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E-Commerce Success Starts With Planning

Posted on 12 October 2009

While e-commerce is no longer a hot buzzword, the Internet is still an important sales channel for many businesses. Now more than ever, success is driven by business basics: Entrepreneurs who hope to succeed online must understand their audience, develop a solid game plan and market their site to their target customers.

“Planning is the key to success in e-commerce, that is definitely what I would stress,” says David Albert, president of Publishing Dynamics, a Web-services consulting firm in Chicago. “Any business owner needs to do a cost-benefit analysis before starting an e-commerce venture.”

Mr. Albert, who oversaw Web development for Cahners Business Information (now Reed Business Information) before starting his firm in 1999, recommends that entrepreneurs work with a reputable consultant to identify the best approach.

Each business is different, but every business owner needs to plan his or her online sales channel the same way as any new venture, he says. Factors to consider include:

  • Projected sales;
  • Inventory required;
  • The number of employees needed; and
  • The expected rate of returns of the products.

Numerous technical options are available for e-commerce, Mr. Albert says. They include “storefronts” built by hosting providers and off-the-shelf solutions from such companies as Yahoo Inc. Basic storefronts can cost as little as a few hundred dollars a year plus transaction charges levied by credit-card processors of between 2.2% and 2.9%. If you’re considering a prepackaged solution, says Mr. Albert, make sure it has the capacity to support your business and is scalable to match future growth.

If you’re inclined to opt for an off-the-shelf online store, try buying an item or two from another client’s site first. If your shopping experience isn’t a good one, Mr. Albert says, “you might want to look somewhere else.”

Ryan Thompson, president of Arial Media, a Web-development company in Addington, Texas, says that for growing businesses, custom-built systems represent a better long-term solution, and are relatively inexpensive because if planned well, they don’t need to be redesigned later to accommodate growth. “People assume that they have to spend hundreds of thousands of dollars for their e-commerce solution. But you can scale up your system [without spending more money] if you design it correctly from the outset,” Mr. Thompson says.

Another factor that will influence your plans is whether you’re selling to consumers or to other businesses. For example, Wrenchead Inc. of White Plains, N.Y., is a business-to-business seller of automotive electronic parts. Much of the work on its e-commerce site involved getting the different computers at other companies to talk to one another, says Paul DeSantis, who was its executive director of e-commerce when the site was built in 2000.

Additionally, entrepreneurs should think about their prospects for growth and plan accordingly, says Mr. DeSantis, who is now a consultant in Howell, N.J. Start-ups can expand to the point where it’s advantageous to interact electronically with a supplier or distributor.

“Sure, if you are a mom-and-pop shop, there are plenty of off-the-shelf, plain-vanilla solutions [for a store] that you can use,” Mr. DeSantis says. He cites VeriSign Inc. and BEA Tuxedo as two well-regarded vendors of online stores. “But if you are in the business-to-business space, machines have to talk to one another, and then you’re into another level of coding.”

For Do-It-Yourselfers

The technically savvy entrepreneur has still more options. Aaron Hazelton, a self-taught 24-year-old programmer in Sylva, N.C., relied on a packaged solution when he launched FixtureFactor.com, which sells faucets, claw-foot bathtubs and other plumbing-related wares. (He learned the retail bathroom-and-kitchen remodeling business from his father.) He downloaded so-called open-source software free of charge from the Web and then customized it. He concedes that his approach to building an online store “might be a little unusual.”

His advice to entrepreneurs? Make sure you also can track and fill orders. “That’s just as important as the front end the customer sees,” Mr. Hazelton says. Plus, don’t forget about offline customer service, he adds. FixtureFactor.com employs four people. “When people call us, a real person answers the phone. Our customers love it. An awful lot of people call just because they like to talk to somebody.”

The Big Picture

Bear in mind, too, that technology is only a part of the e-commerce equation. Robert T. Plant, author of “eCommerce: Formulation of a Strategy,” (Prentice Hall, 2000), believes it isn’t even the biggest part.

“E-commerce is fundamentally a business problem, not a technology issue,” he says. “You can buy the technology. If you don’t understand the process, or understand what you want to do, then you won’t be successful.”

Mr. Plant teaches information-technology strategy to master’s of business administration candidates at the University of Miami. During a sabbatical in 1997 and 1998, he interviewed executives at large companies about their e-commerce initiatives. He says new entrepreneurs can learn from their experiences.

“It starts with the customer: What is the value proposition that you’re offering? Why would somebody want to buy what you are selling?” he says. As a first step, he suggests, would-be entrepreneurs should make sure their ideas pass the “friends” test. “If they laugh at what you’ve got in mind, OK, but if they like it, they’ll give you good ideas,” he says.

Will Customers Find You?

Don’t make the mistake of assuming that because you’re successful offline, you’ll automatically be successful on the Web. “It’s not as bad as a few years ago, but even today people assume that if they open a storefront on the Web, people will come,” says Mr. Thompson. “But it’s not like being on a busy street. You’ve got to invest in making sure your site is found. I’m a big believer in pay-for-performance marketing.” He recommends using paid-search-engine-listing company Overture Services Inc. or Google’s AdWords program, which sells text-based ads that pop up on its site when a user searches for a related word.

“The Internet is the first medium that allows you to intercept interest in a topic,” says Fredrick Marckini, president of iProspect, a search-engine positioning firm in Arlington, Mass. Mr. Marckini wrote “Achieving Top 10 Rankings in Search Engine Positioning” (Direct Response Inc., 1997), which is considered a seminal work on the topic of improving Web sites’ visibility on search engines.

“You’ve got to be where people are looking,” he says. “When I was an entrepreneur, I measured success by the number of times I reached out and spoke to someone during the day.” E-commerce entrepreneurs should approach the Web in the same fashion. “If people don’t find your Web site, it doesn’t matter how good it or the product is,” he says.

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  1. Issue 3 – November 2, 2009 « Internet Marketing Blog Carnival says:

    [...] Ben presents E-Commerce Success Starts With Planning posted at Higher Education and Career Blog, saying, “If you build it, will they come? [...]

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