Questions to Ask Yourself Before Adding an eCommerce Option to Your Business
Whether you're a restaurant looking for more online orders or a manufacturer wanting to sell directly, eCommerce might be the tool you need to take your business to the next level. When done correctly, eCommerce websites and marketing are a great way to expand a company.
But adding eCommerce isn't easy or free. How can firms accurately assess the risk before investing in online sales? We've mapped out a few questions business owners should ask themselves before deciding if eCommerce is right for their company.
1. What Will You Sell Online?
Start by mapping out which items are best suited for eCommerce. Some items may not make sense for online sales. But even if certain parts of your business are best suited to offline models, that doesn't have to stop you from selling select items online. For example, a farm equipment distributor may not want to sell $300,000 combined online, but they may want to offer parts.
A restaurant may not want to offer its entire menu for takeout or delivery but might have a special online menu instead.
Similarly, an art gallery may not want to sell a series of original works online but could use its website to promote shows while selling mass-market posters and cards via eCommerce.
The point is that online sales don't have to be all or nothing. Identify items that make sense for digital purchases and reserve the rest for in-person transactions.
2. How Will You Deliver It?
When transitioning from in-person to online sales, shipping, and delivery can be a real challenge. Happily, there are now lots of options. For example, if you're shipping to customers, you don't have to ship everywhere (and in some industries, such as winemaking, shipping everywhere isn't an option anyway). Choose your delivery area and set up programs that make sense with your product.
Next, evaluate different shipping vendors. The U.S. Post Office has programs created for eCommerce shipping. FedEx and UPS also cater to small business shipping. Some companies, such as Pirate Ship, use online programs that calculate the rates for a variety of carriers and offer the best shipping option to the customer. Programs like these usually integrate seamlessly with eCommerce platforms.
Companies may also want to offer free shipping, usually for a minimum order. If your firm doesn't want to charge for shipping, those costs will affect profitability. Requiring a larger order amount is a popular way to compensate for reduced margins.
Restaurants have lots of delivery options, too. They can offer customers the ability to place online orders for pickup. If takeout is a big part of the business, it may make sense to hire a few delivery people. Services like Grubhub and DoorDash also make it easy for restaurants to offer delivery options.
3. How Will You Market It?
Selling online won't help your business if your best prospects are unaware of the option. At Cup O Content, we recommend posting to social media several times a week. We also recommend using Google search ads and social media ads to get the word out. Email marketing can also be very effective.
The way you build your site can also be a form of marketing. Search Engine Optimization, or SEO, is the practice of building or revising a site in ways that make it easier for search engines to find web pages, index them, and then rank them for search engine results. For example, a pizza place might have web pages that rank high for people searching for Strombolis. A florist might have site pages that rank for bridal bouquet ideas. Using SEO strategies, a firm can populate its site with programming that helps search engines understand how and when to include product pages for a range of relevant search terms.
Whether you choose to promote your site with social media programs, ads, email, SEO, or other strategies, effective marketing takes time, money, and expertise. But it's critical to ensure that customers find your site and start buying.
4. How Much Do You Need to Sell to Make It Worth the Investment?
How much can you spend? The company must calculate ROI before investing. For example, let's say a pizza shop has an initial goal of increasing profits by $1000 a week, so they need to increase sales by $2,500 a week (gross sales) or sell 125 additional $20 pizzas a week, increasing sales by about seventeen pies per day.
In this example, let’s say Cup O Content recommends investing $2,500 a month for the first year. Initial funds might be used for website updates and to get social media in place. We might request that the restaurant start working with DoorDash and others for delivery. After the website is revamped, we start using the marketing funds to create social media ads.
While it will take a few months to get up and running, by month six, the restaurant should be able to see that they are realizing a $1,000 extra profit per week.
For the sake of this example, let’s assume their profit has increased by $1,000 a week or $4000 a month.
The pizza place spent $2,500 per month, or $15,000 in the first six months.
In the first two months, they spent all their time updating the website to accommodate online orders and getting more delivery options in place. By month two, they were able to start running ads.
In the first six months, they were building their websites and marketing momentum and didn’t see any additional profits. By month six, they met their goal of $4,000 additional profit each month, and using marketing, they were able to maintain that level of sales over the next six months.
In the first six months, they spent $15,000 in marketing and realized a $15,000 increase in profit. So at the beginning, they were breaking even.
Over the next six months, the marketing investment remains at $15,000, but they continue to see an increase of $4,000 in profit per month.
That means they've spent $30,000 on marketing but increased profits by $39,000. Their ROI in year one is $9,000.
This might seem like a lot of work for just $9,000 of additional profit per year. However, once initial website investments are in place, the ROI should get more efficient. The company now knows what works.
Building on what they learned in year one, it's possible to increase sales in year two while retaining the same monthly advertising costs from year one by simply relying on increasingly effective ads and promotions. This pizza place should be able to boost profit by an additional $1,000 per month, bringing additional profit to $5,000 per month.
So now they are still spending $30,000 per year to produce an additional $60,000 in profits. In year two, they bring home an additional $30,0000.
At this point, they can reasonably assume that for every dollar they spend in digital marketing, they can expect to drive an additional two dollars in profits for an ROI on marketing/eCommerce of 2:1.
Now, let's be clear that you need continually effective marketing to make these kinds of results happen. The product and service must also be maintained. But Cup O Content has realized this kind of ROI for clients in two years. And if you get two dollars back every time you spend a dollar, how many dollars will you want to spend?
5. Who Will Monitor and Update Your Digital Tools?
That old saying, "If you build it, they will come," doesn't really apply to digital marketing. "Building it" is step one. Continual marketing, coupled with careful analytics and optimizations, is the ONLY way to continue to grow sales over time. Successful eCommerce programs need someone checking the website regularly, working with shipping, working on offers, measuring sales, creating and placing ads, developing emails, and more. Additionally, websites need monthly maintenance and updates, or they can stop working altogether.
If you have an experienced marketer on staff, they may be able to do some of that. Some companies rely on firms like Cup O Content to manage the marketing. Each business is different and has different abilities and opportunities. Whether you choose to use an in-house resource or hire an agency, make sure you have this resource in place before you start spending money on a new website.
Learn More
If you're wondering if eCommerce might be right for your business, contact Cup O Content for a free consultation. We'll discuss your business and make recommendations for digital needs. And if we can't help you, we'll point you in the right direction.
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