5 Focus Points to Become a Successful eCommerce Entrepreneur
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Many customers prefer to buy products and services online. This is credited to ease of transacting, and attractive pricing offered on platform. Running a successful eCommerce business is beyond participating in price war. Secret ingredient in this recipe is to attract customers to come back over and over again. Technology build to post-sales communication create a wholesome experience for the users. This builds loyalty overtime.
1. Picking the right platform to sell: Own portal vs Marketplace
eCommerce sellers are often left in a dilemma to choose from either of the two options – selling on own platform or placing the product in a marketplace. Think is similar to choose between opening a showroom in city center and getting a retail space in a well-established shopping mall. The first gives you much flexibility in operating by your terms and scale your own branding. The later will get you a good growth from an existing footfall in the mall.
Various marketplaces also specialize in certain segments, which is an added advantage. For example, Myntra.com is very popular for fashion brands vs. Amazon that has a great reputation in selling electronics. Also, there are higher variable costs associated with the marketplace model vs a fixed investment in creating your own portal.
2. Pick your technology right:
The primary concern for any eCommerce entrepreneur should be to choose the right kind of technology for selling goods online while considering long and short-term scaling goals. The entire eCommerce ecosystem demands some sort of an organized logistics that is automated at the backend. Here, one must take a decision on whether to go for a custom built application or integrate SAAS like Shopify, etc.
Leading SAAS portals will get the ball rolling with a plethora of layouts, pre-integrated payment gateways, shipping options, and inventory management options. At times, they may come short on your expectations of customizing, and also there are generally charges involved per transaction. For large-scale projects, custom application development works out better to manage server loads and include customizations on purchase funnels. Also, CMS like Magento and Wordpress offers themes and backend code that is highly optimized and helps with SEO.
If you happen to sell on multiple marketplaces and on your own portal, services like Browntape or eSellerHub offers central inventory, shipping, and invoice management.
3. See where your customers hang out and what content do they consume
Most of the eCommerce is about selling. But then, what defines a successful eCommerce entrepreneur is getting into the ‘knowing’ part. Here’s when you will learn more about your customers and that in turn can boost your selling. Once you identify the target group demographics, go out and see where they spend most of their time on screens.
Are they watching videos? Blogging? Forum commenting? Are they checking out Instagram and following certain trends? Getting to know their content consumption pattern helps you target and reach out to the right audience; at the right time and the right place.
4. Watch your CAC and LTV:
This is something that can gauge your break-even and profitability. There does not exist an immaculate place for eCommerce entrepreneurs’ hideout. You are either spending way too much to get hold of new customers or even if you do, you can’t retain them. For this to be in a perfect balance, you should be investing your resources to get hold of acquired cohorts’ cost.
Work the other way round. First, measure the Lifetime Value of a Customer that is possible on your eCommerce products. And then, build an effective acquisition strategy around it. The aim should be to determine a Customer Acquisition Cost such that you are still left with a sizeable amount of profit.
As a rule of thumb, companies typically use the 3:1 ratio, meaning; on an average, if customers are spending $300 over their lifetime, the eCommerce vendor can spend up to $100 to acquire such a customer. However, this highly depends on the nature of the product, margins, repeat purchase propensity and other factors.
5. Your product and service are your best buddies:
Well, this is a no-brainer! Your offered product and services on eCommerce website/application should be bang on, perfect! And nothing can be as accurate as hearing from the horse’s mouth. Investment in gathering customer feedback, analysing what they say, and putting efforts to take customer experience to the next level always pay off.
A successful eCommerce merchant will prefer to integrate Net Promoter Score as a crucial KPI in his/her toolkit that aids nurturing not only business but also in gaining loyal customer-base. You should be looking for the unfiltered surveys from registered as well as unregistered customers. And once you have the score from that survey, quickly identify the promoters, passives, and detractors to further strategize your actions.
Running a successful eCommerce business is no different than running any other business in most ways. If your product is your hero and you have a plan to communicate effectively with your audience, nothing can hold you back!