Why read this? : Setting-up a successful e-Commerce business takes a mix of different skills, processes and systems. We share 12 different areas of e-Commerce capability you’ll need. Learn what supports each step of the e-Commerce plan from identifying the opportunity to driving sales. Read this to help build your e-Commerce capability plan.
Online shopping seems easy if you’re the buyer. Pick what you want on the store website. Enter your details. Wait for the product to turn up. Easy.
But if you’re the online seller, it’s not so easy. It’s hard work to deliver that easy experience for shoppers.
You need to connect skills, processes and systems across multiple functions. Marketing, IT, finance and supply chain all need to work in harmony to deliver the online customer experience. That’s hard.
Across the 5 steps of the e-Commerce planning process, we reckon you need 12 core capabilities.
Step 1 - Identify the opportunity
You start the process by identifying the e-Commerce opportunity. You need to understand consumer needs. What do shoppers really want from e-Commerce? The opportunity normally lies in meeting either unmet or poorly met customer needs.
With unmet needs, you need to create a new way to meet those needs through e-Commerce. The focus is on marketing innovation.
On the other hand, with poorly met needs, you need to find a better way to meet those needs. The focus is on your e-Commerce competitive strategy.
(see also our article on marketing and e-commerce divided by a common language for more on needs and wants).
You can find these opportunities through e-Commerce capabilities like market research; data capture and analysis and a test and learn approach.
E-Commerce capability 1 - Market research
You can look for opportunities by talking directly to customers using market research.
You’ve 2 options here.
First, you can use qualitative research. With this approach, you speak with individuals or small focus groups of customers. You ask questions about why customers do what they do.
This helps you identify and explore attitudes, behaviours and motivations. It gives you ideas about what customers need.
Then there’s quantitative research. Here you speak to a statistically representative sample of customers to quantify and validate the ideas you’ve got.
You use the responses from this sample to predict how the total market will behave.
Acting on customer feedback helps you stay objective. And that leads to better marketing decisions.
The e-Commerce capability here is being able to run the market research process. To ask the right research questions. To be able to convert the answers into actionable plans. That means you only create experiences that online shoppers need and want. But, it’s not the only way to find out what drives online shopping.
E-Commerce capability 2 - Data capture and analysis
You can also use marketing technology to find opportunities in e-Commerce.
Technology captures digital data when customers interact with you online. You can use that data to measure and analyse what customers do.
This analysis helps you come up with new ideas about what online shoppers need and want.
You get this marketing data from your website, from search and social sites like Google, Facebook and LinkedIn; and from online retailers.
With data, you’re essentially observing what people do online, rather than asking them.
This takes away the researcher bias which happens in traditional market research. The data is objective and unbiased. If a researcher asks questions, it can become subjective and biased.
For example, say you want to understand how customers decide between quality and price.
If you ask someone this in research, they may worry you’ll judge them as a cheapskate if they say they buy the cheapest. You may get a skewed result in favour of preferring high quality. But use online shop data when you run a price discount, and you know exactly how many people buy on price. The data shows you what research can’t.
There’s 2 skills underpinning this e-Commerce capability.
First, the skill to manage the marketing technology to capture the data. For example, looking at search trends and using tools like Google Analytics to analyse how customers interact with your website.
Then there are data analysis skills. To organise the data and look for meaningful insights. To create stories from the data that bring the opportunity to life. You need to be able to pull ideas out of the data.
E-Commerce capability 3 - Test and learn
The final way to find opportunities is with a test and learn approach.
This is a quick and relatively cheap process where you test prototypes or mock-ups with small groups of customers. You learn from the feedback you get.
To come up with ideas to test and learn, you can look at creative thinking, secondary research and behavioural science for inspiration.
Creative thinking uses idea generation techniques like brainstorming to generate test and learn ideas. Ideas can come from anyone in your business.
(see also our article on generating creative ideas for more on this).
The ideas can be simple e.g. changing the colour of a button on your store website or complex e.g. creating a subscription service for loyal customers.
The key skill is setting up a creative culture that encourages ideas.
Secondary research looks at existing research and information to find opportunities. It’s usually from published sources like government statistic sites, market research companies or other online sources like Google Trends.
Or, you can look at what competitors do online. Look at their websites and their product pages, for example. What’s their competitive strategy, and how could you make your offer more appealing than theirs?
Other sources of secondary research include industry association publications, and reviewing how it words in other categories. All of these can help you find ideas about what online shoppers really want.
To win new customers, you need to influence them so they do something different to what they do now.
Behavioural science is a skill that helps you understand how people make choices.
For example, what biases drive their choices? What habits do they have that you can tap into or try to change?(see more on this in our review of the book The Choice Factory).
When you understand how choice and behaviour works, it can you give you many ideas to test out.
As we said, you test the ideas from these three approaches with controlled experiments with small groups of customers. You develop prototypes, mock-ups and concepts to test. You learn from the results.
For example, you could send different messages to different customers in your CRM program. You could test different images, text or layouts on your store website. (see our article on quick and easy copywriting for ideas on how to do this in-house or using a freelancer). You could have a few customers test out an express delivery system.
The idea is you start small, quick and cheap. You get direct feedback from customers before you spend too much time and money. You use these results, plus your market research and digital data insights to then move to the next step.
Step 2 - Validate the opportunity
Next, you need to narrow down your list of ideas. You can’t do everything. So you need to prioritise ideas based on, for example :-
- Level of resource (time, budget, people).
- Number of customers impacted.
- Expected changes in customer behaviour.
- Competitor presence and likely response .
- Additional capability (skills, systems, processes) required.
E-Commerce capability 4 - Go agile
The size of the opportunity often determines how you validate it.
For small opportunities, you can use an agile approach, for example. Small in this context means opportunities that can be set-up and tested quickly at low cost.
When you manage your own store, you can use agile as an e-Commerce capability to keep improving your site. For example, changes to your sales copy and product pages. Small agile teams can test lots of small ideas quickly. You validate the opportunity based on how customers respond to it.
E-Commerce capability 5 - Business cases
For larger opportunities though, you need a business case. Large opportunities need more resource – they cost more, involve more people and take longer to do. So, you need to persuade people that it’s the right thing to do.
The business case helps you do this. It’s the “story” of the opportunity. It helps people understand what resources you need and why. You need to include research, data, analysis and your plans in the business case. Show what you expect to happen, and why the business should support you.
Business case content varies by company and context. At minimum though, you’ll need a clear financial plan. This will include an e-Commerce forecast and profit and loss. The returns need to be big enough and fast enough to justify the resources needed.
You also need to outline all operational activities needed to deliver the idea. This include the investment in time, budget and people. The leadership team needs this to understand the business commitment
Business case writing is an important e-Commerce capability. It builds confidence in the idea. It helps you secure resources. And it tells everyone what the plan is. Clearly, you need all those things to move forward.
Step 3 - Channel plan
In this next step, you decide on the e-Commerce channels that best suit the opportunity.
You decide what you’ll do in each channel, and that means you need a channel plan. Both an overall plan and a plan for each channel you use.
Each of the five e-Commerce channels comes with different levels of control and complexity.
So, which you choose influences the e-Commerce Channel Plan capability you need. The more control and complexity you take on, the bigger the reward.
E-Commerce capability 6 - Manage Marketplaces / Print on Demand
In these channels, you sell though third-party online selling platforms.
For example, you sell through well-known marketplace businesses like E-Bay and Gumtree. You sell your products on their platform.
For specific printed items (e.g. T-shirts), print on demand (POD) suppliers like Redbubble and Spreadshirt sell your designs on pre-made merchandise items. You sell on their platforms, or create links via your own website.
These channels are easy to access. The marketplace and POD suppliers usually manage payments. Sometimes they’ll also manage delivery for you.
Your main focus with these channels is on brand marketing. You’ll need a marketing plan to attract customers. And you’ll need great brand activation to convince them to buy your brand.
E-Commerce capability 7 - Manage online retailers
If you work with online retailers, you’ll need account and category management skills to manage the relationship with them. This e-Commerce capability applies to both bricks and clicks and pure players. Key skills include :-
- understanding the retailer’s strategy and way of working.
- working with shopper data and insights.
- building category plans.
- negotiating commercial terms.
- building strong relationships with buyers.
- dealing with issues.
E-Commerce account and category managers have to understand how e-Commerce works. For example, they have to be comfortable with key areas like digital media, marketing technology and order to delivery. Online retailers will expect them to understand and support in those areas of expertise.
E-Commerce capability 8 - Manage Dropshipping / Direct to Consumer
The final channel options are dropshipping and direct to consumer (D2C). Each requires very different e-Commerce capabilities.
With dropshipping, you act as an online store front for suppliers (often based overseas, particularly in China). It works like this. Shoppers order from your website. They pay you. You forward the order on to the supplier. You pay the supplier. The supplier sends the order to your customer.
This approach means you don’t produce anything yourself. You don’t pay for stock and you don’t have to arrange the delivery. The supplier handles all this.
Sounds great. But it comes with 2 new e-Commerce capabilities. First, you need to be able to find the right supplier who can manage your orders efficiently.
Then, you also need customer service skills when things go wrong with orders. Your customers think they’re buying from you. You take their money. If something goes wrong, it’s up to you to sort it out.
With direct to consumer (D2C), you manage ALL elements of the online selling experience. So, you need ALL the e-Commerce capabilities we’ve mentioned so far, plus the day to day management of the online store.
D2C is the most complex channel, but it also gives you the most control. Check out our guides to setting up your own online store for more on D2C.
Step 4 - Create online shopping experiences
Your channel plan sets where you’ll sell. Now you need to work out what and how you’ll sell. That’s all about your marketing and creative skills that help you build online shopping experiences for customers.
E-Commerce capability 9 - Experiences on someone else’s site
Selling on someone else’s e-Commerce site – like marketplaces, online retailers and print on demand – requires a different set of capabilities.
Those sites have controls, systems and processes which you’ll need to follow. As a result, you have less control over what and how you sell.
For example, they’ll usually have a product information system to manage basic content.
You’re responsible for managing your product names, images and descriptions on each product page, for example.
You need to know what makes a good product page. For example, how to source good photography and use photo editing tools to make products look good. How to write clear sales copy. You also need digital media skills like search and social media to drive customers to the page.
But you can only advise and try to influence designs, layouts or formats of your pages. That can be difficult.
For more advanced online shopping experiences, you need to work directly with the shop owner. That also takes some skill. You’ll need to negotiate deals with them. You need to build a good working relationship.
Creating shopping experiences on someone else’s platform is an e-Commerce capability in its own right.
E-Commerce capability 10 - Experiences on your own site
When you manage your own online store, you control all parts of the shopper experience.
You can change how the customer finds your online store. You can change how you manage price, delivery and customer service.
This means you need all the e-Commerce capabilities we’ve covered, plus more creative and technical skills like sales copywriting, graphic design and CRM.
You’ll also need to be able to manage the whole order to delivery process. There’s a lot involved in that.
For example, you need to manage payments. Not just when the customer pays, but refunds and price discounts too. You need supply chain systems to move orders from the warehouse all the way to the last mile and the customer’s doorstep. And you need customer service systems to deal with delivery issues.
As we said, there’s a lot involved in creating the whole customer experience on your own site.
Step 5 - Sell online
The final step of the e-Commerce planning process is to start selling online.
Everything you’ve done to this point sets you you up for success. But you’re not quite done yet. There’s 2 final e-Commerce capabilities you need to factor in.
First, you need to know how to improve the customer experience. And then you need to build the right set of attitudes.
You need both to help you sell more online.
E-Commerce capability 11 - Improve the customer experience
In online selling, you’re only as good as your last sale. You need to keep improving the customer experience if you want customers to keep coming back.
Go back to the e-Commerce capabilities of market research, data capture and analysis and test and learn. Use these to find new ideas. What’s working and what isn’t? Do more of what’s working and cut out what isn’t. Sounds obvious, but many businesses don’t do this.
What are competitors doing? How can you outperform them? Look at ways you can improve the experience to make customers prefer what you offer.
Don’t be afraid to remove unnecessary steps. Reduce the number of clicks and options to choose from when customers are ready to buy.
Review your activity on a regular basis. Smaller opportunities, you can review every 1-2 weeks. Review bigger opportunities every 6-12 weeks. Try to work out which ideas and activities make the biggest impact on performance. Double down on those. Keep improving.
E-Commerce capability 12 - Attitude and resilience
E-Commerce isn’t easy. You find people who put up barriers to what you’re trying to do. D2C in particular comes with many challenges.
Plus, not every idea works out. That’s normal. It’s a percentage game. You learn from success. But you learn from your mistakes too.
That’s how you keep the right attitude to grow your e-Commerce capability. You stay positive, even if things go wrong. You build your resilience. And you keep a level head when things go well and bounce back when they don’t.
Conclusion - E-Commerce capability
To sum up, each step of the e-Commerce planning process has different capability needs.
Marketing skills underpin identify the opportunity. Learn how to use market research, data capture and analysis and test and learn to come up with ideas.
How you validate the opportunity depends on its size and complexity. An agile approach is great for small opportunities. However, you need business case skills writing to go after big opportunities.
The channel plan sets out where customers will buy you online. In some cases, you sell via third parties. As a result, this means you need to manage relationships with online retailers. You have less control. Direct to consumer on the other hand gives you the more control but also more complexity. You manage every part of the e-Commerce process yourself.
Creating online experiences and selling online creates new e-Commerce capability requirements such as digital marketing and customer experience.
Setting up and managing all these skills and processes can be a challenge. So, most of all, you need a positive attitude and the resilience to deal with both success and failure on a regular basis.
Check out our guide to the e-Commerce planning process to learn more. Or contact us if you need help with your e-Commerce capability plan.
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Digital data – Google Analytics : Photo by Edho Pratama on Unsplash
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