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A short guide to using the Business Model Canvas to start an e-commerce website

Follow this easy method to plan out your e-commerce model

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The COVID-19 crisis has created an unprecedented rise in online purchasing by Canadian consumers. E-commerce sales have more than doubled for basically every type of merchant since the beginning of the crisis, according to Absolunet, a Montreal-based e-commerce consultancy.

For entrepreneurs who want to develop their e-commerce business, the time to act is now. Customers could be forming habits that will last long after the pandemic has passed, whether your company sells to other businesses, directly to customers or to both, as e-commerce behavior is similar.

The Business Model Canvas

There are several things to consider when thinking about expanding your business online.

To enable this reflection, our team often use Strategyzer’s Business Model Canvas (or BMC).

I am going to explain how you can use this tool to examine every aspect of your business in the context of e-commerce.

The Business Model Canvas

1. Customer segmentation

In the first building block we are going to look at customer segmentation. It is important to identify who are your key customers and segment them by defining characteristics such as:

  • Value and margin
  • Online shopping and purchase behaviour
  • Products of interest
  • Line of business

Then go a step deeper and understand what makes them unique.

For instance, you might create a high-value commercial segment for business customers with an average order value of over $10,000 and further segment it for a product line. Think about that group of customers and ask what shopping and purchase experience they require.

2. Value proposition

Once you understand the trends that set apart your highest value customers, you will be in a better position to develop strategies that meet their needs.

The ways in which your company provides value to each segment is understood as the value proposition; why customers of each segment buy from you and continue to do business with you.

It is important to consider your value proposition for each segment to tailor your e-commerce website to their shopping habits.

Consider the information that is required for each segment and ensure that it is a key part of their shopping experience. If one of the benefits of your products is most suited to your high-value customer segments, make sure that it is well communicated for them. For example, you can structure you product catalogue according to your key segments’ interests.

3. Channels

It is important to consider how and where people will purchase from your company.

For most businesses, the key sales channel will be a website that attracts users and converts them into customers. To succeed, you will need to properly design promote your website, and put in place the right tools and methods to analyze its performance.

Designing your website

Your website should be clean and focused, with only relevant content and functionality. Also consider multiple platforms and devices your customers will use when shopping.

Next, it is important to consider your website’s content. The information you present to clients should be short, punchy and relevant. For longer-form content, consider blogs as they can contribute significatively to your position in search results pages.

When building out your site, be sure to always consider how it will interact with search engines, such as Google and Bing. Most online customer journeys begin with a search on these portals. Your goal is to appear near the top of results when a web user is searching for information, a product or a service, this should be one of your top priorities.

Promoting your e-commerce site

Paid and unpaid search represents the largest part of website traffic for most companies, but email and social media can also be strong contributors.

When thinking about an email marketing program, including newsletters, group your customers by defining characteristics and send different types of emails to each group (or segment).

Also, think about future emails as a sequence of communications. For instance, your first welcome email could introduce your suite of products and services, and your follow-up email could feature one or two products or services in more detail, with a “Buy Now” call-to-action.

It is also important to consider your current customer base, and treat those differently than email contacts who aren’t yet customers.

Similarly it is important to think about communications sequencing in your social media platforms, by creating a calendar of content that is relevant based on how your potential customers use each platform.

Analyzing your results

The beauty of online business is that you can very quickly see whether your actions are working.

Once you start getting traffic to your site and social media, it is important to set goals for your online marketing efforts and then measure how you’re doing using analytics.

You’ll be able to use what you’ve learned to refine your web presence.

It’s best to start small and focus on simple, incremental changes.

Use data to find out what’s working what’s not, and then adjust to improve your results.

4. Customer relationships

As you launch and optimize your online business it’ll be crucial to understand the types of relationships you will foster with your customers.

  • What does loyalty look like for your business?
  • How will you support this?

One example of this is the use of live chat for customer service. Many people now expect and to use them as ways of getting in touch with a company. Consider using a chat or contact forms on your website to connect with customers—perhaps even integrating social media tools such as Facebook Messenger.

5. Revenue streams

The foundation of your store will be your website—it will act as a channel to drive sales for your business.

In addition, you might also consider connecting and selling on open marketplaces such as Amazon, eBay, or even social media marketplaces, as a supplement to your website.

Do you have an offline business that is still able to thrive in this economy? Now is the time to consider what an omnichannel business and customer experience looks like.

6. Key resources

If you are new to operating an e-commerce business, your website operations (or webops) will now become more of a priority.

Depending on the importance of your e-commerce activity, you might choose to work with partners (see section 8.) instead of relying on internal resources.

At a minimum you will need to consider whether you have people to work on:

  • Order fulfilment
  • Customer service
  • Digital marketing
  • The e-commerce platform and website itself, and the resources it takes to make the platform function
  • As well as overall e-business operations—including all of the new processes and systems that will be required

7. Key activities

It is inevitable that several new functions of your online business will perhaps be unfamiliar to you.

Understanding and defining what the functions and processes are for your new e-commerce business is therefore essential.

Key considerations include:

  • Inventory and warehouse management (depending on scale)
  • Customer service
  • Online marketing (including content and product marketing)
  • Order fulfillment
  • Systems administration and integration
  • Analytics (it is important to learn from data and use it to continually improve)

8. Key partners

The foundation of your new e-commerce business will, of course, be your website platform and technology stack, but we urge you to consider ways in which existing suppliers and partners may change.

As an example, demand planning and warehousing may be a different and new requirement with the move to online sales. Sending single items can be vastly different to preparing truck loads.

Consider the following key partners:

  • A website platform vendor
    • Which technology are you going to invest in?
    • Who will be your vendor or partner?
    • Can they scale with you?
  • Shipping partner—crucial to fulfilling orders will be a dependable and affordable shipping supplier who can manage your demand and not be a barrier to sales or margin
  • Warehousing—it is possible that your current storeroom will not fit your new online demand
  • Marketing partners—to drive traffic to your website
  • Current suppliers—they may not change, but it is important to consider the impact

9. Cost structure

Just as there will be new partners, systems and processes, you can also expect a whole series of new costs. It is important to consider all new recurring costs that will be added to your business.

Think about:

  • Shipping fees
  • New employees and salaries
  • Cost of running a website and platform license fees
  • Transactional fees

The image below maps out what we believe to be the key considerations for businesses making the move to e-commerce.

Cost structure

We invite you to carry out the exercise on your own. You can also contact us if you think you need expert help to build out your e-commerce website.

Never stop optimizing

Work through each building block as discussed, and you will be well on your way to launching your new online business.

Remember to ask yourself:

  • Which products do you want to sell—both from a demand and margin perspective
  • What does growth look like, and how will you scale
  • Which technology is right for you to invest in—choose a technology that is well supported and scalable

And finally: Never stop optimizing.

The key to online success is to take small steps, test and carefully monitor your results.

Learn from what doesn’t work, and continually fine-tune your efforts as you scale up.

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