How to create an effective e-commerce strategy?
This article was reviewed and updated on August 17th, 2023
E-commerce is in a state of constant evolution and growth worldwide. Almost 21% of all retail purchases in 2023 are expected to be conducted online. But with tech giants such as Amazon and eBay dominating the e-commerce market, how can you start and develop your online presence in this situation?
Many companies still need to learn how to create and implement their own e-commerce strategy and reap tangible profits from their online business. Learn how to build and adapt your business strategy to the dynamic and constantly evolving rules governing the e-commerce ecosystem.
What Is an E-commerce Strategy?
An e-commerce strategy is a set of operations and processes within a business, with its goal being to improve brand awareness and recognition. Ultimately, an e-commerce strategy aims to increase sales generated through the online store and sales value across traditional channels.
According to Statista, the revenue in the eCommerce market is projected to reach 4 trillion dollars in 2023. With a predicted annual growth rate of over 11%, the projected market volume will reach USD 6 trillion by 2027.
However, this does not mean every e-commerce platform will effortlessly reach its business goals. Whether you want to implement online sales to your existing, traditional business or start a completely new business based exclusively on e-commerce, you should prepare an action plan based on comprehensive analysis.
How to Design an E-commerce Strategy
An effective e-commerce strategy is holistic (i.e., cross-silo, accounting for multidimensional changes that need to occur in the organization) and divides the entire design process into stages.
Below is a list of steps, including all crucial aspects that should be included based on the strategic areas for your business.
Stage 1. Market Analysis
1. Understanding the Customers
After you create the action plan, the next step is to precisely define your target customer group. Both demographic parameters (i.e. age, gender, place of residence, education, interests, socioeconomic status, etc.) and their behavioral or online shopping habits (Why do they buy online? What functionalities do they expect from a sales platform?) are valuable sources of information.
If you already have a business, customer data from your current website and tools like Google Analytics can be a fountain of knowledge. If you are building a website now or are interested in an in-depth consumer analysis, it is worthwhile outsourcing market research to a professional agency.
2. Monitoring Your Competition
Another important task when developing an e-commerce strategy is to observe and understand market leaders and direct competitors. It will help you determine their positioning and identify best practices. At this stage, it is crucial to answer the following questions:
- How do the leading competition brands define themselves?
- What e-marketing activities do they perform?
- How is their website designed?
- How can you differentiate yourself from them?
3. Selecting Your Offer
Once you have gathered the necessary consumer and competitor behavior information, you can fill your product catalog with items best suited to your target audience - and test it regularly.
To verify the efficiency of your offer, A/B tests work best. Compare two solutions: "A" is the best version so far, and "B" is a new variant. By using this method consistently, you can work out the optimal solution step by step and show customers the best products that appeal to them.
Stage 2. A Professional and Committed Team
The next step is to analyze your company's human resources and identify the changes required to implement your e-commerce strategy. When creating a detailed action plan, ensure the company has the resources, knowledge, and operational capabilities to introduce and maintain an e-commerce platform. Each element should have a deadline for implementation and a person responsible for its finalization. During the plan's implementation, regularly update the status of tasks, and hold departmental meetings. This will allow you to monitor progress and collect valuable feedback from employees.
Take advantage of the untapped potential in your teams. Our entire environment is based on modern technology and is becoming increasingly automated. Personalization, artificial intelligence, machine learning, augmented and virtual reality, biometrics, or blockchain are no longer just mysterious terms but part of our everyday reality. Where possible, invest in developing digital competencies related to the tools, systems, and technology behind the effectiveness of online business.
Stage 3. Goals and Key Sales Metrics
Companies that lack clearly defined strategic business goals cannot measure progress and improve. Without benchmarks and targets for their activities, eventually, the team might get lost and unmotivated.
Develop projections to assess the viability of your e-commerce strategy and set financial targets. Include estimated setup and operating costs from potential website providers, marketing, or logistics. Create an optimistic and pessimistic sales scenario and determine the break-even point. Remember that by implementing an e-commerce channel, you are launching a process of synergies of various sales channels. (e.g., you are triggering the ROPO effect, among other things). Discuss in detail and establish final sales goals with your team.
Plan the implementation and operations of sales tools that will increase the average value of shopping carts, reduce the number of abandoned shopping carts, increase the regularity of purchases, and improve conversion rates.
When defining goals and expected sales results, use the top-down approach. Planning should begin with a general assumption. Then determine and specify the steps whose gradual implementation will allow you to achieve the established goal. It is also worth looking at SMART analysis, which remains one of the most effective methods of defining goals.
Stage 4. Cooperation With Your Technology Partner
Once you establish the vision and business goals and assigned roles in the team (including appointing an e-commerce or IT manager), the next step should be selecting a technology partner. During the workshopping stage, you will discuss the objectives and the plan for their implementation together. An experienced IT provider will help you:
- Launch an e-commerce platform
- Design a website following the UX standards
- Implement a system to manage product information (PIM)
- Implement a system to streamline content management (CMS)
- Implement systemic and operational customer experience management (DXP)
- Implement, maintain, and develop the required applications
- Continuously improve the system regarding the growing and changing consumer expectations and needs
An omnichannel approach is the foundation of today's customer service at every stage of the path to purchase - engagement, onboarding, and self-service. Your strategy should include multiple complementary and intertwined sales channels. This will allow you to build lasting customer relationships, increase consumer trust, and improve your company's competitiveness.
Stage 5. Logistics and Distribution
Your strategy should also include a logistics/distribution department or cooperation with an external operator. Completing the orders, packaging, shipping, and delivering are vital processes for the operation of an e-commerce business. The fulfillment of the customer’s order and their satisfaction with the purchase largely depend on the logistics.
At this stage, omnichannel and diversification also play a crucial role. Existing customers expect access to various order fulfillment methods (e.g., direct delivery to a specified address, parcel locker, or partner point). Meeting their needs involves creating a coordinated supply chain that reliably processes large amounts of data in real time.
You will also need a good inventory and stock management strategy. Warehousing, logistics, and distribution are vital for customer satisfaction and optimizing the company's time and costs.
Stage 6. Digital Marketing
Digital marketing offers unlimited opportunities to promote a brand and reach potential consumers. Today, technologies for targeting ads to potentially interested users and gathering and analyzing customer data are crucial. When preparing an e-marketing strategy, consider aspects such as:
- SEO: activities aimed at achieving the best possible position for your website in Google's organic search results. Through these processes, you will increase the chance that potential customers will find and choose you.
- Content Marketing: by providing users with valuable content (e.g. articles, reports, webinars, product reviews), you can increase your position in free searches, build a relationship with customers, and prove your professionalism and expert status in your industry.
- Social Media: leading platforms such as Facebook, Instagram, Linkedin, YouTube, and TikTok have extensive and constantly improving advertising tools that can be used to reach precisely targeted audiences with your business offer.
- E-mail Marketing: sending newsletters (both informative and promotional) can result in gaining many loyal consumers for your brand. Start by preparing a comprehensive e-mail marketing strategy that takes into account the time and human resources you'll need to prepare the mailings, the budget you can allocate for this type of activity, an analysis of the strengths and weaknesses of your offering, the actions of your competitors, and how you'll attract new leads.
- Influencer Marketing: activities based on the recognition and reach (number of followers) of famous people online. By cooperating with bloggers or influencers, you gain another channel to reach potential customers. Try to choose expert influencers in your industry, and their follower group matches (or expands) your potential client base. Define your terms and expectations carefully before entering into a partnership, ensuring your vision for promotional activities is compatible.
- Marketing Automation: using dedicated software significantly improves sales processes. With the right tools, you can collect and analyze data on your audience groups (obtained, for example, through paid advertising campaigns). Information about customer interests, demographic factors, or the course of the path to purchase will allow you to accurately and effectively adjust your advertising messages and where you present them.
These are just some areas that can be included in your e-commerce marketing strategy. Analyze the opportunities the ever-expanding digital marketing market offers to select tools and develop tactics that meet your business needs. The most important thing is to match the marketing communication channel to your target audience and the catalog you offer.
Summary
Your e-commerce strategy should include elements that you will implement gradually. Remember that both the market and consumer needs are dynamically changing. This requires a flexible approach to the evolving trends. Observing them will allow you to be one step ahead of the competition and respond quickly to changing consumer needs.
Listening to employees, experts, and - above all - customers, personalizing your offerings, and automating sales and marketing processes are crucial processes for the digital transformation of your company or building a new, digitally conscious brand.