Now that the fundamentals of an ecommerce business in theory are clear (Is your Ecommerce website, a retail web-store? – the 4 fundamentals to make sure!).It is now time to put them to practice.
Successful implementation of any ecommerce business is dependent on implementing or adopting these seven key steps:
- Planning for eCommerce Business
- Technology Selection/Website Audit & Analysis
- Customer Acquisition
- Customer Engagement
- Customer Retention
- Optimizing Key Metrics, and
- Business Analysis & Customer Insights
Each of these steps has a positive and cascading effect on the other steps and hence implementing each of them in the right priority and in a phased manner is of utmost importance.
For an e-commerce business to get the maximum ROI on their investment, it is the execution of these 7 steps around the 4 core pillars that will be your mantra for success!
1. Strategic business planning and roadmaps – Strategy is about making the right choices that will help reach the stated business objectives.
There should to be a clear cut vision, mission and objective about what will be achieved, in how much time, within what budget, identification of the right resources for and constraints in the face of execution of the strategy mentioned in the business plan, and what elements will be considered for roadmap.
Knowledge and deep understanding of the digital marketing tools and techniques that will help in reaching and acquiring customers is required. Your business must reach out to customers who are online across multiple dimensions and devices.
So, the assumptions considered in preparing the strategic business plan should be in alignment with the ecommerce industry’s norms and trends.
2. Technology selection/ website audit and analysis – In order to provide the maximum benefit to the end customer, your chosen ecommerce technology should be fully capable of being customizable, and be able to complement the business model, and adhere to the existing best practices in offline retail.
If you’re a retailer taking the first-time plunge into ecommerce, various functionalities on the e-commerce website should be carefully thought over based on the industry, audience being targeted, various customer segments who may be buying the offered products and services.
With respect to retailers who have implemented an ecommerce strategy and have not yet received the rewards of the complete capability of the ecommerce technologies, there needs be a complete assessment of how the website can perform better by examining the store front and customer flow, analysis of competing websites, identification and implementation of solutions based on the gap analysis carried out (‘as-is’ and ‘to-be’). It is equally important to measure and monitor the process that was made because of the implementation of the suggested changes.
3. Customer acquisition – Online or popular digital marketing encompasses multiple tools for reaching out to the new generation of customers, who are actively engaged in using multiple devices, through search engine optimization, search engine marketing (paid advertisement that includes both cost per click and cost per thousand impressions), social media marketing (that includes both cost per click and cost per thousand impressions), email campaigns, display advertisements using various ad networks, referral programs and re-targeting campaigns.
Going by the sales principles of AIDA (awareness, interest, desire and action), it’s important to note that the cost of customer acquisition will be very high for brands and retailers that are newly establishing their product offerings exclusively online.
However, for brands that are well established offline and are pursuing ecommerce strategy, the cost of customer acquisition is lesser compared to the new entrants.
4. Customer engagement – Customers these days are actively seeking to engage with brands to understand the core benefits and unique value proposition that the brand offers, discount and offers during special seasons, a robust support mechanism for queries/clarifications regarding the products displayed and interaction with customer support executives to know more about policies on returns and exchange, etc.
Engaging customers through various social media channels also instills superior trust in the minds of customers.
5. Customer retention –With the advent of sophisticated e-commerce technologies, new age retailers will be able to leverage an almost one-to-one customer experience and that’s the best a customer can really expect.
However, it should be noted that to fully leverage best-in-class technology, there needs to be a constant effort to look out for features and functionalities that will enhance the customer experience.
6. Optimization based on key metrics – Some of the key metrics to measure the health of an ecommerce venture are the total revenue generated, cost of customer acquisition, % of customers converted, and % of customers entering the website through various channels.
However, these metrics may vary significantly based on the business objectives and so every business needs a fully customized approach for defining the key metrics and further analysis.
Once these are defined and there are a substantial number of customers visiting the website, a deeper level of optimization is needed at 2 levels – on the technology and the business front.
- a. Technology – This generally includes optimizing the page load speed, shopping cart, check-out and other web pages, a/b and multivariate testing, etc.
- b. Business – Optimization here includes analysis of the total revenues generated, total spends for running the e-commerce operations, optimizing the gross net margins, conversion rates from each of the various channels, customer loyalty and retention rates, rate of repeat purchase, frequency of repeat customers (across multiple dimensions), % of carts abandoned, etc.
- There are a lot of features and functionalities to helping online retailers improve these numbers. There is a lot of research evidence supporting the incorporation of features like reviews and ratings, and display of the right products either through up-selling or cross-selling.
- Based on the statistics, 47% of shoppers read product reviews prior to their online purchases and 63% are more likely to buy from websites with online reviews or ratings [1]. Similarly, online companies that leverage a recommendation system can increase sales by 8-10%.
7. Business analysis and customer insights – The final step in the entire process is about fine-tuning and understanding the product categories that have performed well compared to other products displayed in the webstore. Assessing this is crucial since each of these categories and products within those categories occupy the prime real estate in the online world – the web store.
- It also should consist of understanding the customer segments, demographics, profitable customers, source of channels through which the profitable customers came to the web store, % of revenue each profitable customer contributes to and the marketing spends that has gone into acquiring these customers.
- These metrics are only a small representation of a larger list that can be optimized further. These metrics vary based on the business needs and require a customized approach for defining, monitoring and optimization.
In today’s “compete hard or perish” environment a holistic e-commerce strategy, if planned and executed well, can be an important means of bolstering revenues, increasing brand awareness, providing best in class support and shopping experience to the new generation of customers.
The successful implementation of an e-commerce strategy helps in gaining a competitive edge over the existing competitors, no matter whether they are online or offline.
It’s evident: a clear winner in the game of e-commerce power play will be one who understands the role of deep integration of these 4 core pillars along with the importance of executing a 7 step approach around these pillars.
This blog is work of Anuj Ramachandra, Business Consultant, Ecommerce at Embitel Technologies.
Anuj has eight years of experience across various business functions including digital marketing, market research, business development, strategic business planning and product management with a specific focus on e-commerce and advices several leading Indian and international retailers on their e-commerce strategies.
Anuj can be reached at anuj.r[at]embitel[dot]com
For more information and to know how Embitel Technologies can help you drive your business objectives using e-commerce technologies, contact us at sales@embitel.com or visit our website at www.embitel.com
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Footnotes/References
[1] https://student-3k.tepper.cmu.edu/GSIADOC/wp/2007-E30.pdf Embitel e-commerce insights | May 2014
