the “incredible four of ecommerce” can mean the difference between a failed startup and the next Amazon.

Last but not least …

7. Showroom and offline purchases

What – you thought that brick and mortar is all gone? Of course not. Online retail is still at just 7% of total retail but growing fast. One of the things that’s helping it grow is showrooming. That is the practice of checking a product in-store and buying it (usually cheaper) – online.

Don’t think about ecommerce as online-vs-offline. Think in terms of customer. The customer wants to feel the product before it makes the purchase. So you’ll need to show it to him. Even a small offline showroom can work miracles for your online store.

So now you have it – online retail is a rather big iceberg. Most of it unseen. Check where others don’t look because that’s where you’ll find success in ecommerce.

An Ecommerce Guide to Improve Holiday Sales

santa-claus

The holidays are coming and for most online retailers ’tis the season to be jolly. With shoppers starting their Christmas purchases as early as september, the holidays season starts earlier for those that really want to take advantage of this opportunity.

When to expect sales? Source: ICSC Spending Survey

When to expect sales? Source: ICSC Spending Survey

Most retailers expect 20-40% of their yearly sales to happen during holidays. Here are some things you should keep in check to insure optimum online store performance and increased sales:

1. Check your suppliers and stocks

It would be quite unfortunate if your sales would increase tenfold and yet you could not ship in time for everyone to get their presents. Say Little Timmy was due to receive a brand new toy but you can only deliver on the 27th of December. Too late.

Even worse – say you have one bestseller your pushing out there on the market and demand is so big that you’re left with no stocks after Black Friday?

These things and many others can happen and can leave a big impression on your sales, profits and customer retention so make sure you check your supply chain for any problems. Here is a brief list you should have in mind when preparing for the holidays:

Check your stocks inventory and your main suppliers

Have a look at last year’s analytics and see what products were most likely to convert users into buyers. Round up the total sales per product and increase that figure so you make sure you’ll be ready to supply the demand.

After you’ve optimized your inventory – make sure the supplier won’t bail out on you if you’ll still run out of stock. You never know when you’ll get your big hit.

Have clear commitments from your shipping supplier

Everyone will expect their purchases  delivered by the 25th of December. If you can’t fulfill that – you’re likely to lose a lot of customers. As such – make sure your shipping supplier is ready to deliver on time. Push for shorter delivery terms. After you’re done with that you should also…

Be ready for a lot more pick and packing

Remember – the objective is fast delivery. The fact that the shipping supplier delivers the next day may be useless if it takes you 5 days to pick (or order) and pack an order.

The Holidays will likely increase activity in the warehouse so make sure your fulfillment team is ready to handle a lot more work than it’s used to. If not, scale up temporarily. Can’t scale up? You can outsource your fulfillment operations to a third party logistics (TPL) supplier such as Fulfillment by Amazon.

2. Holiday marketing starts in september

Of course – that doesn’t mean you have to post Santa Claus pictures, snowflakes and Christmas Carols on your Facebook page but being prepared long before your competition can work out miracles. Here are some things you should get ready for, things that usually take quite a lot of time to prepare:

Sell Christmas Bundles  to insure up-sell

Great products need less marketing and bundles are great ways to insure your customer feels he’s getting more for the buck. Your best-selling products are usually bought with other smaller accessories. You can find out which are these by having a look at last year’s purchases and analytics.

Have a look at what people bought and how they bought it. Try to look for patterns in these purchases but don’t stop there. If you see that customers bought an Xbox, two extra controllers (one to play with and one to replace the one they’ve previously smashed against the wall) and the latest GTA – make it a bundle. Go beyond that and bundle up for a Playstation gift.

It’s hard to pick presents. Make sure you offer Gift Cards

Remember that ” ’tis the season to be happy ” part at the beginning? Well – turns out that’s kind of a lie. People feel depressed and anxious during holidays. Among the reasons – media overload, crowded places and a pressure to find appropriate gifts for those they hold dear.

Of course you can’t shut down the media overload but an online store is a great place to avoid the crowd and a gift card can be the perfect gift for anyone. Have a look at what customers are preparing to buy as Christmas gifts:

• Gift Cards: 59%
• Electronics (ex: TV, Computer, iPad/Apple products): 38%
• Apparel: 35%

Gift cards are not a maybe – they’re a must.

Improve your search ratings and email database BEFORE Holidays

How will you get customers to your site? Of course – they are buying, but are they buying from YOU? If you’ve planned to increase your sales during the Holidays you can be sure you’re not the only one. However – you can improve your results by:

  1. Improve your listings in search results: there aren’t many things you can “quickly do” (heard this like a bazzzilion times) but there are some, as long as you have a fairly decent search engine positioning:
    1. Check for lack of content – some of your products may not have an appropriate description or may not have a description at all, the title may be missing or misleading. If you’re new to this, a great place to start is Moz’s Begginer’s Guide to SEO.
    2. Structured data goes a long way when you go head to head against your competitors. Showing data regarding product prices, ratings etc. directly in search results can be the difference between a sale and an user that doesn’t bother to click on your link. Better have a developer include Schema.org structured data but if you’re curious to what this means – check out the “getting started” area on Schema.org.
  2. Increase your email subscribers database: Offer discount, vouchers, products – anything really but get those people to signup to your newsletter, before the holidays. When it comes to sales during holidays, a fairly targeted, permission based newsletter can do a lot more in terms of sales than your usual display or facebook ad.
  3. pinterest-drives-ecommerceImprove your Pinterest page – people on Pinterest like to buy stuff. That’s why they browse. Here are a couple of stats (you can read more about it here) that will make you WANT to improve your Pinterest presence:
    1. Pinterest drives 41% of ecommerce traffic, 4% more than Facebook
    2. Pinterest users are big spenders – at $80.54 average value per referred customer, Pinterest is doing better than Facebook ($71.26) and Twitter ($70.17)

Make sure your Store stays open through the traffic flood

Your Black Friday program will likely increase traffic by more than 800% . Most online retailers have an larger increase and the trend just gets better by the year. That means that in order to have your store open during the surge in traffic you should:

  • move your store into the cloud so you can easily upgrade used resources when needed. Don’t know what “cloud infrastructure” means? You should definitely catch up with IT reading because these things are not IT – only territory, anymore.
  • increase call center operators if you have a support line (hint: you should have one)
  • focus mostly on client service and less on marketing when the holidays are actually there. Client service sells, marketing just drives people in the store.

This short guide covers some of the most important basics. If these areas are fully covered – you should do fine during the holidays but make sure you come back to Netonomy.NET for more information.

Why Gmail’s New Interface is a Direct Hit to Email Marketing?

Gmail has recently switched on its new tab based interface. As a general rule – when the leading email provider changes something so signifiant in its interface, it must be somewhat important. On one hand users get a cleaner, marketing free first view of their inbox. On the other hand, and marketers should really be worried about this – users get a cleaner, marketing free, first view of their inbox.

gmailtabs

What are the changes in Gmail’s tabbed interface?

First and foremost Gmail changed the stream – like view of incoming email to a tabbed organizer, that seems to organize individual emails pretty well into 5 main categories:

  1. Primary – usually email from individuals
  2. Social – emails focused on social media activity
  3. Promotions – marketing messages from brands you’ve subscribed to
  4. Updates – usually transactional emails such as internal messages notifications, registration confirmation and others
  5. Forums – notifications from forums or groups you’ve subscribed to

Of course – as any automated organizer system, Gmail’s tabbed interface may sometimes be wrong. Users can now move incoming emails from one tab to another and “teach” Gmail where to put incoming mail.

Why is the tabbed interface so important to Google and Marketers ?

Google, through its AdWords advertising program and contextual traffic sends much of the qualified traffic to online stores and other online marketers. It is so good at generating qualified traffic that it’s only real competitor so far is email marketing.

As you probably know – Google is all about advertising. Its main revenue source comes from AdWords and as such the “Do no evil” company needs to protect its cash cow.

Splitting the screen will lower email open rate and, in turn , email conversion rates. Soon enough marketers will find that in order to reach their established customer database they will need to improve marketing efforts in order to move their company emails from the dreaded “promotions” tab to “primary” by the incentivized will of their subscribers.

Is the tabbed inbox going to change email marketing?

Probably. What I definitely know is that online retailers will need to adapt to this change or risk cutting off one of their most profitable traffic sources.

Another thing that I find obvious is that this type of interface change will soon be adopted by all major email providers such as Hotmail or Yahoo Mail and than we will see the real impact this change had.