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Building Your Ecommerce Strategy


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Table of Contents


About This Guide

Learn More →                                                                                               

Ecommerce Business Strategy

Chapter 2 →

Strategies for Developing Ecommerce Websites

Chapter 3 →

Ecommerce Pricing Strategies

Chapter 4 →

Ecommerce Marketing Strategy

Chapter 5 →

The Bottom Line: Best Ecommerce Strategies

Chapter 6 →

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About this Guide

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. 

It’s 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).

Ecommerce Business Strategy

To develop an effective ecommerce business strategy, you need to start by understanding:

  • Ecommerce Business Terms
  • Ecommerce KPIs
  • Ecommerce Business Structure
  • Successful Ecommerce Businesses: Models and Takeaways

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 largest segment of online shoppers are from Gen X (ages 35-54)
  • The second largest segment of online shoppers are Boomers (ages 55-74)
  • The third largest segment of online shoppers are Millennials (ages 18-34)
  • The fourth largest segment of online shoppers (5%) are 75 and up

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 you’ve got a huge digital footprint or are just establishing your online presence, an ecommerce business strategy should be foundational to everything you do.

Ecommerce Business Terms

To be sure we’re all on the same page, here are some of the essential terms (defined) that we’ll use to talk about ecommerce business strategies:

  • Attribution model: Measures the digital marketing efforts that bring in the most revenue. There are various attribution models that can be used, but regardless of which model you choose, the data should illustrate where sales are coming from. Sources or channels could include direct, referral, email, apid search, organic search or ad traffic.
  • Business to business (B2B): B2B ecommerce transactions happen between businesses.
  • Business to consumer 9B2C): B2C ecommerce transactions happen between businesses and consumers.
  • Consumer to consumer (C2C): C2C ecommerce transactions happen between consumers (think Etsy, Facebook Marketplace, etc.).
  • Call to action (CTA): CTA is a marketing term that refers to the language your website uses to prompt action. Examples include “buy now!” “click here!” “complete your purchase!”
  • Conversion: A term used for customers who make a purchase.
  • Drop shipping: Working with a whole supplier for delivery.
  • Fulfillment: Receiving, processing, packaging, and shipping orders.
  • Gateway: The service provider/merchant account/authorization for processing credit card payments.
  • Mobile commerce: Sometimes shortened to “m-commerce,” this refers to the use of mobile devices to buy and sell online products.
  • Outsource: The term generally applied to third-party vendors that support an online business.
  • Payment Card Industry (PCI) compliance: PCI are the requirements that an ecommerce business has to follow for using customer credit card info.
  • Payment service provider: A service that enables an ecommerce platform to accept multiple payment methods, including online bank transfers, direct debits, credit cards, etc.
  • Pay per click (PPC) ads: PPC ads are set up through a variety of platforms and require payment only when people click. 
  • Search Engine Optimization (SEO): AKA “SEO,” this refers to how a website is optimized to get organic traffic.
  • Stock keeping unit (SKU): A SKU is the alphanumeric code for every product in your ecommerce company inventory.
  • Upselling: A marketing tactic that facilitates the all-important “last-minute,” “impulse,” or “add-on” purchase.

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 that’s 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.

Ecommerce 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:

  • Ad stats: More detail will be provided on individual strategies later. For now, important KPIs you should measure for ads include things like click through rate (CTR), cost per click (CPC), and cost per action (CPA). These industry-specific benchmarks may be useful.
  • Average order value: This is calculated by dividing the number of orders from sales revenue.
  • Average time on site: How long a website visitor spends on your ecommerce website.
  • Bounce rate: What percentage of website visitors leave and how fast they leave.
  • Cart abandonment rate: Measures how many site visitors add to cart and then leave without completing their purchase. Also referred to as shopping cart abandonment rate.
  • Click to open rate: This is an email marketing stat that measures how effective your emails are at getting people to move forward in the sales process.
  • Conversion rate: Measures the percentage of online visitors who buy something.
  • Customer acquisition cost (CAC): This is how much it costs to get a new customer.
  • Customer lifetime value (CLV): This predicts how much revenue a single customer can generate in your ecommerce business.
  • Customer retention rate: Not all ecommerce businesses have customers for the same amount of time. Knowing how many stick around, and for what length of time, are important stats that will drive business decisions.
  • Customer satisfaction: In the full circle of a sale, knowing how satisfied a customer was (and getting that sweet online review) is an important step.
  • Organic search rankings: When you own a digital storefront, visibility has a lot to do with where you rank on a search engine results page. How your site ranks and when there are changes are important things to regularly measure.

This list is not exhaustive. As with anything in your ecommerce business strategy, it’s 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? 

Ecommerce Business Structure

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:

  • Sole proprietorship: Many small online merchants are sole proprietors. You may have to acquire permits, but this is really an entry level delineation that requires very little hoop jumping. Taxes are filed personally and dependent on profits. Liability is huge (for the sole proprietor), which is why this really is only for smaller players who don’t have big growth plans or are starting out with minimal capital.
  • Partnerships: Ecommerce business with a couple of partners can be divided into three subcategories. Each has unique tax requirements and filing, but are fairly straightforward:
    • General partnership (GP): Similar to a sole proprietor but with some extra hands on deck (and shared liability).
    • Limited partnership (LP): Often the choice for an investor/operator partnership, where one is managing day to day and the other is a silent partner putting up the money.
    • Limited liability partnership (LLP): This is a mix of an LLC and a partnership. Personal liability is lowered, with some of the details varying depending on the state you live in.
  • Limited liability company: An LLC requires registration in the state, business registration, business licenses, an operating agreement and articles of organization. It’s a good option for growth-minded entrepreneurs or people who don’t want to risk their personal finances.
  • Corporation: Bigger ecommerce merchants go all in as a corporation. Of course, this is the most common delineation for companies that were already selling and are adding ecomm into existing platforms, including brick and mortar retail businesses. Business owners/operators don’t carry liability and must pay corporate taxes.

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.

Strategies for Developing Ecommerce Websites

  • Setting Up the Online Store
  • Ecommerce Web Design
  • Ecommerce Website Builders
  • Ecommerce SEO and Content Strategy
  • Social Selling

Websites are such a big deal in this industry that they’re called “digital properties”. 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:

  • User experience (UX): UX can impact everything from bounce rates to conversion rates. How easy, intuitive and responsive your website is will make all of the difference. It needs to be effortless. UX is something that should be tested for in the initial website design phase and be optimized over time with every website update.
  • Optimization: A website should be optimized from a coding perspective (for use on different devices, etc.) and for organic traffic (SEO).
  • Display: Product displays, organization and packaging are all part of the enormously important graphic design that goes into creating a great website. 
  • Checkout: As soon as you start measuring user behavior on your site, it will become amazingly apparent that even the tiniest barriers to checkout can spell disaster. Because so many people shop on mobile devices, slow load times, issues with payment, or site errors will erode UX and deter people from shopping on your site.
  • Site performance: Related to all of the above, everything from malvertising to intrusive coupon extensions can deteriorate the value of your site. When this happens, visitors get turned off fast and will rarely be willing to give your site a second chances. Many ecommerce platforms make a sizable investment in site performance and site health for this reason.

Whether you already have a website or are starting from scratch, here are the most important parts of running an online store.

Setting Up the Online Store

If you’re starting from square one or doing an overhaul, there are a bunch of decisions you’ll make when you go to set up your online store including:

  • Pick a platform on which to build your website
  • Create or organize your product offering, building/sizing/styling the right media and design elements as well as copy and pricing
  • Identify key pages and how the sales process will work
  • Pick a payment gateway and shipping options/settings
  • Configure tax settings
  • Set up customer support
  • Determine ad spend/scope/schedule

Any good website starts with the right design, and is built on a platform that makes sense for your needs.

Ecommerce Web Design

Whether you’re 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, you’ll 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, you’ll pay for:

  • Hosting costs (domain name/SSL certificate)
  • Design costs
  • Add-on/extensions/plugins
  • Operating costs
  • Payment processing costs
  • Marketing tools

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.

Ecommerce Website Builders

Some e-retailers are either not picky (read: don’t 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 “from the ground up.” 

Some website builders are specifically designed to help users create ecommerce websites. Many people who are willing to go this route use:

  1. Shopify: Get ecommerce hosting, shopping cart services, and mobile commerce services in addition to easy, blocked content that’s easy to DIY.
  2. WooCommerce: WooCommerce is an open-source platform that will build your ecommerce website on WordPress.
  3. BigCommerce: Plenty of ecommerce features (like product filtering and promotions) are built into each template supplied on this platform, with an easy page builder anyone can 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.

Ecommerce SEO and Content Strategy

SEO for ecommerce websites is a non-negotiable investment. If your site isn’t listed on the first page of the search engine results, it’s unlikely that you’ll get a lot of organic traffic. 

Whether you hire an SEO agency or just spend a lot of time creating great content, your business can’t 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.

Social Selling

Turns out, social media isn’t 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:

  • Instagram
  • Facebook
  • Twitter
  • LinkedIn
  • TikTok
  • Pinterest
  • YouTube

Not all of these have built-in capacity for transactions, but (trust us) that’s coming. The smarter e-retailers are in these early days of social selling, the more established and reliable revenue streams they’ll enjoy in the months and years to come.

Ecommerce Pricing Strategies

  • Dynamic Pricing
  • Psychological Pricing
  • Competitive Pricing
  • Value Based Pricing
  • Loss Leader Pricing
  • Price Skimming
  • Competitive Pricing Strategy & Profit Margin

Pricing strategies for ecommerce are a balancing act and require an in-depth understanding of:

  • Customer demographics
  • Customer behavior patterns
  • Market conditions
  • Competitor pricing
  • Market positioning
  • Product line configuration

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

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:

  1. Create distinct groups of customers
  2. Establish a timeline on which the unit of purchase is based (e.g. monthly pricing)
  3. Implement price differentiation (using value metrics)

Dynamic pricing can occur in a few different ways. Some ecommerce retailers use coupons or discounts for certain groups. However you roll it out, it’s important to maintain price transparency so you aren’t accused of discriminatory practices.

Psychological Pricing

Psychological pricing uses tried and true sales tactics to close more ecommerce sales. Numerically, it’s really quite simple: no whole numbers. In other words, a product doesn’t 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:

  1. Create urgency with a “limited time offer”
  2. Charm pricing (the 9’s example listed above)
  3. Price design, such as omitting the dollar sign
  4. Innumeracy, or using no numbers (“BOGO” language)

These pricing strategies benefit from A/B testing to find the right mix for you.

Competitive Pricing

Competitive pricing appeals to the bargain online shopper. This model doesn’t just apply to low-priced inventories. At any price point, letting a customer feel they’ve scored a deal goes a long way, and it’s pretty easy to pull off. 

All you have to do is track competitor pricing. Your goal isn’t 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 “other sellers.” The other seller options are rarely cheaper and don’t have the benefit of Prime shipping. This is a very straightforward way to look better than the competition.

Value Based Pricing

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:

  1. Use single segments against which to compare pricing for items. Value based pricing sets similar products next to each other and offers a comparison of value related features. Obviously, they need to share enough features to be comparable.
  2. Select your own alternatives. Any ecommerce platform can use this pricing model, which is ideally implemented from a curated set of alternatives. Of course, site visitors can just open another tab and look for similar products, so the alternatives need to be authentically detailed with list prices. Then, differentiated worth factors can be calculated.
  3. Assign prices to the differentiators. This gets at the “valued at” mentality. Here’s what you get and here’s how valuable it is. That is a powerful way to make something seem more appealing and close more sales.

Loss Leader Pricing

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:

  • Bundling
  • Upselling
  • Cross-selling

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

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:

  • Penetration pricing: Offering a lower price during an initial product offering. 
  • Discount pricing: Offering discounts for selected periods of time.
  • Coupons: Offering discounts for selected audiences or in exchange for desired behaviors.
  • Seasonal pricing: Adjusting price based on market fluctuations.

Any competitive ecommerce pricing strategy should always be implemented with profit margins in mind.

Competitive Pricing Strategy & Profit Margin

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.

Ecommerce Marketing Strategy

  • Marketing Agencies for Ecommerce
  • Ecommerce Ad Strategies
  • Social Media Platform: Presence & Selling
  • Ecommerce Affiliate Marketing
  • Brand Awareness
  • Influencer 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.

Marketing Agencies for Ecommerce

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.

Ecommerce Ad Strategies

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:

  1. Identify your target audience. Before you even begin finding the weird, fun or winsome content that will differentiate your brand, you need to know who’s on the receiving end. This requires that you take a deep dive into your customer demographics and behaviors. A brilliant ad in the wrong place won’t get the desired results, and good placement can’t occur without this preliminary research.
  2. Optimize your website. This also needs to happen before launching any ecommerce ad strategy. In order to perform well, ads need to deliver on their promises. If you attract users to a clunky site with expired products, your ad performance will diminish to nothing.
  3. Pick your platforms. It’s essential that you act on your carefully analyzed demographic studies and deliver ads on the right platforms. 
  4. Select the right ad type. There are plenty of options: search engine ads, banner ads, social media ads, retargeting ads, in-app ads, etc. Work with an ad agency if you have to for this and the next step, because it makes a huge difference.
  5. Deploy and monitor ads. In spite of appearances, ads are not a set-it-and-forget-it activity. In fact, they need constant monitoring, adjustment and analysis. Once your ads are live, it’s essential that you understand from day one whether or not they are making money. The challenge comes when many people analyze data on the activity an ad gets (clicks, likes, etc.) but forget to follow that train all the way to the station: did it make a sale? The actual money you make in the form of new, paying customers is the only true testament to whether an ad campaign succeeded.

Separate from your ad strategy, generating leads from social media is a must for an ecommerce brand.

Social Media Platform: Presence & Selling

Facebook, TikTok, Twitter, YouTube, Instagram, Pinterest, lions, tigers, bears, oh my. 

It’s 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 you’re 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:

  • Cold and warm leads: On social media, your ecommerce brand can generate a mix of cold leads and warm leads. Whether they find your account through an ad or a search, the connection they offer not only gives you access to them but indicates an existing level of interest for your good or service.
  • Showcasing new products/services: When you effectively build an engaged social media audience, you have a ready-made opportunity to advertise new offerings. Not only that, you can run specials and get the word out about anything you want. It’s like having a digital megaphone.
  • Social proof: Social media is one of the first places people go to look for reviews and recommendations. In this day and age, it’s almost impossible to be a successful online business without spending time on social media.

75% of B2B buyers are influenced by social media when it comes to making purchasing decisions. And the best part is, your visibility isn’t limited to your own account.

Ecommerce Affiliate Marketing

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 you’re about.

Brand Awareness

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. 

Influencer Marketing

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 influencer’s endorsement.

The Bottom Line: Best Ecommerce Strategies

The best ecommerce strategies are the ones you’ll actually use.

At the end of the day, all of the planning in the world can’t make up for poor execution or underlying issues with revenue margins or attribution.


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