INTRODUCTION
Whether you are in the process of developing an ecommerce store for the first time or in mid-deployment of your ecommerce website, you have to make sure that your software components are complete. You need to ensure that you do not miss out any software component because even a single piece missing from the puzzle may lead to significant losses for your business. To help you, we are going to list a few vital ecommerce software components,
The best way to know what are the most important ecommerce software components is to know what you need. Whether you’re a novice or a seasoned pro, there are some things that you will come across over and over again.
Benefits of eCommerce
Businesses and consumers have both moved to eCommerce for its range of benefits. One of the major differences between running a business online compared to in-person is the ability for your business to be accessible 24 hours a day and every day of the week. Furthermore, customers can potentially have access to your products or services from anywhere in the world.
Having a business online creates a range of new opportunities in terms of marketing and customer engagement as well. For example, encouraging a consumer to visit a brick-and-mortar clothing shop could be significantly more difficult than encouraging a consumer to click on a link and to visit an eCommerce website.
Small businesses now have a unique opportunity to reach more people at a lower cost. Rather than needing to pay rent for a physical store, small businesses have minimal operating costs. With shipping becoming more affordable, customers all over the country or even internationally can be reached without much effort.
Types of eCommerce products and services
With eCommerce, people now have access to both products and services online. The ways these are sold range significantly in both what is sold and the form of transaction. Here are just some of the major types.
The first and arguably most well-known form of eCommerce includes stores that sell physical goods. Businesses that sell directly to consumers can be known as retailers or wholesalers. There are also dropshipping businesses where manufacturing and distribution to consumers is managed by a third party.
Additionally, people can sell services online. For example, you can find website designers, freelance writers, and even legal consultants that offer their expertise in exchange for a fee. Generally, the services themselves are given online. With eCommerce, people now have the ability to compare hundreds of service providers online.
ECommerce has allowed for the rise in digital products. Rather than receiving tangible products or services, you receive products in a digital format. Think eBooks, online courses, website templates, movies and software. We no longer have to go to a physical store to pick up a DVD or a new video game.
That’s not even all of it! We now have crowdfunding models where businesses raise money before a product goes to market, as well as subscription models where consumers pay for a product or service on a recurring basis. We’re still continuing to see new types of eCommerce emerge and grow.
Selling physical goods
ECommerce businesses that sell physical goods have unique components. The three main parts are sourcing a product, storage and warehousing, and fulfillment and shipping. There are different ways to go about each of these depending on the type of eCommerce business you want to run.
Sourcing a product
Businesses who decide to sell products online will need to find a way to source their products. There are three common ways to source a product for your eCommerce store, each with their own advantages and disadvantages.
The first and potentially easiest way to source a product is to make it yourself! For example, you might want to make and sell knitted scarves. The barrier to entry will generally be low, depending on the product you’re making. However, it becomes difficult to scale your business if your number of orders start increasing exponentially.
Secondly, you can work with a manufacturer or wholesaler. You get to control how your product is made and ensure it has the unique features that you want. Scaling production levels is also easier. On the flip side, working with a manufacturer or wholesaler can be more expensive and risky if things don’t go well.
Finally, you can consider dropshipping. In this scenario, you find vendors who are producing existing products. They handle storage, warehousing, inventory and fulfillment, meaning all you need to do is sell. However, you won’t be able to find unique products and you won’t have any control over the parts of the process that the vendor manages.
Storage and warehousing
If you’re making or manufacturing your own product, you’ll need to find a place to store your inventory. When you’re just starting out, it’s fine for most people to store products in their home. However, if you’ve started growing out your home or just want your business space to be separate from your home space, it’s time to consider getting storage for your eCommerce business.
At Workit Spaces, we offer self-storage for eCommerce and small businesses. Our showrooms start at $250/per week and range from 25m² to 300m² in size. Our secure warehouse and storage facilities range from 5m² to 500m² in size. Many of our clients base their offices in these spaces or use our other coworking solutions.
If you don’t want to manage your own storage and warehousing, you can also outsource this to a third-party warehouse. You can find 3PL services for eCommerce businesses as well, where both warehousing and fulfillment are outsourced. However, this might not be suitable for smaller businesses or businesses who want to maintain full control over these functions.
Fulfillment and shipping
As mentioned above, you can outsource your fulfillment and shipping to a 3PL. Otherwise, you can manage this yourself. At Workit Spaces, we have a goods in goods out station at our eCommerce Hub. You get to use the discounted shipping rates we have with all major shipping couriers. All you have to do is drop off your packages at the station and they get picked up daily.
Sales channels for eCommerce
For those really looking into building a brand and online presence, you’ll want your own website to act as your sole sales channel or as one of your main sales channels. Platforms such as Shopify, WooCommerce, Magento and Squarespace make this process a lot easier. There are a number of other different websites and platforms that you can use as a sales channel as well.
Other popular sales channels include:
- General marketplaces such as Amazon and Alibaba
- Auction marketplaces such as eBay
- Social media such as Facebook Store, Facebook Marketplace and Instagram
- Handmade and crafts marketplaces such as Etsy
- Subscription box service such as Cratejoy
- Classified listings website such as Gumtree
- Daily deals sites such as Groupon
Each sales channel comes with its own pros and cons. When deciding which sales channel or channels that you want to use, you’ll need to consider your business model, target audience, brand position, goals.
Acquiring and maintaining customers
The next major component of an eCommerce business is of course your customers. Finding customers and keeping them around are some of the most important parts of your business. There are a range of different customer acquisition strategies that exist, especially now with digital marketing on the rise.
When developing your initial customer acquisition strategy, there are a few things that you’ll need to consider. First of all, even though reaching a large quantity of people can be important, being able to find people who are of high quality is important as well. You need to have a thorough understanding of who your audience is and what channels they might be using.
In terms of tactics, there are many that might work for your business. Some are more short-term focused, others more long-term, some cheaper, more expensive and so on. Consider what return you’ll get on the investment and don’t be afraid to test if you’re unsure.
Here are some popular tactics you might want to add to your toolkit:
- Run paid online advertising with Google Ads and Facebook Ads
- Run traditional ads on television, radio, billboards etc.
- Sponsor influencers with a relevant audience on Instagram, YouTube, blogs etc.
- Create a referral or affiliate system
- Invest in search engine optimisation (SEO)
- Build your social media presence on Instagram, Facebook and Pinterest
- Create content such as blog posts, videos, photos and infographics
- Partner with other relevant businesses
- Build an email marketing list
- Offer deals, promotions or giveaways
Managing money
For most people, managing money isn’t the most fun part of running an eCommerce business. Unfortunately, keeping business records, managing cash flow and being ready for taxes is crucial. If you’re hoping to outsource this part of your business, you might want to consider our small business accounting service, CFO by Workit.
However, managing your cash flow doesn’t have to be super hard. You can use a simple spreadsheet template or an accounting software to get started. There’s no point in investing in complicated solutions if you know you won’t use all the features. Examples of small business accounting software include Xero, QuickBooks, Zoho and Wave.
ECommerce trends and predictions
No one can argue with the fact that eCommerce has boomed in the past few years. There are now a range of eCommerce trends appearing in Australia. With the coronavirus pandemic, more people have started shopping online as opposed to in physical stores. Analysts from KPMG are predicting that this eCommerce wave will continue and become crucial for retailers.
We’re also seeing the eCommerce industry itself evolve. Ensuring your sales channels are optimised for mobile is now more important than ever. Along the same lines, digital marketing is moving quickly. ECommerce businesses need to stay on top of the latest tactics. Furthermore, consumers are expecting to see a range of payment options, everything from PayPal to Afterpay.
There are also increasing expectations for sustainable and ethical products. Businesses can no longer ignore the environment and are being pushed to consider their carbon footprint. Similarly, consumers are looking for ethically made goods. It’s become more important to be transparent about how your products are made.
Starting an eCommerce business
Starting an eCommerce business is a massive feat. There’ll be lots you’ll need to research and learn beforehand. However, there are some tips that will help you out. The eCommerce retail industry is getting more and more competitive by the day. This means you’ll need to know how to stand out against competitors.
Here are five tips to help you compete when starting an eCommerce business:
- Find a unique selling point such as a low price, niche market, premium products or customer service
- Use platforms such as Shopify and Magento over marketplaces to build a better brand and customer experience
- Keep your customers engaged by providing rewards or loyalty programs
- Introduce free shipping and free returns above a shopping cart minimum
- Create a seamless customer experience from the first viewing of your site to the delivery of your products
More eCommerce business resources
Workit Spaces offers a range of different solutions and resources for new and existing eCommerce businesses. Make sure to sign up to our newsletter below to get updates on any new blog posts and videos we release in the future. To book a tour of one of our spaces or to ask any questions, feel free to contact Workit Spaces.
E commerce is also known as an online store
What does it take to build a great online store?
No successful store was ever built on luck and marketing alone. Top online retailers got where they are selling great products at great prices, delivering fast and making sure that customers are well rewarded for their choice. That takes a lot of work in areas most of us never notice, areas such as:
1. Suppliers and supply chain management
You are or plan to be a retailer in an increasingly competitive market. It means a lot to come up with a great idea, drive good traffic and convert it to sales but you can’t do that without the right products, delivered at the right time, with a price the market is willing to pay.
Suppliers meant a whole lot when ecommerce was not around. Now – even more so. When it comes to ecommerce, suppliers can provide you with the right merchandise but they can also take the stocks burden off your shoulders. Amazon, for example, relies heavily on its marketplace partners to increase listed products number, without buying stocks for those products.
Key take away: before starting an ecommerce operation make sure:
- you have enough and the right merchandise suppliers
- they are financially and operational safe
- they are able to provide real-time stock inventory
- they are able to deliver purchased products fast
[Read more Supply Chain Management in Omnichannel Retail]
2. Warehouse operations
Post brick-and-mortar retail relies on electronic communication and product display. But when a product is bought it has to come from somewhere, right? Seal the deal with the suppliers and it’s off to the Warehouse, that magical place where online retailers pick products from the shelf, pack them neatly and prepare those products to be delivered.
Sounds simple? Well, usually, it is not. A decent store with its own warehouse operations has thousands of products at any time on its inventory, employs at least a couple of dozens of people to store products, pick and pack, and prepare for delivery. That’s why so many large companies choose to outsource their fulfillment operations to “third party logistics” suppliers such as ShipBob (cool brand, right?) or the ever-growing Fulfillment by Amazon so they can focus on what they do best (usually purchase the best assortment of merchandise, service customers and marketing).
Key Take Aways: A much larger post regarding 3PL/YPL (third party logistics) will soon be available on Netonomy.NET but until then, let’s have a look at things to consider when developing your own warehouse operations:
- technology is the key – all 3PL service providers use technology (warehouse management systems) to know at all times where the products are, what’s the most efficient way to pick those products, who should be the person in charge for each package and others
- think about the season – some seasons (such as the Holidays) are more operationally intensive then others. Be ready to employ temporary workforce to fulfill your orders
- everything needs to be tracked and monitored – security and accountability are the key to handling large numbers of orders and workforce
3. Shipping and returns
Just as mentioned above your merchandise may be displayed and marketed online but it has to be packed and reach its destination in the real world. That’s why you need a good warehouse management and that’s why you need a great shipping service.
Shipping is usually an outsourced service. The best thing to do, unless you’re swimming in cash and you want to start competing the likes of FedEx and DHL, is employ one of the shipping providers and negotiate your way to a marketable shipping cost. Such a cost is likely to be, in the future, one you will be paying yourself – so pay attention.
Once you’ve contracted these shipping providers integrate their system with yours so you can streamline packaging and delivery.
Once in a while customers do not like what they’ve bought. You will need to handle the returns and reimburse customers for their purchase. Here you can team up with the shipping provider but your store has to handle all the communication.
Key take aways:
- hire a shipping provider – It’s probably not worth it to have a shipping service of your own
- pay attention to systems integrations when it comes to online store – warehouse – shipping flow
- handle your returns as gracefully as possible – it may mean the difference between an unsatisfied customer and a lifetime brand ambassador
Before we skip to the next component I just wanted to make sure you’ve noticed I haven’t yet mentioned anything you would expect would be ecommerce related or innovative. So far – it’s just plain ol’ supply chain management and logistics. Got it? Great. Let’s move on to …
4. Client Relationship Management (CRM) – software and policies
Before even considering selling – you need to think about how are you going to treat your customer and keep him coming back. That’s where CRM comes in. While the term is usually used to describe a type of software, it is actually the term describing the whole policy on how are you going to handle interactions between you and your customer.
CRM needs to be “customer-centric”. Big words – but what do they mean? It just means that everything you do needs to be done “for the customer, by the retailer”. You need to understand the customer purchase patterns so you can recommend the most suited products. You need to record purchases, interests, preferred channels and basically all there is to it when it comes to understanding your customer.
Then act on that – after you’ve analyzed data make sure customer care, warehouse operations, shipping providers and even your purchase operations – all know who the customer is and what it wants.
Key Take Aways:
- CRM is not just software – it’s a company policy on how to treat clients
- Profiling is a must – understand as much as possible about your customer so you can serve better
- “Customer-centric” is not a buzz-word – it’s common sense
- There is no “client service department” – everybody working in an ecommerce store needs to know who the client is, record interactions and treat customers accordingly
5. Ecommerce catalogue and product display
Here’s one you surely expected, maybe not so down the list: your online store catalogue. Of course – this one is important. Without one we would be back to mail orders and inventing the wheel. However, as you’ve probably seen so far – it is just a small part of the whole ecommerce store business.
When it comes to it some things you really should be taking into account:
- make sure you don’t over-design your store – your products are the most important items. Make them shine.
- analyze and predict: predictive analytics is the practice of analyzing users behavior and predicting what would they rather buy at any given time. Read more about it here.
- search, search and let’s not forget search: most of your customers will be using a search engine to navigate to your store (1) . Make sure your store is optimized. Once there, when in doubt, they will want to search for products (2) – make sure your site search works. Finally – when their order was shipped they will want to search for its location (3). Show them.
2020 update – Live Stream Shopping
As the world got more connected and customers began experiencing rich media on other platforms such as Instagram or Snapchat, they started expecting better shopping experience. Live Streaming became easier to do and the hottest trend for 2021 in online and offline retail is Live Stream Shopping. With brick and mortar retailers closing stores and online retailers trying to improve the shopping experience it seems Live Video Shopping is here to stay.
6. Marketing and loyalty programs
I know, i know – one includes the other. But for the sake of the argument let’s just assume that maybe loyalty programs online are so important that they should be a separate item to marketing. Because they are.
Loyalty is really hard to acquire these days. Especially when it comes to ecommerce. Most users will be searching for the lowest price and buy from whomever the seller is. But you can fight the trend with loyalty programs such as:
- rewarding purchases – reward your users with points they can spend on your store. It’s really effective in keeping your customers tied to your brand, as well as making them feel great about it
- social shopping – make your customer feel like a king when he can give out discounts and freebies to its peers and friends
- reward social media – most online users have some kind of influence in their micro community of friends. Encourage them to take part in your story, share your products and reward them with freebies, discounts and … well …sometimes “Thank you” is enough
As for marketing at large – there is an increasing number of marketing solutions you an use to market your products and store but not all are alike. Not all are as efficient. Focus on:
- Search engine optimization and paid search results
- Email marketing
- Social media
- Branding
They may not look like much but together the “incredible four of ecommerce” can mean the difference between a failed startup and the next Amazon.
Last but not least …
7. Showroom and offline purchases
What – you thought that brick and mortar is all gone? Of course not. Online retail is still at just 7% of total retail but growing fast. One of the things that’s helping it grow is showrooming. That is the practice of checking a product in-store and buying it (usually cheaper) – online.
Don’t think about ecommerce as online-vs-offline. Think in terms of customer. The customer wants to feel the product before it makes the purchase. So you’ll need to show it to him. Even a small offline showroom can work miracles for your online store.
So now you have it – online retail is a rather big iceberg. Most of it unseen. Check where others don’t look because that’s where you’ll find success in ecommerce.
CONCLUSION
The backbone of any ecommerce business is its software components. This includes everything from payment solutions, shopping carts, and shipping services to inventory management, accounting, and customer support applications. Ecommerce software enables high-volume brand storage, tracking and distribution systems that allow you to sell products and services globally.
Components are building blocks that can be used to create your eCommerce software solution. They’re shared modules containing components and functionality that work together as part of a larger product for the needs you have.