Picture this: you own a successful local retail business in, say, beautiful Washington, DC. All of your hard work and sacrifice is paying off. You aren't banging it out of the park, but you are doing nicely. Your customer base is growing, your inventory is under control, and you are starting to turn a steady profit.
In fact, things are going so well that you are wondering whether it's time to take this show on the road and open an ecommerce site. Well, let me ask you a question... Are you ready to open a store in Minneapolis? This sounds might sound like a weird segue but I swear it isn't. There are aspects to creating an ecommerce store that are so different, it really is like opening a store in a whole new market. Just because the new storefront happens to be online doesn't mean you should approach it any differently.
On the plus side, online shopping is no joke. With an expected $1.5 trillion in worldwide sales this year, it sounds especially tempting. But don't get sucked into thinking "if we build it, they will come." While that might work for baseball parks (all the more alluring since those are so often paid for by municipalities), the Internet is just too big (and the local government won't be paying to build your website). Launching your site is only the first step of a complicated process.
Ecommerce is not the right move for every business and running a successful ecommerce business requires some serious planning and strategy. Before you set to work developing that ecommerce site, there are some important questions you should ask yourself:
1. Do you have time to create marketing for a completely new audience?
You really have to plan for this this just as you would plan for opening a new storefront in Minneapolis. Online customers are a different beast then local retail customers and interestingly, even the same individual shopping online versus in person will act differently. Unfortunately, the marketing you have in place for your brick and mortar location will likely not gain you traction online so this is a whole new marketing effort.
Plus, the ways that physical stores get customers are very different then ways ecommerce sites do so. If you don't have a lot experience with online marketing to this point, you will need to jump in with both feet to be successful. If the terms: Google Analytics, SEO and PPC mean nothing to you now, then you might not be ready for ecommerce. At the least, you'll need to consider hiring new staff or outsourcing to professionals who know how to market specifically for an ecommerce market.
You will need to budget both time and monetary resources to creating a separate marketing plan for the online channel, just like you would if you were opening a brick-and-mortar location in a new city. Making your ecommerce site scale will likely require testing different marketing channels and strategies to find out what works best for your business.
2. Online shoppers are more price-sensitive than local retail shoppers. Is that a sandbox you really want to play in?
Let's say I need a sports bra. (This actually really isn't rhetorical scenario, I desperately need a new sports bra so please send me any recommendations you have.) If I am planning on buying it from a brick and mortar store, I will get in my car, drive to the store, find parking, get out and walk into the store, and try on a few bras. If I find one I love, it is unlikely I will walk away because it is $5 more then it would have been if I purchased it from a competitor across town. First, I might not know the competitor is selling it for less. Second, is it really worth it to me to leave the bra behind, get back in my car, drive over to the other store, find parking again to save the $5? No.
But in the world of online shopping, if I find a product I love, a competitor is just a Google search away. This tends to make online shoppers much more price sensitive. In addition, in the online world, you are always battling Amazon. For many shoppers, Amazon is the default online purchasing mechanism. They have their credit card, they are a known quantity and they deliver fast.
Take a look online for the products you sell. What prices are they being sold at? What about at the big players like Amazon? Can you be competitive and still be profitable? (Be sure you consider shipping and taxes.)
3. Have you thought through the operational components of selling online? (This could be an entire book.)
If you have gotten to this point, you've probably researched ecommerce software at least a little bit and you know that it's important to choose the right ecommerce platform--one that performs the functions you need, is easy for customers to use, and professionally supported. But have you also considered the logistics of getting products into the hands of buyers?
There are shipping concerns; for instance, you have to take into account carriers losing orders during shipment and consider how you will efficiently compensate customers for these types of shipping issues. Beyond worries about creating a smooth shipping operation, keeping track of inventory becomes much more complex when you are selling both online and offline. The danger of someone buying the last size medium of that cute brown sweater both online and offline is real and cancelling orders because you ran out of inventory isn't good for your online reputation.
Remember as you consider creating your online store to think through how the online store will impact the offline business as well. You will need an ecommerce solution that allows inventory tracking for all aspects of your business. Also make sure to consider how all aspects of the sales and purchase delivery process.
4. Does your brand translate online?
Finally, maybe the biggest question for local retailers considering making the jump to ecommerce is whether the brand will translate online. Many local businesses are really part of the community or offer services that are particularly difficult to sell online and it is hard to make the online value proposition work. Really consider who your new ideal customer is, how you find her, and how you interact with her. What are her problems and how are you solving them? Can you provide the same value in an online setting? If it turns out that you can't figure out where your brand fits into this world, then it's a good sign, ecommerce is not right for your business now.
Whenever you make a big change in your business, it's important to consider whether the change reflects your business's purpose and core values. Shifting a retail business from a primarily ground-based game to the realm of virtual reality may take significant rebranding efforts. So, be ready.
If I have a client asking for e-commerce, my strategic instincts kick-in. Don't get me wrong, ecommerce can be a good way for brick-and-mortar retailers to expand their customer base, but doing it well requires careful planning. So before you take the plunge, answer these questions honestly for yourself.
This is a great example of how Spring Insight is so much more than a website design company. While our website team is more than happy to develop an ecommerce site for your business, I always want to make sure my clients understand what that really means for them. Building a successful ecommerce shop requires the same kind of pre-planning and strategizing they would undertake in building any other new business offshoot.
Could you use some business strategy help? Let's start with a FREE website assessment.
Photo attribution: By The original uploader was Jesster79 at English Wikipedia (Transferred from en.wikipedia to Commons.) [GFDL (http://www.gnu.org/copyleft/fdl.html) or CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0/)], via Wikimedia Commons
Erika Dickstein is a Web Strategist located in the DC metro area. She specializes in working with small businesses on creating strategic goal-oriented websites. You can connect with her at www.springinsight.com.