Product eCommerce business infrastructure
The 7 key infrastructure decisions to Build, Manage & Grow a successful eCommerce business.
The most important element to succeed is that your website must be found. Once visitors are on your site, you need to keep them there and compel them to buy from you. That’s the job of your marketing team. Whether it’s website design, social media, SEM search engine marketing or PPC pay-per-click, SEO search engine optimization, digital merchandising, E-mail, or other forms of advertising, marketing is vital.
Most small eCommerce businesses outsource 50-90% of marketing.
Don't break the bank. At most a showroom and office, but no expensive, fancy retail digs necessary. To warehouse or not to warehouse?
3. Customer Service
There are many choices today for delivering high-quality customer service. You can manage in-house or outsource to a third party. Basic customer service for sales and post-sales activities can be handled using email, and by providing an 800 number for more extensive phone support. A CRM Customer Relationship Management system like Salesforce.com will make those activities easier, but for smaller companies it is not a requirement.
Live chat integrated into your eCommerce store is highly recommended to boost sales. It will impact your operations as someone needs to be available during specified hours of operation. Be sure to gauge the impact of that on your organization, if you decide to handle those activities in house.
4. Information Technology
Choosing the right eCommerce platform is one of the most important decisions you will make in your business. Do you want to build and host your own system, outsource the development and then manage the system going forward, or use a hosted, Ssoftware-as-a-service platform that is more turnkey and externally managed?
If you build and host your own system, you may need more cash upfront and skilled administrators and developers on your staff. Using a SaaS platform, you will not need to host or manage the system in-house, but you may still need web developers on staff. Choosing to outsource the development and hosting will reduce your staffing costs, but you will incur higher costs for any future enhancements or changes to your websites.
There are pros and cons to any approach. Just be sure to think through the impacts on both your staffing and your cash flow and bottom line before you move forward.
Another key decision is whether you will manage your own inventory or outsource those activities to a fulfillment house or through drop shipping arrangements with your suppliers.
Managing your own inventory will provide you with a high level of control, but you will tie up your cash in inventory, warehouse space, and your own fulfillment staff.
Decide your mix of products that are drop shipped, out-sourced fulfillment, or in your physical inventory and warehouse. Leverage your purchasing power, whether doing your own manufacturing internationally, importing or sourcing locally. Sourcing product data feeds and having those .xls spreadsheets automatically updating your website is a booming trend.
6. Finance and Administration
Decide if you want to manage your finance and administration activities in-house, outsource, or a hybrid of the two. If your eCommerce platform is tightly integrated to your accounting system, your in-house bookkeeping needs can be re-apportioned to A/R or Customer Service. Using separate systems for your website, order management and accounting always requires more help for data entry and making sure that the information is accurate and up to date.
Many eCommerce companies use outside services for vendor payments, payroll, and other basic accounting activities. They decide to focus on the sales, marketing, and customer service. This allows them to maintain a focus on growing their businesses, instead of paying an internal accountant — or doing that work yourself as the business owner.
7. Human Resources
Many small-business owners avoid the human resources function. Recruiting, setting up compensation, maintaining compliance, training, certifications and other HR activities are specialized and time consuming. You may choose to bring the resources in-house to manage those activities, but also evaluate outsourcing them. There are many individuals and agencies well equipped to take on your HR activities.
When planning any part of your company’s infrastructure, reflect on your target market and the value proposition you have defined. Make sure that each element of your infrastructure supports your value proposition. Be careful not to over commit either your human resources or financial capital in one area. It is very easy to extend yourself financially on things like rent or hiring people, only to find out that other forces impact your growth or profits.
** Note downloadable virtual products, marketplaces and other business models require adjusted attention.