Need an e-commerce strategy for your business? Here’s how to do it
The immediate impact of COVID-19 has been swift and difficult, forcing companies to adopt new ways of doing business.
Most factories and stores have been shut down, while office workers try to work from home. Essential services are implementing new operating procedures to ensure a safe workplace, and consumers have put e-commerce websites to the test with a surge in online orders.
Many believe that these new behaviors will persist beyond COVID-19, creating a new normal. Online purchasing and remote delivery of services, in particular, are behaviors that could stick after the current crisis has passed.
Businesses who plan now and adapt to this new business reality will emerge stronger in the recovery.
But it is not enough to simply go online. Our experience has shown that companies who take the time to plan their online efforts have a much higher likelihood of success.
This blog aims to provide you with a framework to analyze your current environment and business capabilities that will allow you build your vision for going online.
Understand your competitors
The first step to building an online strategy is to understand how online sales currently work in your industry.
A good place to start is by observing and understanding market leaders and your direct competitors to identify best practices and see how they are positioned.
For example, if you are a sports shoe retailer you will go to Altitude sports.com, decathlon.ca, footlocker.ca, and others. You will ask yourself:
- How do they brand themselves?
- Who are their target customers?
- What are their online promotions?
- What are their key website features?
- What can you learn from these companies?
- How can you stand out?
Analyze your customers
The next step is to understand your customers:
- Who are they in terms of age, interests and preferences?
- Why do they buy online?
- What features do they want from a website?
You already have customer data from your existing website and your offline activities; this is a good place to start.
For example, a spa retailer of exclusive beauty products might find that younger women aged 25 to 34 have a higher tendency to buy online, while women aged 45 to 54 prefer buying in-store.
This information will then allow them to improve their website and online marketing to, in turn, drive increased sales.
Measure the impact on your business partners
Your business relationships with various partners will potentially be impacted by your online sales initiative, so you will have to review each one.
How dependent you are on each partner and the amount of value-add each brings to the relationship will be key to this assessment.
Let’s take the example of a manufacturer of specialty goods that distributes their products through a network of independent retail stores in Canada.
The launch of the e-commerce site will likely threaten the distribution network, who may feel that the site will reduce in-store sales. How can you approach this situation?
- Will you share a percentage of online sales from a region with distributors?
- Will you promote in-store pick-up?
Think about the value your distribution network brings, in the form of advice and expertise, inventory management and more as you determine your new business relationship.
Build internal capabilities
The next step is to analyze your internal capabilities and identify changes required for successful online operations.
First, you will need a technical team that can assess the different options to build and maintain your transactional website. Who will build your website? How will you maintain it? When making these choices, think about the client experience you want to create on your website and in after-sales service.
Second, you will need to build digital marketing capabilities. While marketing basics do not change, setting up the technology to capture and analyse customer data will be key.
Third, successful online sales depend on reliable and quick shipping, easy returns and inventory availability. You will need to acquire capabilities and systems or outsource in the areas of fulfillment, shipping and inventory management.
To help your team through the changes brought on by online sales, you must communicate to ensure the project is well understood, involve employees in the change and support all employees with training for their new or modified roles.
Building a digital mindset is also key to your online sales initiative because all employees will need new digital skills related to the systems and technology that the website, digital marketing and the new logistics will bring to your business.
Agility and open-mindedness
Launching online sales is a large project that requires adapting to new ways of doing business. Listening regularly to your customers, employees and business partners and remaining agile to make those changes as you go are necessary for this transformation.
Create your business case
Once you have done your background work, you will need to create financial projections to assess the profitability of your online sales project and set financial objectives.
We suggest that you build a budget over a three-year period. We’ve put up a very basic example with made up numbers here below to give you an idea.
|E-commerce project (C$ '000s)||Year 1||Year 2||Year 3|
|E-commerce project (C$ '000s)Incremental revenue||Year 1200||Year 2400||Year 3800|
|E-commerce project (C$ '000s)Initial investment||Year 1(100)||Year 2-||Year 3-|
|E-commerce project (C$ '000s)Recurring operating costs||Year 1(100)||Year 2(100)||Year 3(100)|
|E-commerce project (C$ '000s)Incremental costs||Year 1(50)||Year 2(100)||Year 3(150)|
|E-commerce project (C$ '000s)Cash flow||Year 1(50)||Year 2200||Year 3550|
To forecast sales, start with the percentage of sales done online in your industry. Adjust the rate for your company’s circumstances. Also, take into account that you will ramp up sales over time. Finally, get estimates of set-up and operating costs from potential website, marketing and logistics suppliers.
Create an optimistic and a pessimistic sales scenario and determine what level of sales you need to break even. Build these scenarios and set sales targets with your team.
4 tips to define your goals and build your action plan
If your business case is positive and you think you can turn a profit, you may now proceed to build your action plan.
We have four tips that will be helpful to you here.
1. Gather your team
Involve your whole management team and any key employees that you think can be good contributors. More heads are better than one. Review and share all previous analysis with them so they can fully contribute.
2. Define your goals
Next, define specific goals for the project with your team:
- What do you want to achieve and by when?
- What is your vision of a successful on-line launch?
3. Develop a detailed action plan
Make the action plan as specific as possible and assign ownership and deadlines for each item. Prioritize actions, so efforts can be focused on a few key deliverables at a time!
4. Communicate and follow-up
Finally, communicate the plan to all employees and update them regularly. Hold follow-up meetings at least weekly to exchange on progress.
To learn more about strategic planning, download our free guide The Foundations of Strategic Planning.