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Managing an online store

Why read this? : We explore the different skills needed in managing an online store. Learn the marketing skills which help you understand customers and improve their experience. Then, the commercial skills needed to grow your business profitably. And lastly, the operational skills to lead teams and set up processes and routines. Read this to learn how to get better at managing an online store.

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Managing an online store

How this guide raises your game :-

  1. Learn which marketing activities drive stronger customer connections with your store.
  2. Review how measures and systems help you set business goals and track performance.
  3. How to control your business by working with the right people and setting up processes and routines. 

Managing a direct-to-consumer (D2C) online store isn’t easy. You need different types of skills. Once you get past the initial e-Commerce post-launch issues, there are 3 main skills to master:-

  • marketing – what you do to connect with online shoppers. For example, market research, brand strategycommunications and customer experience activities.
  • commercial – how you manage your store’s profit and loss. For example, your pricing and price discounting. How you maximise income and minimise costs. 
  • control – managing an online store means establishing control mechanisms. For example, setting up teams and finding the right people. You have to create processes and routines so your operations run smoothly. 
Sale sign in white on a red window with outline of a person walking past in the background

Ready to test your knowledge?

What’s your starting level of knowledge about managing an online store? Take the 2 minute, 5 question Three-Brains managing an online store quiz and see how much you know about managing an online store already.

Marketing - connect with online shoppers

Before launch, you do market research to identify your target audience. You find out what they want from online shopping. From those insights, you work out your competitive strategy and positioning

In terms of actual selling, you also have to drive and manage orders through your business. As per our e-Commerce planning process guide, there are 5 key steps in the D2C customer experience :-

e-commerce planning process - 5 key steps in e-commerce experience

Use insights to optimise each step

Managing an online store means working out how to optimise these different customer interaction points. You use the marketing data you gather after you launch to build insights into all these D2C experience interactions. This real-time customer feedback from actual customer actions helps you make better marketing decisions about how to grow your store. You track performance to find out what’s working and what isn’t.

Track performance against KPIs

So one of the first tasks when managing an online store is to work out how you’ll track performance. 

You want to know how much you’re selling. How much it’s costing. And how your brand activation is doing. You want to work out where you’re winning and losing with customers. 

As part of your online store strategy and your digital media plans, you should have set Key Performance Indicators (KPIs) for each planned major activity. 

Each KPI should have a measurable target, to be delivered by a specific date. There’s usually a short-term target for each which you analyse at the post-launch review. At that review, you re-evaluate your longer-term KPIs.  

You also usually set up an e-Commerce dashboard to track your KPIs. (See our marketing data article for more on KPIs). This is a regularly updated performance summary to check your progress. Most online store performance dashboards capture on a single page the key metrics that show how the store is doing. Your dashboard identifies whether performance is on target, ahead of target or behind target.

On target is easy. Usually, no action is required. If you’re ahead of target, you investigate to work out if there’s more opportunity in that area. For example, investing more in high-performing campaigns or products. And if you’re behind target, you investigate to understand the cause.

As per our e-Commerce post-launch issues article, it’s more common to be behind target than ahead. Maybe your forecast was too optimistic? Or the competition is stronger than you thought? Behind target usually means you need to do something to “fix” the issue.

Fixing the issues with your online selling

Issues are normally linked to one or more parts of your store’s marketing mix. Understanding and optimising this is a key skill in managing an online store. 

As online stores are a service, you should go beyond the traditional 4Ps and look at the broader 7Ps :-

  • product. 
  • price.
  • promotion.
  • place.
  • people.
  • process.
  • physical location.
Examples of the marketing mix 4Ps and 7Ps - product, price, promotion, place, people, process, physical location

Product

Product issues can include which products to highlight in your advertising and media. Different products will drive different click-through rates. 

You also have to optimise which products feature on your home page and your social media.

You should also test whether focusing on 1 or 2 hero products or highlighting your range is better. Test whether some products work better when placed next to each other. 

You should review which types of product information or content types drive the most conversions. Look at how you set up your product pages. Can you use different images, copy and calls to action to drive more sales?

A keynote page showing product page basics - product name, product information and product images

Evaluate your photography. Is it on-brand? Likely to appeal to the target audience? How many images should you use? And which image styles work best to drive sales? 

Think about your key selling messages. Have you tried different styles of sales copy? And if so, which ones perform the best? Can you test different phrasing to improve the call to action?

Price

Your store’s pricing approach has a big impact on sales. Both your regular and promotional pricing. You need an overall pricing plan that fits your competitive strategy. 

For example, if you’re a cost leader, you aim to offer consistently low prices. But if you’re a more premium offer, you focus on high-ticket items with a higher regular price but more frequent sales promotions.

You also have to look at other parts of the price offer. For example, you should explore whether to offer price discounts or incentives for bulk buying, or big purchases.

You should also look at how costs like delivery, insurance and warranties fit into your price offer.

Three-brains Spreadshirt shop shopping cart pate shows Mens Premium Tank T-shirt selected to buy for $48.48 including $16.99 delivery

Promotion

Review how your different campaigns and channels are performing. Is one advert or channel delivering consistently better results in terms of driving traffic? Do customers respond better to particular messages or offers?

You should track changes in awareness and engagement based on your promotion activities. Do these correlate to changes in sales? Is your advertising and media spending paying off in terms of generating more sales and profits?

What about the timing or placement of your media campaigns? Are there certain times of day, or days of the week which drive stronger responses?

Your aim here is to understand how to optimise your future advertising and media plans. You spend more on the areas which work and cut those which don’t. 

Facebook post originally on Instagram of woman wearing Three-brains Blue Controller Hoodie design

Place

Place when managing an online store means looking at the performance of your store website.

For example, Is it doing well from an SEO point of view? What do your key metrics like time on page, clicks and bounce rate look like?

What about the design and layout? Can you test the website to find ways to drive more sales? For example, experiment with the display order of your products. Try using priming to boost particular products. (See our design psychology article for more on priming). 

What about more ‘offline’ touchpoints such as how you deliver the product? You should also track how well you perform on this. 

Screengrab of Three-brains Shop - headline says "merchandise to raise your game"

People, process and physical location

As online shopping is a service, you should also look at the service-specific “P”s in the marketing mix. 

For example, how do your customer service teams handle enquiries? You have to have a people plan to build teams that deliver a great experience for customers. More on this later.

For processes like payments and deliveries, you should have clear KPIs you track and measure. For example,  a target to minimise chargebacks or fraudulent orders. Or to deliver products within a specific time frame. You can also look at processes the customer goes through as part of the customer experience. For example, do they add to cart, but then abandon it before completing the payment?

When managing an online store, physical location is similar to place. But you might also include coverage of which countries or areas you deliver to here. You might also consider where your warehousing facilities sit as part of this performance tracking. 

Optimise your future marketing plans

You use all this data and insights to update your D2C marketing plan and drive future activity briefs. 

Learning what worked and what didn’t helps you develop stronger advertising and media campaigns in the future.

It also helps you define the best types of sales promotions and price discounting for your online store.

Those all help you improve the online customer experience. This helps keep your customers happier and more loyal and drives more growth in the long term.

Person paying for an e-Commerce purchase as they hold a credit card up in front of a laptop

Commercialise : How to sell more and spend less

The second key skill when managing an online store is the commercial management of the store. You focus on how to maximise income and minimise costs so that your store runs profitably and efficiently. This means taking a much more detailed view of the store’s profit and loss. 

Focus on the profit and loss

As per our online store business model guide, the profit and loss is the key reporting tool to manage the commercial side of your online store. It’s where you review how your store is doing financially. 

It captures the business’s total income, less the total costs to run the business. What’s left is the profit. Or loss.

Every business has a profit and loss. However, the online store P&L comes with its own challenges, which can often freak out accountants used to more traditional models.

Commercially, you aim to maximise income and minimise costs to drive better profitability. 

e-commerce d2c simplified profit and loss

Maximising income in your online store

There are 3 main ways to maximise your store’s income. Sell more units. Increase the average price paid per unit. And / or recoup delivery costs from the customer.

Selling more units is driven by the marketing mix skills we outlined earlier like product, price and promotion. Your online store business model should have forecast how much you thought you’d sell based on how you think these factors drive choice. These vary by store and by category and you can only make estimates before you launch. But, as you learn more about what works and what doesn’t with your target audience, you refine the forecast to make it more accurate.

Statistical analysis

Once you start building sales data history, you can use statistical analysis to improve your forecast’s accuracy.

The simplest approach is doing a linear regression. You draw the best straight line through your past sales numbers. This then projects forward to what your future sales would be if the same trend continues. Or you can make it even more sophisticated with econometric modelling. This analyses how much different factors e.g. price, advertising and availability drove past sales. Then you plug in your estimates of those numbers to predict future sales. 

Forecasts based on statistics are generally more accurate. However, they only give you a baseline based on what’s gone before. If you (or a competitor) plan to do something completely new to the market, the statistical model doesn’t have the information to make a prediction. So, there will still be a human element in forecasting. (In maths, this mix of statistics and human intelligence is known as a Bayesian approach.).

Pricing and income

Pricing has a big impact on how much you sell.

In most categories, the lower your price, the more units you sell. But lower prices also squeeze your profit levels and may not fit your brand identity and competitive strategy.

So you build a price strategy. You look for the sweet spot on price that gives you the best mix of sales and profits. 

When managing an online store, you also have to factor in that different products in your range will have different profit levels. You’ll want to highlight and promote your most profitable products to optimise your profit and loss

Sale sign in white on a red window with outline of a person walking past in the background

Delivery - who pays for it?

You also have to consider how you’ll handle delivery costs when managing an online store. As per our online business model guide, you have 3 options :-

  • You make enough from the sale price to cover the delivery cost yourself, so shipping appears “free” to the customer. This works best on high-ticket items and bulk orders.
  • You don’t make enough so you pass on the full delivery cost to the customer. This is a common approach with low-value items.
  • You find a middle ground where you absorb some of the cost and the customer pays the rest. The most common option for all other types of orders.  
Inside a courier delivery van, many different types of packages in cardboard boxes stacked up for delivery

Minimising cost in your online store

The other main way to drive profitability is to minimise selling costs. There are a variety of ways to do this when managing an online store.

Volume discounts

When you start selling online, your costs are based on prices you negotiate with suppliers and other service providers. For example, manufacturing, warehouse and delivery costs

But, your negotiating power on these costs starts low.  With a new store, you have no guaranteed size of business. You’ll usually have to take rate card values on services.

But when you start to sell more volume, you build more negotiating power with these suppliers. You can ask for volume discounts based on guaranteed volume orders. For example, on manufacturing materials, warehouse storage rates and delivery costs.   

Person holding 6 hundred dollar bills in front of them which have been set alight

D2C store owners usually sign contracts with suppliers for a fixed time. They review the details towards the end of that time to see if they can get a better deal on a future contract. They may pitch out the business and ask for quotes from competitor suppliers to get better rates and so lower costs.

Advertising efficiency

The next area which can boost profitability is getting better value from your advertising and media spend.

As you run campaigns, you build up knowledge of what works with your target audience, and what doesn’t.

This knowledge comes from the digital data that sits behind your digital media and online store website. 

You should be able to attribute sales and work out a Return on Investment (ROI) for specific campaigns and channels. You invest more in what works and cut what doesn’t.

Young boy in a yellow jersey showing loudly into a microphone

Advertising ROI example

As an example, let’s say you spend $10,000 on advertising in a year on 2 campaigns (Campaign A and Campaign B) in 2 separate media channels (Channel A and Channel B). Overall, the advertising generates $100,000 in sales. But, you analyse the data and see each activity drives different sales levels :- 

  • Activity 1 : Campaign A in Channel A : Spend $2,500 drives sales of $40,000 (ROI – 16).
  • Activity 2 : Campaign A in Channel B : Spend $2,500 drives sales of $10,000 (ROI – 4).
  • Activity 3 : Campaign B in Channel A : Spend $2,500 drives sales of $30,000 (ROI – 12).
  • Activity 4 : Campaign B in Channel B : Spend $2,500 drives sales of $20,000 (ROI – 8). 

So, in this case, you might decide to put all $10,000 of next year’s media spend into Campaign A – Channel A. This should generate $160,000 in sales assuming that year 2 works like year 1.

However, it’s rarely that simple. There are other factors to consider. It’s rarely that simple. For example, there may be a limit to how much any particular campaign / channel combination can deliver. Spending above that limit will produce diminishing returns. Advertising and media can also “wear out” as customers see an advert so often, they start to ignore it. (See our media planning guide for more on this). 

Operational efficiencies

The final area to minimise costs is to look for efficiencies in the order to delivery process.

For example, changing payment rules to reduce chargebacks and fraudulent payments if these get too high. Or outsourcing order and payment processing to get better rates than handling this yourself.

Where you store your goods, and how they’re physically moved from the warehouse to the customer, can also be areas where you can look for efficiencies. 

As you start your store, a lot of your processes might be very manual and involve lots of different people.

Interior of a warehouse showing high shelving and main aisle

But as you grow, you should aim to automate processes which are predictable and repeated. You can lower costs by removing the need for actual people to carry out low-value tasks. You want your team to focus on more creative and customer-facing activities, and less on operational processes.

Control - People and systems

The final area of managing an online store is how you control it. This is about managing the people involved at each step of the D2C experience and establishing systems to reduce complexity and make the online store work efficiently. 

People and teams 

Our functions of e-Commerce guide covers some of the other people and teams you need when it comes to managing an online store.

You need a people plan to work out how to get the best out of these other functions. How to motivate them so they share their expertise to help your store grow

For example, marketing people can help you understand the customer and meet their needs better, such as improving the packaging.

Your website and IT teams can help improve online interactions and your order processing systems.

Your supply chain team are the experts in moving products from A to B. If possible, spend time in the warehouse and follow an order getting processed. (This doesn’t work in some models like Print on Demand or Dropshipping). You should also spend time with your customer service team to listen to customers. To resolve their issues and ask for suggestions on how to improve their experience.

Online store systems

Online stores are open 24/7. But that doesn’t mean you need to work 24/7 to run them.

With new stores, most processes will be manual. You pick and pack products directly off the shelf. Manually process payments. Answer customer enquiries individually.

But as your store grows, you should consider automating some processes where possible. Marketing technology can help you run many of the processes needed to manage the online store website and the order to delivery process, for example. This helps you spend time on more important tasks. And less time on low-value tasks.

Mans hands typing on a MacBook keyboard with another blurry display screen in the background

Automated questions and emails

For example, to reduce the amount of customer service email enquiries, you could add an FAQ section or a chatbot to your website. That means you only have to handle more individual or unusual enquiries. 

You can also reduce the need for customers to contact you by asking your delivery company to send progress updates as an order goes through the delivery process. You can link these to an automated email system which shows the customer their order’s progress. As the order passes each key stage – order receipt, picking and packing, in transit, delivery – you automatically send out an email to the customer. These progress updates help improve the customer experience and reduce the amount of work you have to do to manage an order.

Automated order handling

Bigger operations should consider moving away from manually picking products in the warehouse. Bigger online retailers invest in automated robotic picking. If you’re at this scale, it can add significant efficiencies and cost savings.

You should review each step of your order process system. Look for where you can automate the flow so the process works smoother for the customer. And places less demand on your supply chain team. You should only have to interact with customers when something goes wrong. 

Conclusion - managing an online store

Managing an online store demands a range of skills.

If it were a sport, it’d be the decathlon. You don’t have to be perfect in all disciplines. But it’s the overall combination of skills that ultimately defines whether you’ll be a success.

The skills across all elements of the online store business operations must add up to a cohesive whole. 

Your ability to connect with online shoppers is important. You have to be exceptionally customer-focused. Without understanding your customers and what they want, you’ll never drive sales.

Three-brains shop category selection - Two choices - Browse by design themes or browse by product type

Managing an online store is essentially managing your own business. So, it’s important to be strong on the commercials. You need to be able to understand how the profit and loss works. It’s important to know how to drive top-line income and manage costs efficiently.

It’s also important you put strong controls in place, so your online store operates efficiently. This includes people and teams, systems and routines.

To achieve all this you have to stay flexible and resilient. Managing an online store is complex. Customers are unpredictable. Something will go wrong at some point. Recalling a product. An angry customer. A breakdown in a system. Credit card fraud. You name it, online store management throws many challenges your way.

But ultimately your online D2C store is a business you control. It can be very liberating. An online store is the ultimate connection for your brand with a customer. They trust you enough to hand over their credit card details and believe you’ll deliver what they want. Do that well and you’ll soon have a very profitable commercial success.

Three-Brains and e-Commerce

We’ve worked on many e-Commerce projects and have good experience across strategy, working with online retailers and building D2C stores. As you can tell from this article, we also know a lot about the challenges of managing an online store. We know how to connect these expertise areas back into driving e-Commerce growth

Get in touch to learn more about how we can help you with our e-Commerce coaching and consulting services.

D2C Online Store Status dashboard - Four column headed strategy and plan, the store, order to delivery and operations
Click to download the pdf

Downloadable D2C status dashboard

Setting up an online store requires you to define your strategy and plan. You need to work out the sales and marketing and set up your operations including the finances and the delivery / supply chain model. It can be complex to manage.

That’s why we’ve used this project dashboard to great success in the past. It’s a concise summary of the key actions needed to set up and manage a D2C online store. Download it here or from our resources section. 

Powerpoint and Keynote versions of this document available on request. 

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