3 Steps for Crushing It in E-Commerce

UPDATED: September 26, 2015
PUBLISHED: January 22, 2015

If you’ve been running a successful retail business for years, eventually your sales might someday seem to hit a brick (and mortar) wall. And if you’ve been attracted by the allure of an online store—where the rent is cheap and the selling hours are 24/7—rest assured that it’s easy to get started and that the rewards can be significant.

Online sales crossed $1 trillion for the first time in 2012. Driving this trend are purchases via smartphones. The Census Bureau found that mobile commerce in the U.S. is growing at three times the rate of general e-commerce. This means consumers don’t even need to be sitting in front of a traditional computer to fatten your bottom line. Here are more reasons why online sales are alluring:

Increased sales with flexible hours. Say you’re running a retail business in Boston. An online store allows you to sell to your local customers long after you’ve closed for the night, as well as bring your product to someone in Boise, Berlin or Buenos Aires 365 days a year. So go ahead and take that much-needed day off once in a while.

Additional inventory. When you run a physical shop, space limits the merchandise on hand. Not so online. You can use your website to offer oversized products that are difficult to display, niche items with customized features, or special orders. The web even allows you to test new products online and bring them to brick-and-mortar retail based on proven popularity.

Your customers demand it. New Yorkers already live in a world where food (Seamless), laundry service (Washio), transportation (Uber), massages (Zeel) and doctors (Pager) can be summoned to their doors within an hour, simply by using an app. If customers can’t get your product quickly and easily, they’ll simply move on to the next website.

The following steps can help you either get started in e-commerce or put a charge into your existing retail website.

Step 1: Be clear about your business model.

Whether you’re an established brick-and-mortar shop looking to start selling online, a new venture ready to launch a web-based business from scratch, or a hybrid, you need to deal with the business side as your first priority.

Nishant Saxena, co-founder of website and e-commerce development firm SAXENA, says, “Too many people put their immediate focus on the website itself. The companies that we’ve helped bring online most successfully already have a clear vision of their business. This includes a deep knowledge of the industry and the types of products they offer, scouting the competition, clarity about their ideal customers (and how to attract them), and having a compelling marketing message. The technology behind it is just a tool to get the job done.”

The socially conscious sunglasses company Waveborn, similar to TOMS Shoes or Warby Parker eyeglasses, is a prime example. “We know that our typical customer is an urban professional in his 20s or 30s who values the opportunity to help others as much as he values durability or high-quality lenses,” says CEO Mike Malloy. “Given how loyal consumers are toward a particular cause, it’s not surprising that 25 percent of our customers buy a second pair within a year of purchasing their first pair.”

Waveborn.com, the online shop offering about 15 products, markets to maximize its appeal to these core customers—and to great success. The company has funded more than 1,000 sight-restoring cataract surgeries by donating a portion of its profits to charity partners aligned with its mission of improving sight, preventing blindness and creating measurable impact in the community.

Step 2: Sketch your product path.

Map the path that your products will need to take—literally sketch it out—in order to follow the flow of your production.

Steps will include:

• Where is it manufactured?
• Where is inventory stored?
• How will sales be handled?
• What is the payment structure?
• Who handles customer service?
• How are rush orders fulfilled?

Fortunately, a lot of the heavy lifting (both literally and figuratively) can be outsourced. Many manufacturing companies also handle fulfillment, and companies such as Amazon.com now lend their expertise to make your job a lot easier.

Once the product side is set, think about your customer experience. While a retail store might be all about location, an online store is about discoverability. Entire industries have been created around Internet marketing and search engine optimization, or SEO, so make sure you’re up to speed on best practices, such as building keyword-rich content around your products and being active on social media platforms that are relevant to your customers. For example, a consumer-facing, design-centric company might target Pinterest or Instagram, while a small business looking to engage in direct conversations should probably focus on Twitter.

A huge advantage of selling online is that just about everything can be measured. At minimum, take advantage of free Google Analytics, which shows audience demographics and top sources of traffic, such as results returned from online searches, clicks from your Facebook page, or users who typed in your website name directly.

For more detailed data, check out companies such as Crazy Egg, Unbounce, Optimizely, KISSmetrics and Mixpanel. These websites allow you to view heat maps (visually highlighting exactly where users are clicking), scroll maps (showing how far down users scroll on a long page), A/B testing (trying multiple offers to see which results in more sales), and funnel analysis (revealing the point at which users drop out of your sales process). Each company offers a free trial period followed by tiered pricing ranging from free to $2,000 per month or more for sophisticated, high-volume plans.

Step 3: Choose your technology.

Now that you’re ready to start building out your online store, consider these options, depending on your situation.

DIY—For companies that are beginning their e-commerce venture and are comfortable digging into the technology, do-it-yourself is a possibility. While many might still think of WordPress as the popular and free site for those looking to start a blog, major companies, brands and celebrities—such as Best Buy, UPS, NASA, The New York Times, BBC America, Harvard Law School, the Dallas Mavericks, the Rolling Stones and Beyoncé—are using the platform as well (WordPress.org). Once you have determined your content and its placement on a WordPress template, it’s easy to install an e-commerce plug-in such as Woo Commerce, a software add-on that integrates with WordPress to add storefront functionality (free to install but may require additional fees).

Sell with the big boys—One easy way to get started is to set up your store with websites like Shopify, Amazon, eBay or Etsy. These sites allow you to integrate your website with their commerce capabilities such as payment methods, account login, shopping carts, coupon codes and suggesting related products that are for sale (the person buying your custom-made dresser might also be interested in your mahogany mirror). Fees vary widely based on your setup and may include monthly plans, a cost per item and various transaction fees, so read the fine print carefully and then run some numbers to be sure you’ve got a firm handle on real costs. The good news is that these large sites provide plenty of guidance, including wikis, user discussion forums, resource guides and video tutorials.

Go custom—The final option is to hire a design/development shop to create a custom solution for your company. This path provides a lot more hand-holding and the ability to add a higher level of customization, such as integrating sites like Salesforce.com for customer relationship management (CRM) or specific design considerations. Costs vary widely, but a pro might cost a few thousand dollars (or less); an advanced website for a small business probably will run $10,000 and up. 

Evolving and Evaluating

As companies grow and needs change, they’ll often switch platforms. For instance, Bread and Badger, a five-employee business that sells sandblasted glass and ceramic gifts, migrated its online store from WordPress to Shopify, which helps its clients manage inventory, orders, price cuts and customer relationships. In addition, clients can use the Shopify Payment system or PayPal for secure transactions. Shopify, which offers a free 14-day trial, costs from about $30 to $180 per month, depending on which plan is chosen; the fees include hosting as well as the software.

Websites such as Etsy.com, which had $1.35 billion in sales in 2013, make it easy for practically anyone to start selling in an online store. Merchants pay Etsy 20 cents per item posted plus a 3.5 percent commission on the sale. Deb Myatt took her lifelong hobby of creating custom quilts and pillows and set up an online shop called Hattie Belle Studio—at age 64. “I was looking for a project as I transitioned from the corporate world into retirement, and Etsy helped handle everything… postage, selling, analytics and promotion tips. What’s amazed me is that it’s so human—person-to-person selling, yet with all the perks of a big business.”

Regardless of your choice, pay special attention to both the visual design—the look and feel—as well as the overall user experience: Does the site load quickly? Is it easy to navigate? Is the checkout process simple? Also make sure your website is mobile-responsive, which ensures that users can navigate easily whether they’re viewing from a 21-inch desktop monitor, a 9.7-inch tablet or a 4-inch mobile phone.

What about selling services, not products?

Just because you don’t market something physical doesn’t mean you can’t generate sales online. In fact, selling your services avoids the problems of managing inventory and resolving complaints about packages left on doorsteps in the rain.

IDoCelebrate.net, which has $1 million annual revenue, is a case in point. The company helps people plan weddings and events in public places like Central Park and South Beach, handling all the tedious logistics while navigating the client almost effortlessly through the red tape. With enormous growth in recent years through the power of online sales, IDoCelebrate is now working with SAXENA to bring its event-service offerings online with a fully customizable sales, management and production system. Users will be able to take planning into their own hands and coordinate everything online, from selecting the musician to catering. This allows customers to buy services before and after office hours, with the company doing follow-up oversight.

“Our goal is to meet or exceed expectations at the highest level of customer service,” says founder Thomas Noel. “IDoCelebrate.net allows users to map out what they want and purchase the services they need online. It’s really streamlined the process for us to get an event qualified and ready for production in a fraction of the time while reducing overhead by more than half and increasing our sales exponentially.”

The Final Package

Will your online commerce site have the chance to be a major part of your business or just be a side hobby to generate extra revenue?

A major benefit to launching and running an online store is that companies can start small and gauge interest, land those first few customers, and then iterate and expand. These steps allow an entrepreneur to take affordable risks and receive extensive feedback in a short amount of time, perhaps throwing out half the things that were tried along the way. It’s a process.

Check out 3 inventory management methods for your online store—you decide how much of the heavy lifting you can handle.