E-Commerce planning process

E-Commerce Planning Process

Why read this? : We share the 6 key steps of the e-Commerce planning process. Learn how to find and validate opportunities and decide which e-Commerce channels best meet your needs. Plus learn how to set key objectives and prioritise activities to start selling online. Read this to help you learn how to master the e-Commerce planning process.

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The e-Commerce planning process

The e-Commerce planning process has 6 key steps to get you up and running with e-Commerce. Each step comes with its own set of capability requirements and decisions.

The first 2 steps focus on the opportunity.

First, you identify the online selling opportunity for your business. You define what selling online is going to do for you and your target audience.

Then you work out the opportunity’s likely sales and costs to validate it as worth (or not worth) going after.

Next, it’s about deciding and planning where and how you’ll go after the opportunity.

You decide which e-Commerce channels to use and how to deliver the ideal customer experience.

Only once you’ve got your plan in place, do you start selling. And once sales start to come in, you plan for you’ll evaluate and optimise what you sell online. Online selling is an ongoing process, You need systems and processes to manage day-to-day operations. And you need to create new ideas and activities to keep customers coming back for more.

Now you know where you’re heading, let’s go through the e-Commerce planning process step by step.

Step 1 - Identify the opportunity

The first step of the e-Commerce planning process is to identify the opportunity.

It’s about looking for an unmet shopper need that your brand can meet better than anyone else.

First, you need to work out where your e-Commerce growth will come from. A great place to start is the Ansoff Matrix.

It’s an innovation planning tool. You look for growth by deciding whether to go after existing or new customers and existing or new markets.

This leads to 4 growth options :-

market penetration.
market development.
product development.
diversification.

Market penetration

Market penetration assumes you already sell products and have customers. It’s about going harder after those sales. In e-Commerce planning process terms, that means your products are already being sold online, usually via online retailers. But you likely haven’t actively gone after those sales.

You start this approach by identifying where you’re currently selling online. Your goal is to sell more through those channels to those customers.

For example, you work with those retailers to build an e-Commerce category management plan. You improve your product pages by supplying better images and copy into their product information management systems.

You also highlight your online availability to existing customers. For example, you add details in the taglines of your advertising campaigns. Add links from your website to retailer sites. Book promotional placements and sales promotions on online retailer sites so customers can find you more easily.

It’s the simplest approach to online in e-Commerce planning process terms. Someone else does the actual selling. You work with them to optimise how your products are sold.

Market development

Market development is about selling your existing products to new markets, for example :-

new customer segments – e.g. you currently sell to men, but launch a women’s range.
customers in other locations – e.g. you currently only sell in Sydney, but decide to ship to Melbourne and Brisbane.

With new customers, the challenge is finding new ways of using your existing product. For example, razors have historically been mainly used by men to shave their faces. But with a few slight tweaks, they could also be sold to women to shave their legs.

With new locations, you can access lots of new customers. But it’s not easy to sell to them. For example, there can be cultural and logistical challenges if selling to overseas markets You have to work out new customer needs and decision-making processes. Plus, find your competitive advantage over local suppliers. You also have to deal with different customs and export rules, plus different tax legislation. It can be a slow and risky process.

Product development

Product development is about creating new products and services for existing customers. You dive into product innovation or find new ways to connect with customers.

E-Commerce examples include :-

Online exclusives – you create products which can only be bought through specific e-Commerce sites. This taps into the psychological idea of scarcity. (See also Robert Cialdini’s Influence). Basically, the harder you make something to buy, the more people want it. (See our sales copy guide and our behavioural science article for more on this).

Subscriptions – you set up a repeat order system on your website. It’s usually driven by value for money and convenience (for regularly consumed products) or discovery (customers get a regular “surprise” package of goods).
Product and service extensions – you add extra levels of features and services to your existing offer. For example, Netflix offers basic, standard and premium options. The more you pay, the better the service you get. Or look at brands like Bundaberg and Vegemite which sell clothing and other items on their D2C sites, for example. (See our advanced e-Commerce techniques article for more on this).

Diversification

Diversification is where you go for new products and new markets. It’s basically starting a business from scratch.

As you start from nothing, everything you do that drives growth will be new growth.

There’s no baggage or history with those customers. You can take a fresh and innovative approach.

However, many diversifications fail. It’s more risky because you don’t know the customers, and they don’t know you.

It takes time to persuade them to change from what they currently do. And you might need to spend a lot of marketing dollars to convince them.

Get it right, and there’s a big upside. For example, look at how food delivery businesses like Uber Eats have changed the way we order food from home. (See our last mile article for more on this). But these are usually exceptions. Diversification is usually the rarest way to look for e-Commerce growth.

Define and refine the opportunity

The options in the Ansoff Matrix help identify the type of e-Commerce growth opportunity to go after. But you still need to specify exactly what your business’s opportunity is, and how you’ll go after it. You have to define and refine the opportunity.

First, you need to work out which customers to go after. That usually means segmentation research and looking at each segment’s attractiveness to decide which to go after. You look for insights to understand what their unmet need is and how you can meet it. As per our what online shoppers want article, the main benefits of e-Commerce from a shopper’s point of view are :-

ease and convenience.
range.
price comparisons.
customer experience.

Ease and convenience comes from being able to shop online from anywhere and at any time. And whatever you order, someone else delivers it to your doorstep.

The increased range comes from the fact that online stores aren’t limited by the same physical space as traditional stores. As long as it’s in their warehouse, you can order it. And if they don’t have it, you can easily search for another online store which does have it.

Being able to switch between stores online also makes it easier to compare prices. You can list products from cheapest to most expensive or look on sites which do price comparisons and track price discounts between different stores.

Finally, you’ve got all the benefits of offering an online customer experience. You can share more product information and make it more interactive and engaging. For example, you can add more images or videos, and share your contact details to answer customers’ questions directly. More on this in step 4 of the e-Commerce planning process.

The business opportunity

You should also factor in the business as well as customer benefits to your e-Commerce opportunity.

For example, you’re “always open” to sell. Online stores can take orders 24/7, 365 days a year.

There’s also less staff costs as there’s less customer interaction. Automated systems to handle FAQs and payments. You only need customer service when there are specific issues.

You can also offer your full range of products to customers across the world when you sell online.

As you define and refine your customer and business opportunity, you now start thinking ahead to how you’ll decide whether it’s an opportunity worth going after.

Step 2 - Validate the opportunity

There’s no single best way to validate the opportunity you’ve found. It depends on the size and nature of the opportunity. And your approach to opportunities and risks.

But there are some common elements you can explore to build your case. You should do some market research to identify and quantify e-Commerce insights. Even if this is only secondary research, you need some sort of evidence from the market to back up your e-Commerce forecast of your sales and costs.

Size of opportunity

You’ll need to estimate the opportunity size in terms of total potential sales. You base this forecast on the total number of customers, and how much you think they’ll spend.

Ideally, you estimate sales for ALL products in the category, and then your potential share of those sales.

Big businesses typically have more formal, structured approaches to estimate market size.

They base this on data gathered via extensive market research, especially quantitative research.

For example, they test for intent to purchase with a representative sample of customers to determine likely future sales. The goal is to build enough confidence in the opportunity to get approval to launch. If you can’t “prove” there’s an opportunity, then you either don’t do it, or you put it aside until you can.

This formal approval approach to validation helps you reduce the risk of failure. However, it’s not guaranteed to produce winning ideas every time. Plus, it can screen out more revolutionary ideas. Approvals tend to go only to safer, less risky ideas. Plus, it tends to slow down decision-making so you may be too slow to go after some opportunities.

Smaller businesses can be more entrepreneurial. They can test ideas with smaller audiences, using an agile approach. (See our marketing innovation guide for more on this). They put prototypes in front of customers and co-create the offer and service with them. It’s still market research but with lower spend and risk.

For example, they test alternatives to the services online retailers currently offer. Or try something competitors currently don’t offer to help define their competitive strategy and competitive advantage. They benchmark against what happens in other countries or adjacent categories.

The goal is to build confidence that your online opportunity is something that will drive your target audience to buy.

Costs to serve

The flip side to this is you also have to work out what your costs will be to support those sales.

As per our online store business model guide, the cost mix can be very different for online stores compared to traditional channels. The costs cover not just the set-up but the ongoing processing of orders.

For example, there are your digital media costs to drive traffic. If you sell direct, then you’ve got website costs like hosting and maintenance. Plus, the costs of storage, returns and refunds. Delivery costs can be high, especially in the last mile. It all soon adds up.

Even selling via existing online retailer channels means factoring in their retail margins. Plus, you may have to cover extra costs like protective packaging. You should be getting an idea of these costs early in the e-Commerce planning process.

You should also consider the likely competitor response, whether they’re already active in e-Commerce or not. This will impact the opportunity size.

Finally, you also need to consider the impact of different channels where you can sell online. This brings us to the next step of the e-Commerce planning process.

Step 3 - Channel planning

Once you’ve identified and validated that there’s an opportunity, it’s time to focus on where you will sell online.

There are 5 main online selling channels to choose from.

Most businesses start with one and then build out. Each has its own advantages and disadvantages. Your channel plan helps you prioritise your efforts on the right channels to meet your needs.

The main drivers of channel choice are how much :-

control you want over how your products are sold.
complexity you’re able to handle with online selling.

Control vs complexity

There’s a trade-off here. The more control you want, the more complex the channel becomes. Give up some control and you reduce the complexity.

Giving up control usually means working with third-party online retailers. They take on some of the more complex elements of online selling. For example, they drive traffic to their site, manage payments and deliveries, and handle customer complaints. You essentially plug your details into their product management system, and they take care of the rest.

However, the more complexity the retailer handles, the less the share of each sale you’ll see. They charge you large margins to cover their costs, so your profitability per item will be less.

If you want more control over how your product is sold and your profitability, you sell direct. You handle the complexities. Overall sales per item will be higher, but you have to manage all the selling costs so it’s not guaranteed you’ll be more profitable selling direct. (See our D2C business model article, for more on this).

Marketplaces

The easiest channels are marketplaces. These are online selling portals where you can sell your goods to anyone who visits the site.

They’re mainly geared to individuals and one-off sales of high-ticket items. But there are ways to sell more regularly on them too. Examples include Gumtree, ebay and to a certain extent, Amazon.

You can find big retailers like Coles, Myer and Big W on eBay because of the high visitor numbers the site gets.

Then there are also other international players like Tmall who cover many markets across Asia.

Marketplaces are often very price-driven with lots of deals and discounts. For most businesses, it’s usually best to focus on selling unique, distinctive products to avoid aggressive price competition.

Bricks and Clicks

Bricks and clicks are where the retailer has physical stores as well as online stores. They’re sometimes also called omni-channel sellers.

They use their online stores as a way to extend their reach to shoppers beyond their physical locations.

For example, take grocery shopping. Most people still go to a physical store to buy their food products.

But almost all grocery retailers now have their own online store. They take orders online and deliver them using their own drivers and vans.

Alternatively, they will offer ‘click and collect’ where a staff member picks their order item from the shelf. The customer then picks up their order from a special area in the store.

Like the other channels, bricks and clicks have both advantages and disadvantages.

Bricks and clicks - advantages

If you already sell to these retailers, then it’s usually easy to set up selling via their online stores.

They’ll already have set up their websites, order processing and delivery systems.

Your main job is to integrate with those systems.

For example, you manage how your products appear on their website by providing product details and images to their product information management systems or via third-party websites like skuvantage.

These retailers take care of driving traffic. They take care of payments and deliveries. From your point of view, there are relatively few tasks to manage which is why it’s relatively easy to sell this way.

Bricks and clicks - disadvantages

The main disadvantage to selling online through bricks and clicks is your reduced control over how the product is sold. Because the retailer manages their own website, they control everything. The look and feel, and the overall experience. You have little say. For example, they manage how navigation works, which products are featured and promoted, and they set the selling price.

Also, with bricks and clicks, you never interact directly with the shopper. You never get individual shopper data. At best, you might get aggregated sales data, which you often have to pay extra for.

Also, you’ll have to spend on digital media if you want to make your products more prominent on the website and drive more traffic to your product pages. That’s either part of your commercial agreement with the retailer or by buying space on 3rd party sites like google or facebook.

So yes, selling via bricks and clicks is easier. But it can also be a costly way to sell. See our online retailer strategy guide for more on bricks and clicks.

Pure Players

Pure Players only operate online.

They don’t have to carry the overheads of running physical stores, so they focus on optimising the online customer journey. They aim to compete on price, range or service.

They’re usually faster moving and more innovative than bricks and clicks.

Check our online retailer strategy guide for more on Pure Players. Plus, see our article on the specific challenges of selling with Amazon, the world’s most famous pure player.

Dropshipping / Print on Demand

The next e-Commerce channel option is dropshipping. Here, you find suppliers who sell at wholesale prices. You then set up an online store website to sell those products at a higher price. When the customer buys from you, you pass the order to the supplier to fulfil. Your store acts as an intermediary between suppliers and shoppers. You make money on the difference between the supplier price and your selling price.

You might wonder why shoppers would buy at your higher prices if they could go direct to the supplier.

But, many shoppers don’t know about the wholesale price websites. And those websites aren’t always set up to make it easy to buy. For example, sites like aliexpress allow you to find Chinese-based suppliers of a wide range of goods. But, as a stand-alone shopping site, it’s not the easiest to navigate.

The value you add is creating a branded store website, which drives traffic and creates a smooth selling experience. When customers order from you, they don’t know that you’re forwarding the order to the supplier.

No stockholding

The big advantage of dropshipping is you don’t have to invest money in holding stock. The supplier manufacturers “to order” and ships the product direct to your customer. Your main costs are the marketing costs to drive traffic and maintain the site, plus any customer service costs when you have to resolve issues like damaged or incomplete orders. You also have to manage issues if customers are not happy with the quality of the goods.

For this reason, you must be confident in the quality of the dropship supplier you use to make sure they have good quality controls in place. It’s a competitive market. Other online stores can order products from the same supplier. You need to work out what will make your store different and better.

Print on Demand

A variation on dropshipping is Print on Demand (POD).

This is where you create designs to go on standard items like T-shirts, caps and water bottles.

In effect, you’re selling the design itself. You pass the order fulfilment to a third-party printer who sends the product to the customer.

They manage both payments and deliveries, with a commission of 10%-20% of the selling price.

For example, our online shop sells T-shirt designs via Print on Demand.

When we reviewed the Print on Demand supplier options, we found Redbubble and Spreadshirt best met our needs in terms of service and flexibility. But there are many other options out there too.

Direct to Consumer (D2C)

Direct to Consumer or D2C is the final e-commerce model. Here, there are no third-party retailers involved. The shopper buys directly from you, and you arrange all the payment, processing and delivery.

D2C advantages

With D2C, you control each step of the online selling experience. Your digital media and brand website link directly to your own online store to create an online path to purchase for your target audience.

You decide what the store looks like. Which products you sell. You decide your pricing strategy, and how much to charge for delivery. What the shopper pays (apart from credit card fees) goes straight into your bank account.

You also have a direct connection to the individual customer. They share their details so you can deliver the product. And, they permit you to contact them directly.

Having individual customer contact details, and their shopping history and preferences gives you a rich source of digital data and insight. Plus, it helps you optimise any CRM activity you do.

D2C disadvantages

This extra control also adds complexity, though. For example, in our online store business model guide, we review all the costs that go into D2C, including payments, delivery and refunds. You need to cover all of these from the sales revenue.

You also have to manage all interactions within the order to delivery process. Storage, dispatch, delivery and managing customer enquiries, all pull on different functions in your business. For example, you need IT expertise to make sure that website, payment, delivery and dashboard systems integrate and work effectively. You’ll need a customer service plan to manage scenarios like lost or damaged deliveries.

You also need to account for customers changing their minds once they’ve ordered. Or finding faults with the product. These scenarios happen a lot in e-Commerce.

Then you have to factor in other areas like managing credit card fraud, and managing stock levels. While the extra level of sales dollars per sale versus other channels is exciting, it has to generate enough revenue to cover all these other costs. See our setting up an online store for more on this.

Step 4 - Develop experiences

Our marketing plan guide introduces the brand choice funnel. It suggests there are a series of steps customers go through before they become loyal buyers.

For example, they need to trust your brand, be aware of it, be persuaded to consider it and so on.

A similar type of thinking underpins e-Commerce. There are a series of steps that have to happen before potential shoppers become actual regular customers.

Within the e-Commerce planning process, you create a series of different online experiences to move customers along this journey. There are 5 main areas to cover.

Traffic

The first challenge is driving traffic. You want your target audience to visit your product pages.

You have to work out how the shopper will find you online. How they’ll know you exist and where to find you.

From a brand activation point of view, this usually means digital media.

You want to reach potential customers with relevant search, social and display ad activity.

This helps them know where to find your product and to understand your selling offer.

You can use market research, and a test and learn approach to identify what works and what doesn’t. Typical research questions include :-

Do shoppers Google your product first, and then go straight to the product page? Or do they visit your online store home page first, and then search for your product?
What are the click-through rates likely to be on display and social media advertising?
Can you use existing contact details to promote your online availability via CRM?

Conversion

You also need to work out how to use the navigation on your own website and online retailer websites to help get customers to your product pages.

For example, if you’re listed on a larger retailer site, how are products within the category listed? e.g. alphabetically, by price or by popularity? You normally have to input your information directly into their product information management system.

This can affect how often shoppers see your product listing. In general, shoppers won’t look at every product listed. They will only look until they find one that sounds right, which is why it’s important to be near the top of a list of products. You want to have high visibility on category pages.

It’s very common in e-Commerce to pay online retailers to have banner adverts on the category home page. Or to pay to use their CRM mailing lists to contact customers with special offers.

Once the shopper finds your page, there are many ways to increase the chances of that visit converting to a sale.

Product pages optimisation

When an online shopper visits your product page, it’s a key moment in the buying process.

It’s where they make the final decision to buy. Or not buy.

So, it’s vital to make sure you have basic elements in place to help complete the sale. If you don’t get these right, you lose sales.

The most basic elements you must cover are the product name, product images and product information.

We’ll briefly cover these here. But you can read more about this in our how to get more sales online guide.

Product name

You also want to consider how you name your product online. Clear and consistent naming makes it easier for customers to find the right product. It also helps with your search engine ranking.

Normally, your “name” would include the brand name, the product variety and any defining features and sizes when listing your product online. So rather than let’s say, AnyCo Shampoo, better to list it as AnyCo Anti-Dandruff Shampoo with Mint 200ml. (See also our product pages article where we cover how the likes of Amazon and Google manage this type of basic product information).

Product images

Because online shoppers can’t physically touch your product like they can in a store, how you represent it visually on screen makes a big difference.

Make sure your product photography is sharp and clear. Think about how to evaluate your photography so it’s doing a good job for you.

Consider a combination of plain background product shots, and lifestyle shots if they’re relevant.

These lifestyle shots show someone using the product itself. This can help bring the product to life.

You need to consider how the images you use for your product appear on a screen. And in particular, how they might look on different sizes of screens.

A lot of online shopping is done on mobile phones. Your product images need to look good on a small screen.

Most online retailer sites allow you to show up to half a dozen images. It’s good practice to show the product from multiple angles – front on, side on, from the back etc.

You also have to think about this online context when you design the packaging itself. There’s an overlap with packaging development skills as you should be thinking about how a product appears on the shelf AND on a screen. (See more on this in our packaging development for e-Commerce article).

Product information

Consider the description you give your product You can normally copy this straight from the packaging. Highlight the features and benefits that will persuade the consumer to buy your product. There is usually more space for words on a retailer’s website than there is on packaging. Use this extra space wisely.

A good product description would cover key features and benefits and be around 300 words. See our articles on good product page content and examples of good product pages for more on this. Plus, see also our how to get more sales online guide.

Payment, delivery and customer service

Once you persuade the customer to buy, there are still steps like payment, delivery and customer service which need to happen to complete the process.

If you sell through online retailers, they manage these steps. You work with them to optimise these steps.

For example, you recommend email copy to go with the order. You influence the packaging of the products that they send out.

But in most cases, the retailers will use these steps to drive their own brand experience. You won’t have a huge amount of opportunity to influence these steps.

However, if you sell D2C, YOU take ownership and control of each of these steps. Payment and delivery come with their own opportunities and challenges. (See our order to delivery guide for more on this).

Customer service is important too. It’s a big part of the D2C experience. There’s a lot that potentially can go wrong when you send out goods directly. Your customer service team and system should be able to fix problems quickly and keep customers happy. That can be a very strong marketing tool. It drives loyalty and satisfaction. But, it also takes time and money to set up and maintain.

Step 5 - Sell, sell, sell

Once you have all these elements of the e-Commerce planning process lined up, your focus moves to how to continue to sell your products online.

Sales promotions

For example, do you need to carry out online sales promotions at certain times of the year?

And if you do, what type of promotion will work best in your category?

Is it a straightforward price offer like 20% off, or buy one get one free, for example?

This might sound simple. But think about the previous steps of the e-Commerce planning process. You need to make this type of offer work at each step of the process. You need to tell people about it via advertising campaigns. The message has to say when the promotion starts and ends.

The promotional offer then needs to appear on the appropriate part of the website at the right time. Your financial tracking system and supply chain system need to be set up to manage the change in details from the regular order price.

If it’s a buy one, get one free for example, the warehouse needs to have the right packaging to send out two items together. The delivery company need to know that the order will be twice as heavy as normal orders. And you need to be able to check your analytics and sales data so that you evaluate the effectiveness of the promotion afterwards.

Online selling operations

At the start of the e-Commerce planning process, we covered opportunities like subscription models and online exclusives. These present big opportunities. But, you also need to fit them into each step of the process.

For example, with subscription models, you need digital media to highlight the offer and stimulate interest. You need to be able to set up your website to allow people to choose and manage their subscriptions. For example, do they get to choose what goes in the subscription box? Or is it set in advance?

If you take regular credit card payments for a subscription, how do you store the details securely? If a shopper wants to cancel their subscription or amend it, have you made it easy for them to do so?

And if you sell online exclusives, what happens if a retailer then wants to buy them from you? How much do they need to buy to make it worthwhile to give up the exclusivity? Do those products always remain as online exclusives?

Step 6 - Evaluate and optimise

Once you start selling online, you should schedule a post-launch review to capture what you learned from going through the process. And, as you manage your online store, and / or work with online retailers, you need to continue to look for ways to improve how you sell.

On-going, it’s important to think like a retailer.

For example, how will you continue to drive traffic to your product pages? How will you drive conversions and create great customer experiences?

What about your digital data? Can you use it to guide you as to what your customers like and don’t like? How do you set up a dashboard to track and measure how your online business performs? And how do you make adjustments to spend more on activities which work? And cut out those which don’t?

Do you have the website capability to test different activations and learn from the results? If you manage payments and delivery, how do you keep those systems working efficiently and in the interests of the customer?

These are just some of the questions you need to answer when it comes to managing your own online store. None are impossible. But as we said before, it’s an ongoing operation to continue to sell, sell, sell.

Conclusion - E-Commerce planning process

This guide talked about how e-Commerce needs a wide range of capabilities. For example, market research skills to understand customer needs and digital marketing skills to drive traffic and create online experiences.

Plus, it needs back-of-house capabilities to manage payments, deliveries and keep customers happy.

There are many different ways to sell online. From the “toe in the water” approach of using marketplaces and bricks and clicks retailers, to the full-scale operation of a D2C set-up.

When you go through the e-Commerce planning process, its basic aim is to ask key questions to make sure you’re prepared for the e-Commerce challenges you’ll face.

There’s no single best way to do e-Commerce. It depends on your brand, your category and how much control you want. But, once you’re in, there’s no doubt it’s an exciting, dynamic and challenging way to grow your business online.

You can connect better with customers you already engage with through digital media and websites.

You can do this in a way that brings commercial benefits to your business through increased sales, and new selling opportunities. That’s good for your profit and loss.

And with the D2C experience, you get a new level of control over how and where your products are sold online. You control each step of the customer journey.

Three-Brains and e-Commerce

We’ve worked on many e-Commerce projects and have good experience across the e-Commerce planning process. This includes working with online retailers and building D2C stores and operations. We know how to connect these expertise areas back into driving your brand marketing and growing your sales.

Contact us to find out more about how we can support your e-Commerce growth with our coaching and consulting services. We can help you set up and run your e-Commerce planning process so you make the smartest decisions about how to sell online.