No business makes it big without a strategy. In no place is that more evident than in the immensely competitive industry of online retail. The right ecommerce strategy will apply relevant, up-to-the-second data to a perfectly optimized platform, tracking interactions every step of the way.
Itâs doable. But you will have to work for it.
This article will give you all of the insight, components and action items that make a strategy work (and generate real revenue for your business).
You can sell anything online.
Well, you can if you have a plan.
In 2019, retail ecommerce sales amounted to $3.53 trillion globally. By 2022, experts project e-retail to grow to $6.54 trillion globally and surpass $640 billion in the U.S. alone.
Shopping habits have changed, and people in more demographics than ever are willing to shop online:
The way these people shop online has changed, too.
One of the most important points to consider is where online shoppers go to buy things. With 150.6 million mobile users on its app, Amazon has easily dominated the online retail landscape. But the rise in social media selling and innovative strategies mean that smaller players can still get their share of the market.
Whether youâve got a huge digital footprint or are just establishing your online presence, an ecommerce business strategy should be foundational to everything you do.
To be sure weâre all on the same page, here are some of the essential terms (defined) that weâll use to talk about ecommerce business strategies:
Of course, depending on what you sell and how involved you are in your store, you may need to learn a whole bunch of web development terms, payment terms, marketing terms and more. But thatâs enough to get you started.
Obviously, the lingo is just a surface consideration. Any good strategy begins with the end in mind: what will success look like? In this case, success means achieving the desirable stats on your KPIs.
Key performance indicators (KPIs) of ecommerce are the metrics whereby you measure success. The right KPIs will help everyone on your team know, at all times, whether you are on track to make money or lose money. Additionally, tracking the right KPIs will enhance your marketing efforts, site health and pinpoint areas of loss.
Some important KPIs to stay on top of include:
This list is not exhaustive. As with anything in your ecommerce business strategy, itâs important to relate each KPI to its down-the-line effect on revenue.
How do each of these impact your bottom line? And, knowing what you know, how do you make better decisions and more strategic investments?
There are many ways that retailers enter the world of ecommerce, and how they got in may impact how they are structuring their business.
Here are the basic options:
Successful ecommerce businesses get their ducks in a row in advance. Things like business structure and KPIs will outline a clear path for success. And, of course, any good online business starts with a fully-functional, optimized website.
Websites are such a big deal in this industry that theyâre called âdigital propertiesâ. And, similar to physical real estate, they have significant potential to appreciate over time. But as an appreciable asset, ecommerce websites deserve initial and ongoing investment.
There are several important elements to an e-retail website:
Whether you already have a website or are starting from scratch, here are the most important parts of running an online store.
If youâre starting from square one or doing an overhaul, there are a bunch of decisions youâll make when you go to set up your online store including:
Any good website starts with the right design, and is built on a platform that makes sense for your needs.
Whether youâre selling something homemade or mass-produced, ecommerce is a competitive business. A lot of companies are selling the same, or very similar, products online. To stand out from the crowd, the first and last word is: branding.
In a business where visits to your website are the first opportunity to make a good impression on prospective buyer, a solid, recognizable, attractive brand starts with web design.
Professional web designers may be a blend of nerdy-coder-person or whimsical-graphic-person. In an ideal world, youâll hire someone (or an agency) that has both technical and design chops and can build the site of your dreams. The goal is for your ecommerce web design to be both beautiful and functional.
There are a few costs associated with this, which should be included in your budget.
With an ecommerce website build, youâll pay for:
The cost will vary depending on how custom your site is and whether you use a website builder.
How much does a custom ecommerce website cost? A relatively simple ecommerce website will probably land you between $5,000 to $10,000 to get started, while larger, more complex websites can easily cost upwards of $50,000.
Some e-retailers are either not picky (read: donât care about custom elements) or tech savvy enough to build a website themselves. In this case, they may rely on one of many popular website builders rather than constructing the site âfrom the ground up.â
Some website builders are specifically designed to help users create ecommerce websites. Many people who are willing to go this route use:
There are a few dozen more ecommerce website builders that you can use, in addition to these famous options. Regardless of the builder you choose to use, the point is to build a website that will get as much traffic and site conversion as possible. And, of course, organic traffic is a huge priority in that.
SEO for ecommerce websites is a non-negotiable investment. If your site isnât listed on the first page of the search engine results, itâs unlikely that youâll get a lot of organic traffic.
Whether you hire an SEO agency or just spend a lot of time creating great content, your business canât perform if no one ever sees your site. SEO is an ongoing endeavor that takes some time to get started, but can pay off big in the long run.
Turns out, social media isnât just about funny cat videos after all. Social media selling is one instance of omnichannel commerce, and is becoming a real industry with the potential to generate major revenue for the ecommerce brands that get it right. In 2020 alone, 37% of internet users say they have bought something on social media.
Platforms you may successfully sell on include:
Not all of these have built-in capacity for transactions, but (trust us) thatâs coming. The smarter e-retailers are in these early days of social selling, the more established and reliable revenue streams theyâll enjoy in the months and years to come.
Pricing strategies for ecommerce are a balancing act and require an in-depth understanding of:
Of course, from a purely practical perspective, you also need to know basic things like overhead, markup percentages and profit margin.
Some common pricing models are broken down below.
Dynamic pricing is a strategy that segments out sales of the same product to different customers. In order to implement it effectively, you first need to follow these steps:
Dynamic pricing can occur in a few different ways. Some ecommerce retailers use coupons or discounts for certain groups. However you roll it out, itâs important to maintain price transparency so you arenât accused of discriminatory practices.
Psychological pricing uses tried and true sales tactics to close more ecommerce sales. Numerically, itâs really quite simple: no whole numbers. In other words, a product doesnât cost $40.00, it costs $39.99.
Psychological pricing is all about how things are perceived. There are a few other ways to use psychology to sell more:
These pricing strategies benefit from A/B testing to find the right mix for you.
Competitive pricing appeals to the bargain online shopper. This model doesnât just apply to low-priced inventories. At any price point, letting a customer feel theyâve scored a deal goes a long way, and itâs pretty easy to pull off.
All you have to do is track competitor pricing. Your goal isnât always to be the cheapest, but rather to appear to be the best value for the cost. Depending upon your product, branding and positioning, you may aim for average pricing in a saturated market or even to be the highest priced amongst other luxury products.
Sometimes, competitive pricing is as easy as advertising a redlined (higher) price next to the actual (lower) price. This gives the immediate appearance of a deal.
An example we all understand is how Amazon advertises its price (with Prime) and then has a link to âother sellers.â The other seller options are rarely cheaper and donât have the benefit of Prime shipping. This is a very straightforward way to look better than the competition.
Value based pricing is all about comparisons and worth. There are a few important elements to keep in mind if you pursue this ecommerce pricing model:
Loss leaders are items that are so popular that ecommerce merchants reduce their cost and encourage add-ons to even out the sale. Loss leader pricing is an ecommerce strategy that uses one of three approaches:
Loss-leading encourages add on sales of multiple items for each transaction. The goal is to improve transaction value to offset price reductions.
Price skimming is an ecommerce business strategy that starts at the highest opening price, then lowers that price over time. This requires a reliable bank of initial buyers. Once revenue is assured, price can be lowered without a huge hit to profitability or reduction in unit costs.
In addition to standard ecommerce pricing strategies, any good ecommerce strategy will allow for things like:
Any competitive ecommerce pricing strategy should always be implemented with profit margins in mind.
When it comes to ecommerce pricing strategies, data analysis and more, some companies turn to an ecommerce agency for help. Agencies that specialize in ecommerce business may provide in-depth support and consulting for everything from finances and business development to marketing.
No ecommerce business strategy is complete without a heavy focus on marketing. Ecommerce marketing strategies will implement the best digital marketing tactics to improve traffic and convert more leads. The better the strategy, the more predictably and consistently your revenue will improve. Not every ecommerce team does marketing for themselves.
Outsourcing ecommerce marketing is a pretty standard practice and there are plenty of marketing agencies that specialize in helping ecommerce businesses with everything from ecommerce ads, lead generation, campaigns, and clickfunnels, to sales strategies and more.
Not every ecomm company has a resident CMO or marketing guru, So hiring a marketing company for your ecommerce business may be one of the smartest decisions you ever make.
Whether you outsource your marketing or do it yourself, a good ecommerce marketing strategy must include lead generation through ads and social media.
So, how do you build an ecommerce advertising strategy?
Ads are a pretty complex endeavor. There is a load of data at every step, ad bidding strategies to understand and deploy, ad placement, ad platforms, ad copy, ad media⊠the list goes on.
Here is a basic list of what your ecommerce business strategy for ads needs to include:
Separate from your ad strategy, generating leads from social media is a must for an ecommerce brand.
Facebook, TikTok, Twitter, YouTube, Instagram, Pinterest, lions, tigers, bears, oh my.
Itâs a lot. And each of these platforms has the potential to fill your pipeline. But each of them also has unique elements that require some finesse.
The bare minimum is this: pick some social media platforms, post on them regularly, engage with followers and build a customer base. That will get you sporadic sales and some brand awareness but there is way more gain to be had, if youâre willing to put in extra work.
Social selling and social media selling are two different things.
Selling on social media is simply one way to execute social selling. Basically, you get sales on the basis of a relationship. For brands, this often means illustrating your personality and products in your social media account/feed. It also means regularly connecting with followers, offering exclusive specials on social media and even selling directly through social media platforms.
The benefits of ecommerce social media efforts include:
75% of B2B buyers are influenced by social media when it comes to making purchasing decisions. And the best part is, your visibility isnât limited to your own account.
The world of ecommerce selling has a broad reach. Some of this is accomplished through intentional networking. For instance, affiliate marketing is a promotional method that has been around for a long time.
Affiliates get paid when you do, so there is minimal risk. The set up and management of an affiliate program can be complex, but once you have a process in place, affiliates can be a profitable way to promote your brand, and increase awareness of who you are and what youâre about.
Because the barrier to entry is low for starting an ecommerce company, the playing field is pretty populated. For this reason standing out from the crowd can be a challenge, making the network you build on social media essential to increasing your reach.
Influencers are people who already have a large following and some voice in social spheres and can be hired to help drive awareness for your products and brand. Basically, in exchange for a kickback, they will endorse your ecommerce platform or product. They may test it, unbox it, video it or just post pictures with it.
This has proven to be enormously effective for many ecommerce brands, dramatically increasing revenue within hours of an influencer post going up. Of course, like anything, this has to be carefully researched (influencer fraud is a thing) and data analyzed to ensure people are actually buying from you as a direct result of the influencerâs endorsement.
The best ecommerce strategies are the ones youâll actually use.
At the end of the day, all of the planning in the world canât make up for poor execution or underlying issues with revenue margins or attribution.
