The Top 7 Most Important Factors in Building (Better) Ecommerce Companies

eCommerce has really picked up pace in the last ten years and is on its way to becoming a really serious competitor to classic retail. Needless to say, many companies jump the ecommerce wagon. Some are internet savvy, some are retailers with many years of experience or, in the most fortunate case, both. However, that most fortunate case is usually rare. The internet and the classic commerce are still, for most of us, worlds apart.

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The main reason ecommerce is still a pretty damn hard thing to do is it takes a lot of know-how regarding both commerce and the internet. When starting or expanding an ecommerce operation you will be faced with decision regarding management and sales platform, marketing (“do I do Social Media, should I go for Search Marketing or maybe Affiliate marketing?”) but also more real-world issues such as “What are the products I will be selling?”, “How do I store these products?” or “How is my product going to reach my client?”.

While there are many, many variables and data you will be faced with, you still need to keep an overview on the most important factors that will make your ecommerce business successful or not. Here are the most important 7:

  1. Choice of Products and Product Display
  2. Stocks availability
  3. Pricing
  4. Shipping
  5. Customer Care
  6. Search (yes, search)
  7. Innovation

As you notice I have not mentioned marketing. Marketing makes a difference when all those above are working well together. That is not to say marketing is not important. It is. Unfortunately marketing cannot save you when your store isn’t performing its base functions.

[See how these factors connect to create Omnichannel Retail]

Further on, keep in mind that as an eCommerce company you are first and foremost a technology company. If you are a classic retailer this part will be the hardest thing to wrap your head around. You use technology to deliver products at the best price and with the best customer care possible. As such you need to stay constantly focused on market changes (your product market) and technology changes (think how important search engines are for online-first businesses) and adapt those changes to your 7 pillars of ecommerce excellence, as follows:

1. Choosing the Product Range and Product Display

What makes Amazon such a great business? One might argue things like “Wide variety of products”, “Great prices”, “Fast delivery” or “Great customer experience”. All these, and probably more, are true. All these make Amazon the leader in US’ largest online retailers but I would like you to focus on the following screen:

Amazon tracks, stores, analyzes and than recommends based on that recommendation products you are likely to buy.
Amazon tracks, stores, analyzes and than recommends based on that recommendation products you are likely to buy.

What you see there is my recent history on Amazon (I am quite fond of eCommerce, as you’ve probably noticed). Now if you would be Amazon you could basically market anything to anyone (well, almost anything to almost anyone). Why? You can show your customer a version of your product choice based on his or her particular interest,  particular history of browsing and buying.

So with Amazon basically each customer gets his or her own version of the store. 

But you are not Amazon. You don’t have the same product choice, the same data, the same infrastructure. You will need to create a specific product choice and focus on your specific niche.

Ex.: Say customer X wants to buy a computer. Where would he go? Probably to an IT related online store. Say he needs to buy a mouse after he bought the computer. He would, if the first shopping experience was good, go to the same place and make an additional purchase.

If you are not Amazon you will need to make a clear choice regarding your product range. You cannot be a fashion retailer and also deliver groceries. It just doesn’t makes sense. It doesn’t make sense business wise and it doesn’t make any sense for your customer.

After you have chosen your product range you will need to expand it. Say you started by selling clothes. There are a few product categories that would go great with that type of products:

  • shoes
  • accessories
  • bags

Once you got that settled you will notice that there are specific ways you will need to display your product. As a fashion retailer you will need models and show your customers how those clothes would look on them. Such a choice of display won’t make too much sense if you would be selling, say, laptops. No one actually cares how they look when typing, unless they own a Mac and they are typing in a Starbucks.

2. Stocks Availability

Picture this: you are shopping in your favorite brick and mortar store. You’ve just tried on a couple of jackets and you’ve found that one, great looking, discounted, jacket. You have it in your hands. You have the money. You head over to the cash register and take out your credit card. Surprisingly, even though you’ve spent the last 20 minutes searching for it, trying it on and then deciding to purchase it, the item is not actually in stock.

That is not very nice, isn’t it?

Customers feel tricked when they try to purchase something that is not actually in stock. That usually happens when your warehouse stocks system aren’t synced with your ecommerce site. It’s really frustrating and you need to make sure that never happens to your customers.

Key take away: Keep your stocks updated real time.

3.Pricing

Pricing – how do you do it? Do you just go ahead for the smallest price possible? Should you rather adjust your price according to the market and the other competitors?

Pricing should take you in the shortest time to a profitable operation. The pricing operation is mostly an internal decision (the price should first depend on your OWN resources and costs) while still trying to keep up with the market. Here are several things you should consider while looking at your pricing options:

  • You will probably not turn a profit from the start. As such – focus on creating a competitive price that will, at some point help you turn profitable.
  • DO NOT go for the lowest price on the market. Try to earn customers by offering discounts, vouchers, having a great customer care and a great product range. Anything but the lowest price. That is always an unsuccessful choice. Of course – you will get a couple of customers but these are not really the customers you are looking for. Plus a low price usually means a very low profit or loss. It’s better to have a slow but steady increase in customer base than a fast increase that will, in time, bankrupt your business.
  • Keep in mind the operational costs. While most startups focus on technology and marketing costs, they usually overlook many operational costs such as staff, warehousing, shipment and others.
  • Think highest possible price instead lowest possible price. Keep in mind that you are not your marketing. While you may want to be seen as a low pricing company you need to maximize your profit. Find the best balance between profit and managing to stay competitive in the market.

4. Shipping

Here's a box from ASOS. It's branded, easy to use and it usually carries things people love.
Here’s a box from ASOS. It’s branded, easy to use and it usually carries things people love.

Shipping is an important part in your business. Doh! It is, for best or for worse – the most important physical contact your customer has with your company, unless you also have brick-and-mortar stores. You should make the best of it.

Here are some ways of making a great impression with shipment:

  • Treat the delivery box as the most important part of your visual and physical identity. Because it is. Have a look in the right hand area at this ASOS box. It has a clean, functional design, it’s beautiful and people love receiving it. The experience is close to receiving a gift, as most have already paid for their purchases. Don’t spoil the experience.
  • One size shipping DOES NOT fit all. Adjust your shipping model to your market. If you are delivering groceries people will expect them as soon as possible (usually within 24 hrs) and are willing to pay to get this. If you are a discount shop people are willing to wait a little bit longer as long as they know they get a better deal.
  • If possible – offer free returns. It’s great when trying to build trust. People will think the pros and cons of buying from your web store and a free return is a great incentive.

5.  Customer care

This is one of the most important pieces of building a strong, reliable eCommerce brand and, unfortunately, one of the hardest to manage.

Zappos has turned great customer service from a cost to a competitive advantage
Zappos has turned great customer service from a cost to a competitive advantage

While CRM (customer relationship management) systems and technologies have improved greatly, most of what your customers would call customer care still relies on people answering calls, people delivering merchandise, people in charge of packaging. People, people, people. Customer care is about bringing the right kind of people on board, making sure they understand what makes your company great and making sure they always do their best in handling customer needs.

It’s a hard thing to build. Good customer care is subjective. However, there are a couple of things you can do to improve your chances at keeping your customers happy and returning:

  • Build a culture around your customers. Make sure that anyone involved in your ecommerce operation knows how important it is to keep customers happy. After all, it’s not like jobs depend on it. Oh, wait. They do.
  • Make sure you track your customers purchase history and make this purchase history as clear as possible to your call center operators. You won’t be able to attain a perfect score. Just don’t ruin your best customers’ experience.
  • Don’t judge your customers. There are no “dumb questions”. There are no calls that take too long. After all, if Zappos can handle a 9 hours and 37 minutes phone call, you can spend a few extra minutes with those who buy your products.

In the end customer care is actually treating your customers friendly, polite and helpful. If you can manage that , you will build a great shopping experience.

6. Search

Amazon's search engine, A9.
Amazon’s search engine, A9.

While it could be a little awkward to add search, basically an ubiquitous and often overlooked eCommerce feature, it actually is one of the most important tools in helping your customer reach its desired product as fast as possible, without hassle.

How many items are listed on Amazon? Millions. There are so many products that Amazon decided that it didn’t need just a search engine “feature”, but a search engine program. At launch A9, Amazon’s Search platform,  was rumored to be a competitor to Google but it turns out Amazon just wants to guide its customers as efficient as possible to the products they are looking for.

Don’t underestimate the importance of search. We live in a search-engine era where we need to find what we are looking for in matters of seconds. If your search feature doesn’t do that, maybe its time to work a little bit more on that.

7. Innovation

kindle dx
The Kindle DX

Remember: as an eCommerce company, you are a technology company. I will say it again. You are a technology company. Get used to it. Now – as any technology company, you need not only keep up with market developments such as mobile commerce or social commerce, you need to lead the way.

The largest eCommerce companies lead by innovation. Weather it is Amazon’s Kindle, Ebay’s Market Place or even AliBaba.com’s online payment system, Alipay – they all innovated their way to the top and continue to develop to stay there.

Conclusion

These are the top 7 most important factors that make or brake eCommerce companies. Focus and improve each one of them but remember that commerce has always been about a) delivering products, b) at a great price, c) before and better than anyone else. It still is. We’ve just added a layer of technology on top of it.

Mobile, Social search, Photos and iOS integration makes Facebook Stocks Rise

After dropping more than 50% since the IPO, Facebook’s market cap restarted growth following Mark Zuckerberg’s on-stage interview at TechCrunch Disrupt. The company closed today with a 7.62% increase in its share price. Several factors could have lead to this fortunate turn of events but the keywords are: mobile, social search, photos and iOS integration.

facebook market capitalization growth
A surprising growth in Facebook market capitalization

Facebook’s focus on mobile

On stage, Mark Zuckerberg made it very clear that Facebook is focused on mobile growth. A very bold statement, probably targeted at investors that so far have had their fair share of drama, was “On mobile we are going to make a lot more money than on desktop”.

Facebook has more than 488 million mobile users and the numbers are growing fast, due to increase in smartphone and mobile internet adoption. Recently the company introduced new ways for advertisers to target mobile users through sponsored stories. The advertisers were not so fast to switch to mobile ads, however: although mobile revenues are estimated at about $72 million this year, the figures are below Twitter’s estimates.

This situation is sure to change as Facebook’s focus seems to follow the mobile trend.

Facebook search

Probably the most important thing Zuckerberg mentioned was the fact that Facebook now serves 1 billion search results per day, “without even trying”. To put that in perspective – that is 10 times the number of Bing searches and approximately 30% of Google’s searches. Imagine that – 30% of the world’s largest search engine.

With social input Facebook search can potentially deliver better results than Google. After all, Google is not really good at answering questions but rather locating information. Facebook users usually ask their friends for help on different issues and this type of behavior creates a huge pool of data Facebook can use to answer questions in a very efficient way. Even “without trying”, Facebook has recently started monetizing its searches through contextual ads.

Facebook and Instagram Photos

instagram facebook
Image source

Zuckerberg mentioned that there is no hidden agenda in Instagram’s acquisition. They want to help the app grow and so far they increased exposure by 1100%.

Photos seem to be a very important area in future Facebook development. Although it’s obvious that photos have a positive psychological effect on users and increase revenue through photo-page delivered ads there is probably something that we don’t know yet.

iOS integration

Facebook is deeply embedded in iOS 6

iOS is the most popular mobile operating system on the Internet, with an astonishing 65.27% of all mobile internet users. Today Apple announced several news, including the long awaited iPhone 5, the new iPod touch and some social features based on Facebook and Twitter social relationships.

Having been integrated in the world’s most popular OS means big exposure for Facebook. Even more – it means an increase in revenues.

As I mentioned a few days ago Apple and Facebook were planning and started rolling out a deeper iTunes integration. Although Facebook is just starting monetizing its mobile users, Apple is one of the best at this game. Using Facebook’s social features Apple can sell even more, bringing a new stream of revenues for both companies.

It seems as though George Soros knew what he was doing when he purchased Facebook stocks

Is Facebook trading information with Apple regarding its users? Facebook-Apple partnership?

This is the question that popped into my mind as I saw a Facebook ad leading to an iTunes Album I have previously bought four of songs from (this one). I bought the songs on my iPhone from the iTunes Music store.

I instantly started thinking how could had Apple (or Facebook for that matter) target me so well. I can now see three possible explanations here:

  1. Sheer coincidence. Maybe … just maybe … Apple happened to market that album to the demographic group I happen to be in. Facebook had just shown me an ad pointing to the exact album I had purchased some songs from. Those 4 songs out more that 20 million songs currently available on iTunes. Not very likely, I presume.
  2. Apple and Facebook started an partnership and are now sharing user data. That means that right now Facebook may have access to my contacts, application data I use, purchase history, browsing history and others. Apple has access to my Facebook data, off-iOS related browsing history, Facebook related purchase intent and so on. More likely.
  3. Apple is using data from my Apple account to remarket products on other web platforms. Such as Facebook. This might mean that Apple is not actually sharing data but might be using data collected on the iOS to target users on other platforms. I believe there is an automated marketing system setup on Facebook for ads that run and target users based on their previous purchase history. Very likely
  4. Apple is using application data to target users. Possibly without express consent from the Apple Developers. I use different emails for Facebook and Apple login. This got me thinking about possible data usage by Apple without express consent from Facebook – or other developers. As I believe an integration with Facebook Ads would be impossible in this case without a partnership between the two companies. I would rather rule this one out.

Apple-Facebook partnership highly probable

Having two of the fastest and largest growing technology companies partnering is pretty much amazing in terms of products they could develop. However several privacy and monopoly questions might arise. Apple was part of a privacy controversy in 2010, regarding the iOS 4 privacy policy:

“The revised policy states that Apple has the right to share this information with 3rd parties who provide services to the customer, including advertising and promotion services. Apple also states that “it may be necessary” to provide this [real-time] information in response to “requests from public and governmental authorities within or outside your country of residence or if [Apple] determines that for purposes of national security, law enforcement, or other issues of public importance, disclosure is necessary or appropriate…. Additionally, in the event of a reorganization, merger, or sale we may transfer any and all personal information we collect to the relevant third party.”

The revised policy does not make any distinction between warrant-based and warrantless searches, nor provide what criteria would trigger the sharing of personal real-time information with government entities, nor allow an opt-out for the location-based information.”

Apple, and all the other technology companies for that matter, don’t really deal well with privacy. Mark Zuckerberg is known for stating that the age of privacy is over.

While that might be true and the younger generations are letting go of old-timey privacy concerns I still want my data taken care of with a bit of responsibility. After all I am a paying customer to Apple and not just a target for advertising. While I do appreciate a more contextual advertising as opposed to classic mass communication I believe I and all the other Apple users have the right to share our my information to whomever I choose.

Is there more to the Facebook-Apple partnership?

On one hand we have Apple with more than enough cash than it needs (110 billion dollars to be more precise). On the other hand we have one extremely high potential technology company that might change the way humans interact and is not doing very well on the stock market right now (Facebook stocks have dropped 47% from the IPO and keep going down).

Apple can take advantage on the blow Facebook took on the market and buy stocks that, in my opinion, are sure to rise again. Facebook could do really well with such an unexpected help. Both companies would benefit from such a move:

  • Apple is reaching a innovation plateau and it needs a young, visionary leader or product that might replace Jobs. Facebook and Mark Zuckerberg could fill the gap. Although Zuckerberg is still young and inexperienced he has a certain charisma that could develop in the future. Apple fans need an icon, they need innovation. Also – let’s not forget that Facebook is an one billion users market that Apple could turn into consumers.
  • Facebook is not harnessing the huge potential it has. Facebook gaming, social commerce, mobile are all things that are there but the Facebook team cannot yet capitalize on the growth. Apple is doing really well in all those areas and could share some of the knowledge.

In the end – maybe Apple will not take over Facebook but such a move would benefit both companies and is sure to add at least 10-15 years in the spotlight for them. Unfortunately such a technology behemoth will not be taken lightly by the Federal Trade Commision so the two will have to find ways to find ways to address this.