Objectives of Ecommerce for Business (Components & Functions)
For convenience, variety, and affordable prices, consumers are increasingly choosing to shop online these days. In 2023, 2.64 billion individuals—or roughly 33.3% of the world's population—shopped online, according to Hostinger. This offers a huge opportunity for businesses.
This blog post discusses the advantages and justifications for e-commerce for well-established businesses. In this section, we'll cover the primary objectives you can achieve with an online store, such as expanding your customer base and improving the online shopping experience.
Next, we'll go over each of the crucial elements you'll require, such as selecting the appropriate platform and integrating it with your current systems.
In our final section, we'll examine the features of e-commerce and how it will alter your business's operations, including order fulfillment and customer support.
Objectives of Ecommerce That Can Transform Your Business
Revenue and Growth
Besides increasing sales, ecommerce opens new markets. Consider shipping your product to customers outside your immediate area to expand your reach nationally or globally. Online sales could meet unmet customer needs due to geography.
Improved Margins
Ecommerce may reduce overhead costs, but not always. Rent on prime retail space, possibly large staff, and utilities can be reduced or eliminated. Be realistic: shipping, platform fees, and digital marketing will cost money, but a careful analysis may reveal greater profitability.
Customer Experience
Online tools allow for greater personalization than in-person tools. Customer satisfaction and loyalty can be improved by recommendation engines ("Customers who bought this also like..."), targeted promotions based on purchase history, and simplified feedback mechanisms. Online accessibility helps disabled and geographically-isolated shoppers.
Data & Analytics
Ecommerce generates many data points that brick-and-mortar stores struggle to capture. This data can improve business decisions, targeted marketing, and product development by revealing browsing behavior and abandoned carts.
Geographic Reach
Ecommerce reaches more. If shipping were available, would customers outside your physical store be interested in your products?
Niche Markets
The internet simplifies niche community discovery. A physical store can be difficult to maintain if your product is highly specific, but an online store removes that geographic constraint.
24/7 Availability
Your online storefront is open 24/7, unlike a physical store. This lets customers in different time zones shop at their convenience. It also helps those who shop late at night or early in the morning and those with busy schedules who can't visit a store during regular hours. Every hour is a sales opportunity, maximizing reach without increasing staffing or overhead.
Price Flexibility
Ecommerce lets companies respond quickly to market changes. Changing competitor prices, flash sales, or testing promotional pricing is easier online than in stores.
Reduced Marketing Overhead
Digital advertising costs more, but it offers precise targeting that billboards and print ads lack. This optimizes marketing budgets by targeting likely customers.
Direct Customer Relationships
Ecommerce eliminates middlemen. Directly connecting with buyers builds brand loyalty. This relationship provides first-party data unfiltered by a third-party retailer for marketing and product development.
Rapid Testing & Scaling
Online, testing a new product, price point, or promotion is easier. Scaling up successes is faster than ordering more inventory, hiring staff, etc. for physical locations.
Adapting to Demand
If the supply chain is strong, ecommerce can handle more volume than brick-and-mortar during viral product demand. Online overhead is less fixed, so it can weather sudden downturns better.
Lower Barrier to Entry
Ecommerce stores can be launched with less money than physical stores, depending on the products. This reduces risk for new businesses, allows market testing, or allows side projects with less financial strain.
Essential Components of Ecommerce to Grow Your Business
Platforms
Multiple Options (Shopify, WooCommerce, OpenCart)
Many platforms make ecommerce website creation easy for businesses. They serve different purposes and meet different needs. If transitioning with a small in-house team, Shopify's ease of use may appeal, while WooCommerce can help WordPress websites become ecommerce sites.
Integration Capabilities
The more complex a business, the more important a platform that works with legacy systems. Example: A company with specialized accounting software needs a platform that integrates or exports data in the right formats to save time.
Inventory Systems
Real-time syncing
Selling an item online that is out of stock in the physical store is one of the best ways to undermine customer trust. Software for inventory management and the selected platform need to interact with each other easily.
Scalability
If ecommerce grows, the inventory system must handle more orders. A seasonal retailer using spreadsheets for inventory may hit a wall during peak season due to online orders.
Flexibility for Businesses with Multiple Locations
To avoid customer dissatisfaction, the inventory system must accurately reflect stock availability across all stores.
Accounting & Taxes
Tax Complexities
Ecommerce can quickly establish nexus (a business's sales tax obligation) in new states or countries. Each jurisdiction has its own nexus rules, and sales tax rates vary greatly. How online sales affect tax compliance is crucial because ignoring these obligations can result in steep fines and back taxes.
Reporting for Insight
Ecommerce platforms generate sales reports, but accounting software may need additional modules or processes to extract the most useful data. Example: Tracking COGS accurately across online and offline sales channels aids profitability analysis and pricing strategies.
CRMs
Avoiding Data Silos
Customers who shop online and in-store should have a smooth experience. Both channels should reflect their purchase history, loyalty points, and customer service interactions. Data must be synced between CRM, POS, and ecommerce platforms.
Personalization Opportunities
If the CRM allows purchase behavior segmentation, this data can improve online and offline marketing. Example: Sending exclusive online discounts to customers who haven't bought in-store in a while can bring them back.
Functions of Ecommerce: How It Transforms Business Operations
Fulfillment
Outsourced Fulfillment
Working with Amazon FBA or 3PLs eliminates the need to manage inventory. This is scalable and cost-effective for small to mid-sized businesses. It may mean giving up some control over the customer experience and higher order costs.
In-House Fulfillment
Maintaining your own warehouse and staff maximizes process control. This may make sense for businesses with warehouse space, fragile or large shipping needs, or high ecommerce sales volumes. Initial investment and ongoing costs are drawbacks.
Hybrid Models
Blending in-house and outsourced fulfillment provides flexibility. A business may outsource some operations and bring others in-house as it grows. Or, ship popular items in-house for fast shipping and less-frequent ones via 3PL.
Shipping
Speed vs. Cost
Fast, free shipping is expected. Businesses must balance expectations with shipping costs. Explain how options like free shipping over a certain order threshold, flat-rate shipping, and speed-based options (overnight, 2-day, etc.) affect profitability.
Carrier Integration
Most ecommerce platforms integrate with UPS, FedEx, etc. Real-time shipping rates and label generation require this. Ensure the platform supports negotiated business rates.
International & Complex Zones
Stress the complexities of international shipping—customs, duties, restricted items, and destination-specific costs. Many ecommerce platforms offer plugins for this, but planning ahead avoids surprises and customer frustration.
Returns & Exchanges
Competitive Yet Sustainable Policies
Easy returns increase online sales. Thus, you must strike a balance between generous policies that attract customers and a process that doesn't cut margins or burden operations. Return shipping labels, restocking fees, and processing time should be considered.
Impact on Inventory
If the business has both online and physical locations, the returns policy must address whether online items can be returned in-store and how they affect real-time inventory visibility.
Using Returns Data
Not all returns are negative. It allows you to analyze data to identify product quality issues, apparel size inaccuracies, etc., to improve the business.
Customer Service
Chatbots & AI
Chatbots and AI-powered tools are revolutionizing 24/7 customer service that scales with your business. Chatbots can quickly and efficiently answer simple questions or perform basic troubleshooting, freeing up your staff for more complex issues. Many complex issues, frustrated customers, and high-value clients require the empathy and nuanced understanding of a human support agent.
Social Media
Customers now seek help on social media instead of traditional channels because they expect brands to respond. Fast response times require dedicated social account monitoring. Public complaints are visible to potential customers and affect your brand reputation, so have clear policies.
Unique Needs of Online Orders
Shipping losses, incorrect orders, and website glitches require different troubleshooting than in-store customer service. Staff must be trained on these scenarios and have clear escalation paths.
Build Your Ecommerce Store with Narola Infotech
Expanding into ecommerce is exciting but difficult. At Narola Infotech, we understand the unique challenges of established businesses. Our experts can help you choose a platform or migrate systems.
Work together to make your ecommerce dream a reality. Request a free consultation today.
Read More: How Ecommerce Can Transform Your Business: Objectives, Components, Functions
