The global eCommerce market is expected to hit $4.5 trillion by 2021. That’s nearly double the revenue that this industry is expected to clock this year. Despite the terrific opportunity this presents, things are not likely to be easy. Amazon has been the undisputed leader in eCommerce for over a decade now and other major brick and mortar retailers have also been consolidating their position. While building another Amazon from scratch can be quite a challenge, there are ways to build a successful online store. Here are a few guidelines.
Focus on a niche
Earlier this year, Target unveiled a multi-billion dollar plan to revamp their eCommerce website. Walmart has also launched an investment arm to specifically focus on their eCommerce presence. While these retail behemoths plan to consolidate their position against Amazon, the chances for a new entrant in horizontal eCommerce are not too great. However, entrepreneurs can still benefit from the surge in the eCommerce market by focusing on a very specific niche. Pick a niche (like auto spare parts, or cell phone accessories) and focus on becoming the most popular brand in this category. The chance for success is relatively much higher with this strategy.
Target actionable metrics that matter
One of the most common mistakes committed by eCommerce entrepreneurs is to focus on vanity metrics like total turnover or gross merchandise value (GMV). These metrics convey nothing about your business’s real growth. In order to sustain health growth, your business must focus on improvement in actionable metrics like net profit, burn rate and average margin. It is very important that you do not focus on any one metric and instead work towards a holistic growth of all your actionable metrics. Even improving each of these actionable metrics by a humble 10% each can result in dramatic compounding of your business growth.
Focus on customer service
ECommerce is neither a technology play nor is it a supply chain game. The success of an eCommerce business rests solely on your customer service. This is especially true given the behemoths that you are competing with. Customers need a strong reason to buy from your store. Customer service that includes seamless logistics, a clear refunds/returns policy, and an extremely responsive customer support team instill confidence in the buyer, making them more likely to place an order from your business.
Do not diversify your marketing
Conventional marketers would stress on the importance of diversifying your marketing budget. This rationale is to make sure that your pipeline does not dry up if and when your marketing fails to deliver results. While this is true and diversification is important in the long-term, the objective as a startup business should be to identify your most profitable marketing channel and throw all your resources into mastering this channel. If you are in the B2C segment, for instance, this could be social media. Focusing on one channel helps you build a brand among your target audience who use this channel. Once you have established yourself in one segment, you could look at identifying more channels to spend your marketing budget on.
ECommerce stores are not built in a day. It takes months, if not years of perseverance, to build a successful eCommerce brand. Given the fickle nature of the business, the strategies outlined above can help your business weather the short-term challenges arising from funding and operations related issues and grow and succeed in the long-term.