E-Commerce capability – 12 ways to drive success

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Snapshot : It takes the right skills, processes and systems to build a great e-Commerce business. This e-Commerce capability makes for better customer experiences and smoother running business operations. In this article, learn the 12 types of e-Commerce capability you need to be a successful e-Commerce business. 

Online shopping seems easy if you’re the buyer. Pick what you want on the store website, enter your details and wait for the product to turn up. 

But if you’re the online seller, a lot of hard work needs to happen to deliver that easy experience.

That hard work involves 12 core e-Commerce capabilities. These are skills, processes and systems that come from marketing, IT, finance and supply chain.

Apply these across the e-Commerce planning process to build a better experience for your customers. 

e-commerce planning process - The 5 key steps of the e-commerce process

Step 1 – Identify the e-Commerce opportunity

To start, you first need to identify the e-Commerce opportunity. There’s two main types to look for – unmet needs or poorly met needs. 

With unmet needs, you focus on finding new ways to meet those needs. You want to move fast and focus on marketing innovation. 

With poorly met needs, you focus on finding ways to better meet those needs. You need to develop a clear competitive strategy 

(The opportunity can also apply to wants as well as needs – see our article on marketing and e-commerce divided by a common language for  the differences between needs and wants).

There’s three main ways to identify these opportunities – market research; data capture and analysis; and test and learn. 

E-Commerce capability 1 - Market research

You can look for opportunities by talking directly to customers using primary market research.

Two options here.

Firstly, 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 you need to do to influence these customers to choose your brand. 

Person holding glasses in front of them against a blurry street background

Then there’s quantitative research. Here you speak to large numbers of customers to quantify and validate the ideas you found during the qualitative research.

The sample of customers you talk to statistically represents the total market, so you use their responses to predict how the total market will behave. 

Combined together these qualitative and quantitative insights help you make better marketing decisions about how to win more customers. 

From an e-Commerce capability point of view, it’s important you understand the market research process. You need to be able to ask the right research questions and know how to convert the answers into marketing plans and actions.

This capability helps you understand online shoppers better, so you only create experiences they need and want. But, it’s not the only way to find e-Commerce opportunities. 

E-Commerce capability 2 - Data capture and analysis

You can also use marketing technology to identify e-Commerce opportunities.

Technology lets you observe and measure what customers do. You analyse these results to generate opportunity ideas. 

These results come from digital data captured when customers interact with you online. On your website, for example, or from third-party sites like Google, Facebook and online retailers

This data-based e-Commerce capability helps you better understand what people do online. 

Google Analytics

Observing what people do, rather than asking them, takes away the researcher bias which happens in traditional market research. This is where the researcher unintentionally influences the customer response just by asking them questions. 

For example, say you want to understand how customers decide between quality and price.

If you ask someone directly, they may worry that you’ll judge them negatively if they say they value price over quality. They want to manage the impression they create by seeming more discerning (quality focus) than financially savvy (price discount focus). So, you’ll get skewed results that may not match what they actually do when no-one’s watching. 

But if you observe actual shopping behaviour, you measure directly how many customers pick quality options and how many pick price options. The data has no bias.

There’s two business capabilities that support this e-Commerce capability. 

Firstly, you need to understand how to set up and use 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. Analysis helps you to create clear insights and stories that bring e-Commerce opportunities to life.

E-Commerce capability 3 - Test and learn

The final way to identify e-Commerce opportunities is with a test and learn approach. 

Here, you set up prototypes or mock-ups of different elements of your e-Commerce offer. You then test these with small groups of customers as if they were “real” experiences and use that to learn which parts you can roll out to more customers, and which parts don’t work.

The advantage of this approach is it can be quick and relatively cheap to run.

To generate these test and learn ideas, you need a mix of creative thinking, secondary research and behavioural science

Creative thinking

Creative thinking uses idea generation techniques like brainstorming and lateral thinking to generate test and learn ideas. Everyone in your business can learn to be more creative. 

Techniques like picture and word associations, using opposites and varying the attributes generate ideas you can test in the shopping experience.

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. 

Yellow post it with illustration of a lightbulb pinned to a wooden pin board

(see also our article on generating creative ideas for more on this).

Secondary research

Secondary research looks at already existing research and information about customers to identify e-Commerce opportunities.

For example, you can look at what competitors do to attract customers. Look at their websites and their advertising. What would make your customers choose a competitor instead? Can you adapt some of their ideas and find ways to do them better? These are ideas you can test and learn from.

Secondary research can also involve looking at industry association publications, looking at other categories and looking at published research about online shopping. You’re looking for ideas about what online shoppers really want

Behavioural science

To win new customers, you need to influence them to change their current behaviour. The study of behavioural science helps you understand how people in general make the choices they do. You then use this to shape your marketing ideas. 

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). 

This understanding of behaviours can be a great source of ideas for e-Commerce opportunities. 

An old pocket watch dangling hypnosis style in front of a leather chair with a speech bubble saying "Buy me..."

Test and learn ideas

The ideas from these three approaches can then all be tested with controlled experiments with small groups of customers. You can develop prototypes, mock-ups and concepts to test. 

For example, you could send different messages to different customers in your CRM database. You could test different images, text or layouts on your store website

The aim of test and learn is to get feedback directly from customers. This feedback (along with the insights you capture with market research and digital data), you then collate to help you then validate the e-Commerce opportunity.

Step 2 - Validate the opportunity

Next, you need to narrow down your list of opportunities. You won’t have the resources to do everything, so you need to gather information to help you validate and prioritise opportunities such as :-

  • Level of resource (time, budget, people) needed
  • Number of customers impacted
  • Expected changes in customer behaviour
  • Competitor presence and likely response 
  • Additional capability (skills, systems, processes) required

E-Commerce capability 4 - Agile methodology

The size of the opportunity often determines how you validate it. 

For “small” opportunities, you can use an agile methodology approach for example. When you manage your own store, you can use agile as an e-Commerce capability to keep improving your site. 

Small in this context means opportunities that can be set-up and tested quickly at low cost.

So for example, small and agile could mean changes to your sales copy and product pages. Small agile teams can test different ideas to see which work best with customers. 

E-Commerce capability 5 - Business cases

For “large” e-Commerce opportunities you’ll need a business case, because the opportunities need more resource – they cost more, involve more people and take longer to do.

The business case is the story of the e-Commerce opportunity you tell so people supply the resources you need. It contains customer and market data, analysis and plans. It shows what you expect to happen and why the business should support it. 

The format of a business case varies by company and context. At minimum  though, you’ll need a clear financial plan. 

The opportunity will need to clear sales and and profit thresholds (a minimum amount a project must deliver). It’ll also need to meet deadlines for return on investment (e.g. must break even in six or twelve months)

The business plan also needs to outline all operational activities needed to support the opportunity. If there’s significant investment in time, budget or people, the business case makes sure the leadership team commits and supports the plan.

Business case writing is an important e-Commerce capability because it builds confidence in opportunities and makes sure you secure the resources you need.

Step 3 - Channel plan

In this next step, you decide on the e-Commerce channels you need to to go after the opportunity. 

You need to 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 5 key channel options - on a x-y graph against level of complexity and control

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 either sell on their platforms or create links via your own website. 

Ebay home page - headline says Ebay Plus - start a 30 day free trial

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 management skills to manage the on-going relationship with them. You need this e-Commerce capability for both bricks and clicks and pure players.  

Account management skills includes understanding the retailer’s strategy and way of working, negotiating commercial terms, building strong relationships with them and dealing with issues. And of course, e-Commerce account managers need to understand e-Commerce and how it works. 

They need to be comfortable talking about key areas like digital media, marketing technology and order to delivery for example. You need to build this capability with your account management team,

E-Commerce capability 8 - Manage Dropshipping / Direct to Consumer

The final two options are dropshipping and direct to consumer (D2C). Each brings different requirements for e-Commerce capability.

With dropshipping, you act as an online store front for suppliers, often based overseas, particularly in China. Shoppers order from your website, and you forward the order on to the supplier who sends it 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 two new e-Commerce capabilities. Firstly, you need to be able to find the right manufacturer / supplier who can manage orders efficiently and effectively. 

Then, you also need good customer service skills when things go wrong with orders. Your customers think they’re buying from you, not a third party. 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

With your channel plan in place, next you need to turn your ideas into actions. So the next set of e-Commerce capabilities really focus on creative and digital marketing skills that create great online shopping experiences for your customers.

E-Commerce capability 9 - Create experiences on someone else’s platform

Selling on someone else’s platform – like marketplaces, online retailers and print on demand – limits the types of experiences you can create.

Those platforms have controls, systems and processes which you’ll need to follow. As a consequence, you’ll have less control. 

For example, they’ll usually have a product information system to manage the basic content of your product pages.

You use this to edit the product name, the product images and the product description on each product page. 

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

Part of this e-Commerce capability is knowing how to set up good product pages. So, how to source good photography and use photo editing tools for example, to make products look good on screen. You also need digital media skills like search and social media to drive customers to the page.

For more advanced online shopping experiences, you’ll also need the skill to work with the shopping platform owner. This usually means spending money with them on areas like display advertising. This takes extra e-Commerce capability to build profitable activities with online retailers. 

E-Commerce capability 10 - Create experiences on your own platform

When you manage your own online store, you’ve got control over all parts of the shopper experience.

You can change how the customer finds your online store website. You can change how you manage price, delivery and customer service.  

In addition to what we’ve already covered, you’ll also need more creative and technical skills like writing sales copy, graphic design and CRM.

You’ll also need to be able to manage the order to delivery process.

As a result, this all adds extra e-Commerce capability requirements for D2C. 

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

As per our guide to the functions of e-Commerce you need to be able to manage payments through your financial systems. You need efficient supply chain processes and systems to move orders from the warehouse to dispatch and on to the customer. And you need customer service systems and processes to deal with order issues.

You need all of these to create good experiences for customers with your online store. 

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 two final e-Commerce capabilities you need to factor in.

Firstly, 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. 

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

E-Commerce capability 11 - Improve the customer experience

When it comes to online selling, you’re only as good as your last sale. You need to keep improving the customer experience if you want to keep customers 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 

In e-Commerce, not every idea works out. That’s normal. It’s a percentage game. You learn from both successes AND failures.

This means you need the right attitude. Stay positive, even if things go wrong. Build your resilience. Keep a level head when things go well and bounce back when they don’t. 

Track your successes and failures.

All these positive attitudes and behaviours will pay off, because you’ll find you consistently deliver more successes and less failures as you build you e-Commerce capabilities. 

Person's hand resting on a wooden sign saying you got this

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 find e-Commerce opportunities. 

How you validate the opportunity depends on its size and complexity. Agile project management skills are great for small opportunities. However, you need skills in business case writing to manage big opportunities.

The channel plan determines where customers will buy you online. In some cases, you hand over complex areas like order to delivery to 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 most control but also has the highest complexity. You manage every part of the e-Commerce process yourself. 

Creating online experiences and selling online demand you build e-Commerce capability in digital marketing and customer experience. 

Building all these capabilities and making them work together can be a challenge. As a consequence, 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. 

 Photo Credits

You got this : Photo by Ava Sol on Unsplash

Glasses : Photo by Josh Calabrese on Unsplash

Digital data – Google Analytics : Photo by Edho Pratama on Unsplash

Idea – Bulb on Post it : Photo by AbsolutVision on Unsplash

Hypnosis Pocket Watch : Photo by MK Hamilton on Unsplash

Laptop and credit card : Photo by rupixen.com on Unsplash

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