When you first start an ecommerce store, it can feel like there are a million things to do—and there are. Every store needs to launch a website, establish a supply chain, create a brand, and more.
But these early steps aren’t just a checklist to get you ready for launch. They are the foundational building blocks of your ecommerce strategy. The most successful online stores use their launch to set their ecommerce strategy, then build on that strategy over time.
A great strategy doesn’t just set you up for a great launch, though. It sets you up for long-term success by driving focus. Everyone (and their team) has a finite amount of time in a day. A great strategy helps you prioritize what needs doing, and just as importantly, what doesn’t need doing.
What is an ecommerce strategy?
An ecommerce strategy is a series of interrelated decisions about how your business will operate. A proper strategy considers the full lifecycle of the product, the customer, and the corporation.
Here are some of the key strategic decisions you need to make in creating your ecommerce strategy:
To plan a product strategy, you’ll need to decide:
- Research & development. How are your current products, and potential future products, developed? For example, do you develop them yourself or contract a third party, and how often?
- Product positioning. How will your product(s) fit into the market, and ideally fulfill a need that current products aren’t filling? This helps inform your product pages’ product descriptions. A 2×2 matrix can be helpful when planning this.
- Product supply chain. How does your product reach your customer? What partners do you select for manufacturing and delivery? These affect your product quality, delivery times, and gross margin.
- Product line depth & breadth. How many products would you like to carry, both for launch and over time? Will your product have multiple variants, such as colors or flavors? After your first product, will your additional ones be a new product line (think: introducing a t-shirt to complement your jeans) or an extension (think: introducing more lightweight jeans to complement your current line of jeans)?
- Product lifetime. Will your products be evergreen, or will you be doing limited-edition or seasonal product drops?
A great ecommerce strategy thinks about the full lifecycle of the customer and answers many of the decisions along that journey:
- target audience. Who is your target market? A common way to capture information about your target market is in a buyer persona document.
- Branding. What values does your brand represent, and how will customers understand this? How do you want your customers to feel?
- customer acquisition. Where and how will you reach your target audience? This could be anything from social media to email marketing.
- Customer experience. What are your customer service standards? For example, you will subsidize shipping costs and/or returns, and will you provide a guarantee? Will there be an option to subscribe?
- Customer retention. How often do you want your existing customers to reorder—once a month, once a year, never? How will you ensure they come back to do so?
Many ecommerce website owners start their business because they’re passionate about their customer or their product. As a result, corporate strategy is often an afterthought. But a great corporate strategy can be a powerful enabler for your business.
Some of the decisions to consider in a corporate strategy include:
- Number of shareholders. Who do you want to own the business?Owning 100% of your business yourself can be attractive—you get to make all the decisions. But for some people it can mean missing out on business partners that could provide valuable skills or investors who (in addition to their financing) are often well-connected, experienced, and eager to help. At the same time, shareholders eventually want a payout for their time or money, so if you take on shareholders or investors, you’ll need a plan for them to get their money back.
- Financing strategy. Although starting an ecommerce business is easier than ever, it typically still requires some cash. Where will you get that cash? That can take the form of loans, investment, your savings, pre-sales to customers, or crowdfunding. However, businesses that are already operating need a financing strategy too. They may need to place big orders of supplies, or fulfill seasonal demand, and these things require a plan to have enough cash at the right times.
- HR strategy. If you’re just starting your ecommerce business, this one may not seem that important yet. But veteran store owners will tell you it can get very important. Who will your first hires be? For example, it could be a digital marketing hire, a customer experience hire, or a product development hire. Then, once you start hiring, how will your organizational structure fit it all together? How will your employees grow over time? This all makes a big difference in the future of the business.
How to create an effective ecommerce strategy
All of the questions above may seem overwhelming at first. But they are a framework to check if your strategy is comprehensive. Once you begin planning your strategy, you’ll quickly find they’re all interrelated, and by making one decision, some of your other decisions will start to fall into place.
To organize this strategic decision-making process, consider splitting your ecommerce strategy creation into 4 steps:
1. Decide on your personal goals and values.
Your personal goals and values are foundational to your ecommerce strategy. This isn’t a fluffy statement, it’s a business reality. Your goals will inform how you grow and your values will inform everything from who you do business with to how you manage your product line.
Here’s an example of how goals and values inform your strategy on everything from pricing to branding:
- You value natural ingredients and commit to having your products be all-natural.
- You need to source natural ingredients from suppliers who don’t use chemicals.
- Those suppliers charge a premium, so you need to price your products higher than market averages in order to maintain your gross profit margin.
- To justify the higher price point and maintain a strong conversion rate, you’ll need to invest more deeply in brand building and customer experience.
- The natural ingredients cause your product to spoil quicker, so you’ll also need to invest in customer education and post-purchase experience.
Running a business that aligns with the owner’s personal goals or values, may create operational challenges, but doing so is crucial for staying motivated and proud of what you’re doing. If you’re unsure how to start when naming your goals and values, try naming your anti-goals and values. What do you stand against? What kind of life or financial situation do you want to avoid?
2. Get to know your potential customers.
One of the goals of any new ecommerce store should be to establish product-market fit. This is when you have a product that your potential customers (who are your addressable market) aren’t just interested in, but are thrilled to have the opportunity to purchase.
The best way to achieve product-market fit is to research and deeply understand your target audience and their needs. It’s completely up to you how you decide what customer you’re serving. It could be as wide as “women from 45 to 60” or as specific as “CrossFit enthusiasts in southern Ontario.” To determine your ideal target market, ask yourself: What group of people do I know have a need for the type of product I have in mind?
In addition to product-market fit, understanding your customer can help inform your brand positioning, marketing channels, and customer service standard. If you’re unsure where to start with understanding your potential customers, find 5–10 of them and ask them questions about your idea and their needs. If their answers surprise you, talk to more potential customers! In the early days of your ecommerce strategy, it is almost impossible to spend too much time speaking with potential customers given how valuable their insight is.
3. Create your long-term vision.
Once you’ve done customer research to validate your initial product, branding, and marketing channels, you’ll be ready to think about the long-term. A great strategy is rounded out by a vision.
“Vision” may sound like something only the Steve Jobs of the world can create, but creating one is actually a fairly simple exercise. Just ask yourself a few versions of this question: What does it look like if we succeed?
To make this practical, add a time frame and make it specific:
- “What does our product line look like in 5 years if we succeed?”
- “What does our brand feel like in 5 years if we succeed?
- “Who are our key partners (supply chain, resellers, collaborators) in 5 years if we succeed?”
This is similar to goal setting, but with a different purpose. Goal setting helps you define a series of specific actions to reach your vision. Vision setting allows for ambiguity—you don’t need to define exactly how you’ll get there in 5 years, just how it looks and feels.
4. Ruthlessly prioritize.
By the time you’ve gone through the exercises above, you’ll likely have plenty of ideas for each area of your business. The last step is prioritizing. For each area of your business (product, customer, corporate), identify the single most important thing to do. If you’re unsure how to identify them, try asking it this way: What’s the biggest roadblock to your business profitably growing, and how can you address that?
A great ecommerce strategy means saying no to good ideas to make way for great ones. By understanding and evaluating all the levers you have available for your business, but focusing on the most impactful ones, you can set your store up for the best long-term success.