eCommerce businesses often face the paradox of needing to grow in order to be profitable, but needing to be profitable in order to grow.
This can be a challenging balancing act, trying to calibrate internal capabilities, channel strategy, vision and organizational fit for higher performance eCommerce. But the timing has never been more vital and those that are able to find the right combination will be positioned with a competitive edge for years to come.
Echidna understands that digital growth alone does not necessarily lead to positive outcomes; it is positive growth that creates exponential organizational value. As a leading digital agency, we have worked with numerous clients over the years to implement sustainable, profitable growth strategies. Our team has identified common trends among leaders in eCommerce, and are highlighting five imperatives that can point organizations down the path to solve the paradox of achieving both growth and profitability.
While some businesses do have an inherent advantage- whether it be their business model or products, all companies can take certain actions to improve their eCommerce sales channel. Brands must tailor their strategy to its particular starting point, but a successful approach should consider these five imperatives.
Enabling aligned incentives and shared KPIs isn’t always easy, but once achieved will greatly impact overall profitability. This starts with providing the entire organization a clear understanding of the total cost to serve.
Data visibility amongst the company is key. Without systems that work together and with teams in silos, unprofitable decisions can easily be made. Having decisions informed by a single source of data can greatly improve the decision making process required to achieve more profitable outcomes. While this can sometimes require additional up-front investment, the costs to integrate and create this type of centralized data is an essential foundation for success and growth to account for previously “hidden” costs of serving customers.
Leading eCommerce companies invest in consistent and friction-free experiences, a strategy with a clear link to customer loyalty. With a customer-centric mindset company wide, work to blend all your channel experiences, whether the customer is in-person, online, or on the phone. This focus will not only improve customer retention, but with seamless marketing campaigns can grow acquisition.
For example, by improving online functionality will enable the eCommerce channel to better support in-person locations. One way to do this is by creating a store locator extension which is used to manage and assign catalogs to various stores, it makes it easier for customers to see what is readily available before they head in-store. Ship-to-store custom modules and BOPIS (buy online, pickup in-store) can also further this strategy. Many businesses will find that an eCommerce solution has the ability to drive growth not only online, but when collecting products purchased online customers tend to purchase additional products in-store.
Accelerating the speed at which your company organizes and operates can be one of the biggest challenges, but also prove to be one of the most profitable. With the pace of change only increasing, having the right teams, processes, and technology in place will be imperative to sustainable growth.
A good example of this focus is AirBorn Manufacturing, a company that manufactures specialized connectors & electronic components for Original Equipment Manufacturers. Echidna’s team designed and implemented a MVP modern commerce experience and technology that not only meets current needs with seamless integration of key technologies, but has the ability to scale. The integrations and updated technology now allows them to enable a more rapid test-and-learn culture and streamline decision making.
Another important strategy is to optimize pricing, which in some cases may lead to diversifying categories or entering new markets. Taking product profitability into account can allow your business to be strategic about what to offer online and what to promote heavily on eCommerce.
If your business has lower margin products, consider expanding offerings, markets, or heavily promoting cross-shopping with higher margin products. Many businesses have seen success in mitigating the disadvantages of the lower margin products by launching private-label brands to gain more control over margins or entering a complimentary category with higher-margin products. This can also help to reduce the risk of relying on a single product or market, making the business more resilient and sustainable in the long run.
Additionally, buyers more than likely don’t think about your company expense in delivering the goods, so take this as an opportunity to nudge them toward lower-cost options, such as no-rush shipping or ship to store.
To win in the years ahead, businesses will also need to maintain a relentless focus on cost reduction opportunities. Reducing costs doesn’t always have a negative impact and done right can actually increase efficiency and boost sales.
Ways to achieve this can be through a variety of means, such as automating processes, streamlining supply chains, and leveraging technology. Several strategies that have proven successful include:
When looking to reduce costs while maintaining or improving the customer experience consider this question, “which types of initiatives and services can persuade customers toward low-cost channels and help the organization take on quick wins?”
Is your business set up for online success and does it have the right people, tools and process in place to deliver on its eCommerce ambition?
Echidna has proven processes and expertise in being able to quickly assess where the biggest opportunities lie for your company. Taking the time to learn about your business, our team is able to help you overcome the challenges that are slowing down your digital progress with pragmatic and tangible solutions.