My first e-commerce experience goes back almost 20 years, maybe this should make me feel old or like a veteran, but funny enough not much has changed since then. Back in 1999, I built my first online store from scratch. Not because there weren’t any e-commerce platforms around back then, but readymade solutions required considerable investment and reliance on tech companies.
It wasn’t necessarily easier to build my own platform, but there was a critical part of the entire setup that I had at my disposal which made it an achievable mission. The company I was working for had a fully operational mail order. Mail order for those who can’t remember, (or weren’t born???) was a printed catalog that was sent out to a customer base so they could place orders via mail or phone (mail, then order).
I had everything in place, a warehouse system with inventory, fulfillment, returns handling and a team that could process orders. All I had to do was building the online store, enable online payments and focus on fancy features such as a recommendation engine, or ensuring there was a lot of content available for customers to experience products online.
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20 years later we are still building e-commerce websites, but the tools that we have available now have changed and are more powerful, with all features right out of the box.
Not too long ago we launched the new e-commerce site for a large fashion retail brand which caters to the GCC markets. The project took three months from start to finish. That’s pretty fast for an e-commerce site of that size.
We used Shopify Plus, which for sure contributed a lot to the success of the launch in a short time frame. However, the truth is the most time-consuming part of the project was configuring the system to work based on the client's requirements. Making sure orders get processed seemingly, returns get handled efficiently, and the inventory updated from their ERP.
It reminded me of that first e-commerce project I worked on, because while I had a fully operational mail order team, this project required a lot of this setup to be established throughout the process.
While the clients team did a fantastic job to set up their logistics and operations, many other e-commerce projects fail precisely because of the fact that the business is focusing on the technology part, which is setting up the e-commerce platform, but not necessarily on the operational part which is how to operate the platform once the orders are coming in.
So what should businesses do to ensure e-commerce success?
Defining the Operational Model
The first step is to have a clear idea of the operational model and requirements of this new sales channel. Your online store is just like a physical store as at some point goods have to be stocked, ordered, shipped, delivered and returned if needed. It is a complicated process and requires the management of inventory, integration with shipping providers, credit card processors and managing customer orders retrospectively.
E-commerce is one of the most competitive online models from both a pricing and customer experience perspective. Customers demand a smooth, frictionless process and to guarantee these experience e-commerce operators must ensure their systems work together like clock-work.
The best way for a new e-commerce business to start defining the required processes and integrations is by mapping out the customer journey.
An often overlooked aspect of running a successful e-commerce website. Online merchandising is the part where you decide which products to sell, which ones to promote and how to enhance your catalog for maximum returns and conversions. Many startup e-commerce sites upload their entire product catalog online and expect customers to search, find and buy the products, however, like a conventional brick and mortar store a robust online experience will help customers making buying decisions. Online, you have even more tools available to do so effectively from A/B testing, product recommendations, analytics, and marketing automation.
While planning your merchandising strategy you may also want to plan how to integrate with your inventory management system as your merchandisers need to know what products are in stock, are running low, are getting out of season and so forth, for them to adjust the online catalog accordingly.
It’s a common misconception that inventory integrations are there for customers to see what’s available and what’s not. This is wrong, customers should always be presented with something they can buy, and your merchandisers need to make sure there is a product to buy.
Marketing & Customer Attraction
Once you have your products in place, it’s time to get customers.
Marketing your e-commerce store will require a substantial investment in advertising, SEO, and other marketing campaigns to drive traffic. The main advantage of e-commerce sales is that they are 100% trackable and it’s easy to measure which activities lead to online purchases. Therefore the budget for your marketing campaign can be calculated based on your conversion rate, product price and advertising spent.
Imagine you are selling pairs of socks online that cost $10 an each if you have a conversion rate of 1% on your product landing page you know that our of 1000 visitors you will get $100 worth of sales. If you now take the amount of money you can spend selling $100 worth of socks and stay profitable you know the budget you can put into your advertising campaign to attract a thousand visitors.
Placing an order is usually fully automated and means that the customer is adding items to their shopping cart and submitting the order to the system. Depending on your setup, however, this submission process may require some additional steps in the background that may have to be orchestrated back to the customer in real-time. What if the product just became unavailable while placing the order, what if the shipping fees need to be calculated, the order contains multiple items that need to be split into multiple shipments or the address of the customer requires additional details. All these processes need to be clearly defined so that the order placement can be implemented accordingly and reflect your operational model.
Processing online payments have become much easier, as there are a lot of different payment providers that accept all sorts of payment methods from credit to debit to PayPal or even Bitcoin these days.
Security is critical when it comes to processing payments, and therefore it is essential to ensure whichever provider you choose offers the latest security standards. Also, the payment provider should ideally support refunds that can be triggered directly from your online orders back office for you to be able to manage returns or refunds efficiently.
Once the order went through together with the payment, what are the next steps you have to take behind the scenes? You most likely want to send a confirmation to the customer and forward the order to your warehouse for processing.
Everything from printing pick lists, and sending notifications will be handled during this stage. However, it could become more complicated if orders are picked from multiple locations or warehouses and require more advanced processing.
This step seems pretty straightforward as it involves collecting the ordered items and putting them in a box, ready to be shipped. However, during this stage, it is essential to have an excellent way to track which items have been picked together as well as providing a way for warehouse staff to communicate back to the order system in the event there are any changes, missing items, etc. Things can always and will always go wrong, and it is a good practice to be prepared for these situations and handle them gracefully.
Printing the shipment label and preparing the package for courier pickup usually requires the integration into the shipment provider API to enable the customer to get notified about the shipment as well as track its location.
Returns and Customer Care
Customers will want the ability to send a product back if there is an issue with it, the same way they would be able to return it to a physical store. Therefore the process of handling returns needs to be thought through carefully and planned into the operations.
Choosing the Right Technology
Technology is often overrated, don’t get me wrong, but in reality, most platforms offer the same features as they have evolved to support online businesses and the fundamentals are the same. It sounds like it doesn't matter which technology to choose right?
Well, based on my opinion there are three ways to go about e-commerce technology:
- Setup a pre-configured cloud-based solution
- Setup on-premise open source solution
- Setup the enterprise-grade e-commerce platform
Pre-Configured Cloud-Based Solution
If I had to name one then would be Shopify or Shopify Plus since we had some hands-on experience with the system. The good news is that even tho it is a cloud-hosted platform it allows you to customize the user experience quite freely and you can write your own plugins and logic if required. While the more costly Shopify Plus offering may seem expensive at first, keep in mind that e-commerce websites are high traffic sites and the hosting requirements and ensuring seamless transactions requires a lot of server and processing power.
"If you think you won't have much traffic on your e-commerce site, maybe you don't need an e-commerce site."
On-Premise Open Source
This category is more complicated to evaluate, and here you’d usually find your Magento or WooCommerce fans. Again, in my opinion, it’s not about which platform, but how much you are willing to invest in maintaining any open source and self-hosted platform over time. Self-hosted systems require ongoing patching, updates, and maintenance and eventually, that cost will exceed the value of investing in a one for all cloud solution.
Further, more and more online retailers experience high hosting costs involved when stabilizing their high traffic transactional sites on open source systems. Due to the architecture of these applications and the fact that scaling, for example, a Magento e-commerce site on a Black Friday can involve a complicated hosting setup. To the rescue, you have new players in the market such as Reaction Commerce, which is built using Node JS and modern technology stack that can scale to thousands of transactions quite smoothly.
Enterprise-Grade E-Commerce Solutions
These to my mind come together with a lifelong consultancy subscription and from a technology perspective are highly outdated, but bring the advantage to be bundled with a lot of the “back-end” stuff you will require such as warehouse management, ERP, inventory, etc. E-commerce is a fast business, and to my mind, your technology should enable you to make changes quick and efficient. You don’t want to wait for three months to optimize some of your pages for search engines just because your enterprise e-commerce system only has a monthly release cycle.
As always making a decision when there are too many choices can be difficult, but by better understanding, your initial requirements and planning your e-commerce operations before buying the technology itself can save you a lot of money in the end.