“A good plan today is better than a perfect plan tomorrow.” —George S. Patton
Your company has finally made the decision to enter eCommerce. You have ownership of the initiative and will be accountable for many operational pieces. So where do you begin?
Like any business initiative, you’ll need to develop a strategy for success and have a model for executing your strategy.
Factors to Consider When Developing Your Roadmap
- Time – Each day that you’re not selling your products direct to consumer represents lost opportunities to grow revenue, capture new customers and build brand relationships. What is your organization’s level of urgency to launch? Do you have the time and bandwidth required to implement and manage your eCommerce business in-house? Consider the time it will take to research, evaluate, short-list, and implement the various solutions that are needed. Not to mention the effort needed to hire new resources and/or train existing staff. Would you be better served by getting online quickly via a turnkey solution?
- Skill sets – Do the capabilities and experience of current staff match the demands of running your eCommerce operations? Can they be easily adapted? Take an honest inventory of your current resources.
- Cost – eCommerce requires infrastructure, technology and human resources. Will your budget support the investment required to in-source? Would outsourcing options that are pay-as-you-go be a better fiscal match?
- Integration – The various eCommerce components that you’ve selected will have to be integrated. This means that systems will need to talk to one another. Staff and managers from different departments will need visibility into their respective systems. Processes need to be linked and employees trained. What are your levels of skill and tolerance for this?
COO Jim Madaj discusses what you need to consider when evaluating your eCommerce strategy.
The Building Blocks
Several components are required for seamless, profitable eCommerce.
- Marketing: When it comes to eCommerce many people think of technology first. But perhaps the most important component of your eCommerce strategy will be online marketing. Not only will you need to drive traffic to your website, you may need to develop an omnichannel strategy to help facilitate shopping in physical and online channels and on multiple devices. This requires different skill sets than what you may be used to with traditional channels.
- Warehousing & Fulfillment: This was covered in greater detail in a previous blog: Why Having a Loading Dock Doesn't Mean You're Ready to Ship to DTC Customers. In summary, your B2B infrastructure and operations aren’t optimal for the faster paced demands of DTC shipping. And the demands are growing. One study indicates that 46% of consumers expect faster delivery than the previous year (Multichannel Merchant). You’ll need a solution tailored for eCommerce.
- Customer Service: Just as with fulfillment, DTC customer service has higher volume and is faster paced than B2B. As with Marketing, omnichannel is a factor. Your customer service team needs the technology and training to support every step of the customer’s journey across all channels even if the customer has changed devices during the process.
- Technology: Many people think of eCommerce technology as a website with a catalog and a cart. That’s only the tip of the iceberg. To maximize productivity, systems such as order management, customer service, warehouse management, and ERP should interface with your eCommerce platform. According to Gartner, many online retailers end up integrating their eCommerce platform with up to 15 technologies. See Uncovering the Real Costs of eCommerce Software for more insight on this subject.
Before your eCommerce launch, you’ll need to evaluate the alternatives for each of these components and then integrate them. This can be a time consuming, complicated and costly process. But it doesn’t have to be. More on sourcing options later.
Fast Track Sales That Come at a Big Cost
Amazon and other online marketplaces offer a simple, fast track path to online sales. It’s a channel that can’t be ignored. It’s possible to get set up and start selling online within hours. Amazon reports more than 310 million active customer accounts, (Statista) and grabbed 36% of online market share during the 2016 holiday season (CNBC). Online marketplaces look especially attractive to small businesses or mid-sized companies that think they lack the resources, bandwidth and budget to launch a dedicated eCommerce operation. A closer look shows that reliance on this channel comes with a steep cost:
- Amazon and the other online marketplaces own the customer relationship and the invaluable data that comes along with it. They can use this data to promote their brand and build better targeted marketing. They might even use it to promote product lines that compete against yours, if the analytics tell them it’s better for business (their business, not yours.)
- Fees can be upwards of 40% depending on the range of services used.
- Competing products are often arrayed side by side, which exerts pricing pressure.
- According to Retail Dive, Amazon private label brands are “crushing competitors” in many categories.
Are you interested in building your brand or just selling products? You’ll sacrifice the many benefits of DTC commerce if you rely heavily on the quick fix of online marketplaces.
Choosing Your Roadmap
You know that several components are needed to launch your eCommerce operation and have an awareness of the resources and infrastructure requirements. What is the best path to source what you need and build a completely integrated value chain?
- Insourcing – Building your own team will give you the highest level of control over your operations. It also comes with a high cost in terms of budgeting for human resources and the infrastructure to support them. This is impractical for most organizations getting started in eCommerce.
- Outsourcing – Outsourcing partners already have people, infrastructure and systems in place. They also have skills and proven processes that might take a while to build in-house. They can usually scale to meet fluctuations in demand or specialized requirements. These are significant advantages and efficiencies. The downside is that it can be very time consuming to research, screen and evaluate solutions to fit your needs for the various components of eCommerce. The pieces will need to be integrated and work together. And it’s likely that you might not find the best fit the first time around the track.
- Hybrid – Many companies find success by in-sourcing the core functions that are differentiators or most critical to their business and outsourcing the rest. For example, a company might hire a VP of eCommerce to develop a strategy and manage the operations. The VP might hire a core marketing team, while the fulfillment, customer service and technology components are outsourced and licensed.
- Turnkey Solution – There are companies that can provide a complete, branded, end-to-end solution and ongoing managed services. This means a one-stop shop that includes technology, fulfillment, digital marketing, and customer service. Because the people, processes and systems are fully integrated, it can provide all the advantages of outsourcing without the challenges of evaluating, implementing and integrating multiple solution points. And unlike the online marketplaces, you’ll have a dedicated, branded operation where you own the customer relationship and data, while netting higher margins.
While a new eCommerce initiative can seem daunting, proven roadmaps exist. If you take an honest inventory of your organization’s skill sets, time constraints and budget, and map them against the requirements of eCommerce, you can find a model that will lead you to a successful launch.