Chapter 15
IN THIS CHAPTER
Strategizing your e-commerce program
Understanding the options for selling online
Discovering how best to use Amazon or eBay storefronts
Taking note of key off-line distribution strategies
Considering channel structure and options for resellers
Gaining ideas for improving in store sales
You can build the greatest product ever invented, but it won’t matter if you don’t have an equally great distribution channel and strategy in place.
No matter which business category you’re in, you cannot ignore the burgeoning growth in e-commerce, which has accelerated at a record pace in recent years (particularly as a result of the COVID-19 pandemic). And you cannot ignore the accelerating expectations and demands of customers in all spaces to have both online and off-line options for doing business with you. The fast trajectory for online sales worldwide will leave laggards behind and continue to reward early adopters. For most businesses, adding an e-commerce option isn’t a matter of if but when if you want to survive.
This chapter sets forth some tips and tactics for moving into e-commerce as easily as possible. I tell you how to set up your own e-commerce store, set up store-fronts, get your product noticed on third-party sites (like Amazon), and more.
Setting up an e-commerce program is actually simpler than you may think, given all the platforms and technology that are now affordable for small and large businesses alike. This section explains some of the challenges you face getting started with an e-commerce program and outlines many simple and affordable solutions for succeeding.
According to www.digitalintheround
.com, there are upwards of 12 million online shops worldwide. More than 2 million of these shops are in the U.S. alone. By comparison, there are 2.14 billion online shoppers around the world. This trend is likely to continue to grow as online shopping has become an integral part of consumers’ lives, just about anywhere on the globe.
You can compete for online sales. The best place to start is with your existing customers, who likely would welcome more options for engaging with you. Once you get them shopping your online store, you can reward them for purchases, referrals, reviews, and shares to social media pages.
By building an engaging website that appeals to the triggers of choice (discussed in Chapter 2) and providing a fulfilling customer experience from landing page to shopping cart (as discussed in Chapter 3), you’ll also secure new customers.
Often what sets one e-commerce star above another for visits and transactions is search engine optimization, or SEO, which isn’t something you set up once when you launch your e-commerce site or Google Ads campaign. As mentioned in Chapter 13, you need to continuously monitor search terms, keywords, campaign optimization, clicks, click-through rates, and conversions, just as you do your website. Monitoring the keywords and SEO efforts of your competitors on sites like SpyFu is also a powerful way to stay ahead of the pack.
With stores having to offer curbside pickup or stop doing business in 2020, new distribution methods blossomed during the COVID-19 pandemic. Curbside pickup and click and collect — also known as buy online, pick up in store, or BOPIS — soared, and they show no signs of slowing down. According to Business Insider, U.S. shoppers alone spent $72.46 billion on BOPIS purchases in 2020, representing a 107 percent growth rate over 2019. Multiple studies indicate that many consumers intend to keep shopping this way.
BOPIS offers many opportunities for businesses large and small. Small businesses can keep up with online order fulfillment by offering BOPIS options rather than trying to package and ship product. If you assign one or two staff members to prepare pickup orders prior to in-person shopping hours, you can offer BOPIS without adding much to your labor costs or interfering with your in-store customer service. You can also set up lockers in store or outside your storefront. Customers can pick up their packages much like picking up their mail, reducing the need for staff engagement, customer lines for pickup, and, best of all, extra payroll for fulfillment.
Your e-commerce store must provide the same kind of engagement, services, and support as your brick-and-mortar store, if not more. Expectations for 5-star service online are, and will continue to be, high. Personalizing online shopping with relevant live chat opportunities or customer service follow-up is key because consumer expectations are no different for online engagement as they are for in-store interactions. A 2018 Accenture study shows 91 percent of consumers were more likely to buy from brands that recognize them, use their name, and provide relevant offers and recommendations, off-line or online.
With the right e-commerce or customer relationship management platform, you can offer live chat with employees who have access to customers’ data and can deliver personalized service based on past transactions in real time. By empowering employees to solve issues immediately and offer incentives to keep customers satisfied, your online experience can be just as good, if not better, than your in-store service.
Abandonment is a real thing in e-commerce, and while you can’t take it personally, it impacts your bottom line and marketing return on investment in ways that can feel very personal. Abandonment in the e-commerce world happens when people get off your site without making a purchase or leave items in their cart and never come back to check out.
Consider this statistic reported by BigCommerce (bigcommerce.com):
U.S. retailers spend close to $24 billion on digital ads per year to drive traffic to e-commerce websites, and on average experience conversion rates between 2 and 3 percent.
Despite this not-so-encouraging statistic, it’s critical to offer e-commerce in a world where customers want options and will patronize the brands that give them choices that fit their lifestyle and expectations.
The following guidelines can help you secure sales:
Again, SEO is an important aspect of e-commerce success. If you aren’t on the first page of search engine results pages, or SERPs, you’re not going to drive traffic to your site. Consumers tend to have the patience of a gnat and usually won’t look past the first SERP that Google, Bing, or the like serve up. However, first pages now list several ads before the organic options, making it harder to get a top listing without paying a lot.
The work-around is to put some extra effort into elevating and maintaining your SEO rankings to ensure you’re at the top of key searches related to your business, and that you stay there! You need to constantly monitor key terms in your Google Ads account, keep your website tagging current, and monitor keywords and search result rankings for your competitors. Again, SpyFu is a great site for keeping tabs on your competitors and gives you decent insight for free.
Even with 70 percent or more of online shoppers abandoning their carts, you can get them back with some simple tactics, such as emailing or texting incentives to complete a transaction. According to Wix, triggered emails can quickly get back around 10 percent of shoppers. Most e-commerce platforms offer automated triggers for re-engaging abandoned shoppers. You can also use a marketing service like Omnisend.
Following are some strategies that will help you minimize abandonment:
There are many options for taking your business online. You can build your own website with an e-commerce feature and fulfill your own orders, or you can contract with a company that will do the work for you for a percentage of your sales. It’s not if you’ll go online, but which option you’ll use in today’s consumer culture, where e-commerce is growing 20 percent per year. Some options include:
Whichever option you choose, you’re setting up for a fun, rewarding, fast, and adventurous journey for your business. Hold on and enjoy the ride!
There are numerous platforms for do-it-yourself (DIY) e-commerce websites, and numerous review sites to guide your decision process. One example is www.best10ecommercesitebuilders.com
.
It’s important to review websites that compare e-commerce platforms to see what users have to say about ease of development, design, SEO management, payment and shipping processes, service, and tech support. And, of course, to find out if they offer the services and features you need to start out strong and achieve sustainable growth.
If you’re just getting started, there are many affordable options that provide the same services and features offered on big brand websites. You may be surprised at how many features you can get for less than $100 a month from an e-commerce platform like GoDaddy, Square, or Wix, three highly rated and highly used platforms.
Features you can get from affordable platforms for small businesses include:
Website Builder Expert (www.websitebuilderexpert.com
) lists the following as the seven best e-commerce platforms:
Various website builders have various advantages. For example, one of the features highlighted about Wix, a highly rated platform with hundreds of easy-to-use templates for retailers, is its easy integration of products and even full catalogs to Amazon and eBay. An advantage of using Square Online is its automated integration with Square’s point of sale and banking tool.
It’s important to do the research on e-commerce platforms and read what others have to say about ease of site and store development, quality of support, and so on. Uploading your photos, product descriptions, and setting up pricing and shopping options requires a substantial time commitment you can’t recoup if you decide to switch platforms down the road.
With the right system, setting up an online store can be as simple as
If DIY isn’t your thing, you can find sites that will take care of many of the management functions for you. Many of these sites cater to a specific business line. For example, one company might specialize in e-commerce sites for counselors and life coaches, another for artists.
Darkroom.tech is a site that hosts storefronts for photographers. You choose your template, and upload your photos and prices, and they manage your shop and fulfill orders for you. You end up paying 5 to 15 percent of your revenue for these services, but you gain back the time to focus on your business.
Keep in mind the personal time you have available to maintain your site, manage inventory uploads, review analytics and sales dashboards, and perform other housekeeping functions. If your time is scarce, this option may be best for you.
When browsing options for platforms that manage sites and processes, pay attention to how much you will be paying to process each order. Is it 15 percent, 30 percent or more? How do the fees of those platforms you are considering compare with commissions you would pay resellers such as brokers, retailers, or galleries.
As of 2019, online marketplaces accounted for the largest share of online purchases worldwide. Leading the global rankings of online retail websites in terms of traffic is Amazon, which registered more than 5.2 billion unique visitors in June 2020. In terms of gross merchandise value, or total amount of sales over a specified period, however, Amazon ranks third behind its Chinese competitors Taobao and Tmall. Both platforms are operated by Alibaba Group, the leading online commerce provider in Asia.
Not surprisingly, the two biggest e-commerce outlets used by U.S. retailers are Amazon and eBay. Both are great for getting your products out to the masses, but they’re quite different in how you use them. Amazon offers a retail structure and will often fulfill your sales as well as feature your products on its site for a fee. eBay is mostly a marketplace provider and offers tools to help you better promote your products to visitors on its site. With both sites, you have access to a lot of shoppers, while having to overcome a lot of competition, of course.
Consider these numbers:
Amazon | eBay | |
Monthly active users | 197 million | 109 million |
Annual income 2021 | $33.6 billion | $11.8 billion |
Number of independent sellers | 2 million | 25 million |
Number of products available | 353 million | 1.7 billion |
As you can see, a lot of selling takes place on these sites, and your product will be one of dozens, or nearly two billion if you choose eBay. However, setting up a storefront on Amazon or eBay often pays off. Amazon merchants report that sales went up when they began selling on Amazon and that the volume of sales outweighs the cost of any selling fees.
So the question is, to eBay or Amazon?
You are probably familiar with Amazon but may not have a lot of experience with eBay. Before deciding on a digital storefront, you should know what eBay has to offer. More importantly, you should consider the eBay offers that Amazon doesn’t. Here are some key differences:
The key to success on eBay is to get your product to pop up on the first page or two of the search results. Here are some tips that can help you get noticed:
Studies show that more than half of all online shoppers start their search for new products on Amazon. As a retailer on the site, you can sell your products with Amazon.com as the payment processing system for your shopping cart, or you can become an Amazon seller, paying a monthly fee for Amazon to list and fulfill your product. Following are some keys to success for selling on Amazon:
Beyond building your own e-commerce site or setting up storefronts on third-party platforms like eBay or Amazon, there are other distribution options to consider.
Multilevel marketing representatives:Multilevel marketing, also known as network marketing, is where individuals sell products as 100 percent commission-based representatives of the brand rather than as salaried employees and recruit others to sell with them. They receive a percentage of any sales associated with other representatives they recruit.
This model is often referred to as pyramid marketing and is often more about earning money from representatives and their recruits than developing high-quality products. In many cases, the products are inferior and overpriced because the price point has to cover commissions to several people associated with the sale. Setting up this model for your business can taint your reputation before you even get started. Top multilevel marketing companies include Amway, Avon, Herbalife, and Mary Kay.
The quality and quantity of retailers and distributors are important considerations for business-to-consumer (B2C) and business-to-business (B2B) companies, because they impact not only access to your product but also the prestige and perceived value that drives your pricing limits. If you produce luxury goods, where you sell them is critically important. People expect to pay more at high-end retail stores like Saks Fifth Avenue and Neiman Marcus. But the minute you start selling your luxury items at discount department stores like JCPenney or Walmart, the perceived value of your brand drops, and that can impact your ability to get premium pricing when you sell direct.
On the other hand, online point of distribution promotion is about purchasing search terms for browsers, pop-up ads via programmatic marketing, and mentions on shopping cart pages, such as Other customers also bought …, which triggers the fear of missing out and helps you capture emotional sales. (See Chapter 2 for more on FOMO and emotional triggers.)
Distribution strategies are key to launching and growing any business in any industry. For B2B marketers, distribution strategies include building a strong reseller network and a concerted focus on getting your products in front of purchasing managers at industry conventions, trade show expos, and similar events as well as product directories.
How you distribute your products can also influence what you are able to charge for your goods. Your price point can fluctuate if you create a sense of scarcity or abundance for your product. Consider the following:
You also have to decide whether you want to develop parallel distribution channels, also known as competitive channels, which involve selling directly to consumers, not just through distributors or retail outlets. Be aware that parallel distribution puts you in direct competition with businesses you depend on to get your products out en masse. This can backfire by souring your relationships with companies that sell your product for you, so do your homework on the implications of parallel distribution for your business before going with this option.
Increase your visibility. One way you can use distribution strategies to boost sales is to increase the visibility of your product or service within its current distribution channel by making sure it’s better displayed or better communicated.
Many retail chain stores provide better shelving (such as end cap displays or eye-level shelving with a sign) if you offer them special promotional discounts or cooperative advertising fees. Look into these options and take advantage of them when you can afford to do so.
Efficiency should be the driving goal behind your distribution channel strategy. Channel efficiency is based on having a small number of transactions involved in getting the product to the end user.
As Figure 15-1 shows, a channel in which 4 producers and 4 customers do business directly has 16 (4 × 4) possible transactions, because each producer has to make 4 separate transactions to get its product to all 4 consumers. In reality, the numbers are much higher when you have markets with dozens or hundreds of producers and thousands or millions of customers.
You lower the number of transactions significantly when you use an intermediary (someone who handles the business transactions for you) because now you just have to do simple addition rather than multiplication. As you can see, you need only 8 (4 + 4) transactions to connect all 4 customers with all 4 producers through the intermediary. Each producer or customer has to deal with only the intermediary, who makes all the necessary connections. Even with markups or commission fees, intermediaries can lower your overall distribution costs because you’ll have fewer transactions in your channel.
This example is simplistic, but you can see how the logic applies to more complex and larger distribution channels. If you choose to use a direct channel whereby you deal with customers directly for sales, service, returns, and so on, be prepared for a lot more work on your end, which may not be worth your time and the opportunity cost of dealing with customers’ needs over executing more marketing programs to gain new customers and sales. (Opportunity cost is the loss associated with choosing one option over another.)
Even with the growing volume of online shopping transactions for just about any product category, in-store shopping is still part of the human experience. People like to shop in person, where they can see tangible products, feel the peaches or plums, and mingle with people. Being present in the real world is still a strong component of human nature. For retailers, creating an atmosphere that is inviting and experiences that are worth repeating, are key to growing and maintaining sales and loyalty. This section shares some ideas to help you get started.
A store’s atmosphere is critical to building traffic and increasing the value of transactions and overall sales. Creating the right atmosphere requires paying attention to your customers’ lifestyle, personas, and why they shop. It’s often about more than just the products you sell.
The best way to do this is to conduct in-store surveys at the cash register. (See Chapter 5 for details on surveys.) Ask customers what they like most about your store environment, what’s missing, and how shopping with you makes them feel. Then find ways to create an atmosphere that supports your findings.
Harlan Bratcher elevated sales for Armani Exchange when he was the brand’s CEO by creating an atmosphere that was emotionally engaging beyond the products he sold. His target audience was young, single adults who enjoy the metropolitan social scene. So he created a nightclub ambiance for his stores. His team researched the music his customers loved to listen to while dancing, created spot-on playlists, which they played loudly, and added lighting that reflected a dance club atmosphere. Sales skyrocketed. This strategy not only made people feel fun, attractive, and glamorous, which in turn made them buy more, but it also drew people off the streets because the music and lights were audible and visible outside the store.
REI is another brand that creates a particular atmosphere in their stores. Some of its flagship stores have climbing walls that allow customers to experience adventure and their own athleticism. The Denver, CO store has a 47-foot climbing monolith with 6,400 square feet of a hand-sculpted rock-like surface that reflects some of Colorado’s most popular climbing areas. It offers 12 routes that are rated for difficulty on the Yosemite Decimal System which governs the sport in the real outdoors, and includes hand cracks, finger cracks, overhangs, and more. They do charge a minimal fee to climb their walls so people will come whether they need to shop or not. However, its likely hard to be in REI, surrounded by things that make you feel you are on top of the world, and not buy anything.
American Girl is one of the best examples of how to create a lucrative retail atmosphere. Their flagship stores, like the Fifth Avenue location in New York City, offer experiences that make lifetime memories for parents and children beyond the dolls and accessories they sell. These include a cafe that serves afternoon tea, a theater, a beauty salon so children can get hairstyles that match their dolls, and much more.
If you’re competing with an established brand like Starbucks, find a new or local twist that makes your experience a bit different. Add easy-to-serve lunch foods like soups and prepackaged salads from a nearby café, offer books by homegrown authors, display local artists’ work, provide seating designed for laptop use, and create a different experience that reflects the local culture over the sameness of an international chain.
The point of purchase (POP), or the place where customer meets product, represents a critical opportunity to increase your sales. Although customers may have a planned purchase in mind when heading to your store, research shows that the majority of their purchases are actually unplanned. It’s like going to the grocery store for just one thing and ending up with $100 worth of groceries you didn’t have in mind when you left home.
This is the phenomenon of POP advertising, those signs on store shelves or end caps that “remind” consumers they need specific items. Table 15-1 shows you just how important POP advertising is, given the percentage of unplanned purchases at grocery stores and mass merchandise stores. (The statistics are from Point of Purchase Advertising International.)
TABLE 15-1 Nature of Consumers’ Purchase Decisions
Supermarkets’ Percent of Purchases | Mass Merchandise Stores’ Percent of Purchases | |
Unplanned | 60% | 53% |
Substitute | 4% | 3% |
Generally planned | 6% | 18% |
Specifically planned | 30% | 26% |
Your direct, mass, and display advertising and social media messaging drive people to your store. Your merchandise selection, POP advertising and messaging, pricing and display strategies, atmosphere, and interactive experiences including augmented reality (AR) get them to purchase more (see the nearby sidebar for an explanation of AR).
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