Last Updated: May 10, 2024

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Rohit Rawat

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Today, customers are increasingly turning to online shopping for convenience, selection, and competitive prices. According to Hostinger, 2.64 billion people worldwide shopped online in 2023, which is about 33.3% of the global population. For businesses with an objective of ecommerce growth, this presents a tremendous opportunity.

This blog post discusses the hows and whys of ecommerce for established businesses.  Here, we'll explore the key objectives you can achieve through an online marketplace, from expanding your market to improving customer experience.

We'll then break down the essential components you'll need, like choosing the right platform and integrating it with your existing systems.

Finally, we'll delve into the functions of ecommerce,  focusing on how it will change your operations – from fulfilling orders to handling customer service.

Objectives of Ecommerce That Can Transform Your Business

These objectives of ecommerce are essential for the growth of your business.

Business-Objectives-of-Ecommerce

Revenue and Growth

More than just increased sales volume, ecommerce opens the door to entirely new markets. Analyze your product – can it be shipped to customers outside your immediate area, expanding your reach nationally or even globally? Are existing customer needs going unmet due to geographic limitations that online sales could solve?

Improved Margins

While not a guarantee, ecommerce can reduce significant overhead costs compared to a traditional model. Rent on a prime retail space, potentially large staff, and utilities can be minimized or even eliminated. However, it is essential to be realistic: shipping, platform fees, and digital marketing will incur their own costs, but a careful analysis might reveal improved profitability potential.

Customer Experience

Online tools offer personalization on a scale difficult to achieve in person. Recommendation engines ("Customers who bought this also like..."), targeted promotions based on past purchase history, and streamlined feedback mechanisms can enhance satisfaction and loyalty. Additionally, online accessibility aids customers with disabilities or who face geographic barriers to shopping in person.

Data & Analytics

Ecommerce generates a wealth of data that brick-and-mortar stores often struggle to capture. From browsing behavior to abandoned cart insights, this data can fuel better business decisions, targeted marketing, and even product development.

Geographic Reach

Ecommerce casts a wider net. Evaluate your business: are there potential customers outside your physical store's usual draw who would be interested in your products if shipping were an option?

Niche Markets

The internet makes finding niche communities easier. If your product has a highly specific appeal, finding enough customers to sustain a physical location can be challenging, while an online store removes that geographic constraint.

24/7 Availability

Unlike a traditional store with set operating hours, your digital storefront is always open for business. This caters to customers in different time zones, allowing them to browse and purchase products at their convenience. It also benefits those who prefer to shop late at night or early in the morning, and individuals with busy schedules who struggle to make it to a physical store during standard hours. Every hour becomes a potential sales opportunity, maximizing your reach without the need to increase staffing or overhead costs.

Price Flexibility

Ecommerce empowers businesses to react swiftly to market dynamics. Competitor price changes, flash sales, or testing promotional pricing is often far easier to implement online than across physical locations.

Reduced Marketing Overhead

While digital advertising comes with its own expenses, it offers precision targeting that traditional methods (billboards, print ads) often lack. This allows for more efficient use of marketing budgets by focusing on reaching the most likely customers.

Direct Customer Relationships

Ecommerce cuts out the middleman. Building a direct connection with buyers fosters brand loyalty. This relationship also offers valuable first-party data unfiltered by a third-party retailer, aiding in future marketing and product development.

Rapid Testing & Scaling

Experimenting with a new product, a different price point, or a targeted promotion is easier online. Successes can be scaled up quicker than ordering more inventory, hiring staff, etc., for physical locations.

Adapting to Demand

If demand spikes (think viral products), ecommerce can potentially handle a higher volume faster than brick-and-mortar, assuming the supply chain is robust. It can also weather sudden downturns better, as online overhead is often less fixed.

Lower Barrier to Entry

Depending on the type of products, the initial investment in launching an ecommerce store can be significantly less than a physical location. This reduces risk for new businesses, allows for testing the market, or opens the door to side projects with less financial strain.

Essential Components of Ecommerce to Grow Your Business

Apart from the objectives of ecommerce, its components also form an essential part of the growth of your business. Let's discuss them in detail.

Components-of-Ecommerce

Platforms

Multiple Options (Shopify, WooCommerce, OpenCart)

There are many platforms that help build an ecommerce website easily for businesses. Each has a different purpose and function that suits different requirements. For example, Shopify's ease-of-use might be appealing if transitioning with a small in-house team, while WooCommerce can help businesses who already have a WordPress website to turn it into an ecommerce website.

Integration Capabilities

The more complex an existing business, the more crucial it becomes to choose a platform that plays nicely with legacy systems. Example: A business with specialized accounting software needs a platform that can either integrate or easily export data in the necessary formats to avoid time-consuming manual work.

Inventory Systems

Real-time syncing

Nothing erodes customer trust like selling an item online that's out-of-stock in the physical store. The chosen platform and inventory management software must communicate seamlessly.

Scalability

If the business anticipates significant growth from ecommerce, its inventory system needs to handle the increased order volume. Example: A seasonal retailer relying on spreadsheets for inventory might find they hit a wall during peak season due to the influx of online orders.

Flexibility for Businesses with Multiple Locations

If the business has more than one physical store, the inventory system needs to reflect stock availability across all locations accurately to avoid disappointing customers.

Accounting & Taxes

Tax Complexities

Ecommerce has the power to rapidly introduce nexus (a business's obligation to collect and remit sales tax) in new states, or even countries.  Every jurisdiction has its own rules on when nexus is triggered, and sales tax rates can vary significantly.  Ignoring these obligations can lead to hefty fines and back taxes, underscoring the importance of understanding how online sales affect your tax compliance.

Reporting for Insight

Many ecommerce platforms generate sales reports, but existing accounting software may need additional modules or updated processes to extract the most useful data from them. Example: Tracking cost of goods sold (COGS) accurately across both online and offline sales channels helps with profitability analysis and pricing strategies.

CRMs

Avoiding Data Silos

A customer who shops both in-store and online should have a seamless experience. Their purchase history, loyalty points, or any past customer service interactions need to be reflected across both channels. This requires syncing data between the CRM, point-of-sale systems, and the ecommerce platform.

Personalization Opportunities

If the CRM allows segmentation based on purchase behavior, this data can be leveraged for more effective marketing - both online and offline. Example: Emailing an exclusive online discount to customers who haven't made an in-store purchase in a while can drive them back to the physical location.

Functions of Ecommerce: How It Transforms Business Operations

Now that the objectives of ecommerce and its components are out of the way, let's get into the functions of ecommerce and how they can transform your business operations.

functions of e commerce

Fulfillment

Outsourced Fulfillment

Partnering with companies like Amazon FBA or third-party logistics providers (3PLs) removes the need to manage inventory in-house. This offers scalability and can be cost-effective for small to mid-sized businesses. However, it can mean relinquishing some control over the customer experience and potential additional costs per order.

In-House Fulfillment

Maintaining your own warehouse and staff gives maximum control over the process. This could make sense for businesses with existing warehouse space, very specific shipping needs (fragile or large items), or those anticipating high ecommerce sales volumes. Drawbacks include the upfront investment and ongoing operation costs.

Hybrid Models

Blending in-house and outsourced fulfillment offers flexibility. A business might start by outsourcing, then bring some operations in-house as they grow. Or, keep popular items in-house for fast shipping, while less frequently ordered ones are fulfilled by a 3PL.

Shipping

Speed vs. Cost

Customers expect fast shipping, often for free. Businesses must balance those expectations with the reality that shipping is expensive. Clearly outline options like offering free shipping over a certain order threshold, flat-rate shipping, tiered options based on speed (overnight, 2-day, etc.), and how those choices impact profitability.

Carrier Integration

Most ecommerce platforms integrate with major carriers (UPS, FedEx, etc.). This is crucial for real-time shipping rates and label generation. If the business already has negotiated rates, ensure the platform can accommodate this.

International & Complex Zones

If international shipping is anticipated, emphasize the complexities involved – customs, duties, restricted items, and widely varying costs based on destination. Many ecommerce platforms offer plugins for this, but it's crucial to plan this aspect ahead to avoid getting surprised by costs or causing customer frustration.

Returns & Exchanges

Competitive Yet Sustainable Policies

Customers are more likely to buy online if returns are easy. Therefore, you need to find a balance between generous policies that attract customers and a process that doesn't eat into margins or burden operations. Consider costs like return shipping labels, restocking fees, and time spent processing returns.

Impact on Inventory

If the business has both online and physical locations, the returns policy needs to address whether online items can be returned in-store, and how those returns impact the real-time inventory visibility.

Using Returns Data

Returns aren't just negative. It allows you to analyze the data to spot potential product quality issues, size inaccuracies in apparel, etc., to improve the business as a whole.

Customer Service

Chatbots & AI

Chatbots and AI-powered tools are transforming customer service, offering 24/7 support that can scale alongside your business.  For simple questions or routine tasks (checking order status, basic troubleshooting), chatbots can provide quick and efficient resolutions, freeing up your human staff for more complex issues. However, complex problems, frustrated customers, or high-value clients often require the empathy and nuanced understanding that only a human support agent can provide.

Social Media

Customers now expect brands to be responsive on social media, often seeking help there instead of traditional channels.  Dedicated monitoring of your social accounts is essential for fast response times.  Develop clear policies on how to handle public complaints, as these interactions are visible to potential customers and impact your brand reputation.

Unique Needs of Online Orders

Issues like shipments lost in transit, incorrect items received, or website glitches will require different troubleshooting procedures than in-store customer service. Training staff on these specific scenarios and having clear escalation paths is crucial.

Build Your Ecommerce Store with Narola Infotech

Expanding into ecommerce is an exciting but complex undertaking. At Narola Infotech, we understand the unique challenges faced by established businesses. Whether you need help choosing a platform or migrating your systems, our experts are here to guide you.

Let's collaborate to turn your ecommerce vision into a thriving reality. Contact us today for a free consultation

Frequently Asked Questions (FAQ)

See the answers to some of our most commonly asked questions below.

Absolutely! Narola Infotech offers a free consultation to discuss your business goals and develop a customized ecommerce roadmap. We can guide you through platform selection, system integration, marketing strategy, and more.

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