E-Commerce operations demystified.
Updated: Nov 30, 2020
So, you have your idea on what to sell online. Now what? How do you set up shop?
There's tons of information on how to market and sell your idea online, but what about how to collect payment, ship the product, track your inventory, and support your customer?
I had the opportunity to setup shop and scale an e-commerce business that launched from zero dollars to a thriving 8-figure international corporation! I can tell you that there are no big secrets here - just a thoughtful approach and disciplined execution.
Below, I share the 8 critical components to consider when launching your e-commerce business:
E-Commerce Platform: Your e-commerce system will typically be the hub of your technology infrastructure; all customer orders placed on your website will flow through the E-Commerce system. This system stores order information, customer information, product information and much more. Often E-Commerce systems have built-in marketing and business intelligence functionality that can be helpful when tracking key metrics and testing marketing campaigns. Popular options include Shopify, BigCommerce, and Lightspeed.
Inventory Management: In the era of Amazon Prime, customers expect quick and accurate shipments. As such, you must maintain inventory visibility and have systems that enable quick and accurate fulfillment of orders. If you are partnering with a 3PL warehouse that provides fulfillment and shipping services (such as Amazon FBA), you can typically leverage the 3PL’s technology solutions for tracking and managing inventory. If you are managing your own inventory, it's worthwhile to invest in tools that support inventory management (warehouse management systems and/or inventory management systems).
Website: There are truly a tremendous number of options to build the front end of an E-Commerce website! The challenge is picking the right solution for your unique needs. A common and simple solution is to select an all-in-one E-commerce platform that can both host your website and provide e-commerce back-end solutions (BigCommerce, Shopify, Weebly, Wix, among many others). These solutions are convenient, plug-and-play, contain tested templates and are often cost-effective. On the flip side, they may limit the amount of customization that is possible.
Customer Service: You will need the tools to reply to customers quickly and accurately to ensure a good customer experience. Regardless of whether you are shipping hundreds or thousands of shipments per month, there are abundant customer care solutions that provide the right level of visibility into customer orders so that you may most effectively provide support. Further, most of these tools are priced per agent per month – making them an inexpensive solution for small volume businesses as they grow(examples: Zendesk, Freshdesk, Zoho Desk).
Systems Integration: Whether you are a start-up or a rapidly growing medium sized company, it is critical to ensure that all software systems you select play nicely together. This is a common oversight! Often features and functionality are so attractive that the integration abilities of a piece of software is an afterthought. However, this can create an expensive problem that results in manual and clunky workaround to “make things work” and may even negate the initial attractive functionalities of the software. The good news is that most popular cloud-based software solutions have both open APIs that are easily plugged into other applications in addition to pre-built plug-ins for the most popular software tools.
Payment and Taxes: Luckily, there are just a few major players on the market and the process of collecting payment is fairly standardized. Your business will likely want to be able to collect payment from all major credit cards, PayPal, Apple Pay, and Amazon Pay. You will also need to collect sales tax based on the shipping address of the order. Since tax laws tend to be complex and dynamic (varying by state, county, and even city), it is easiest to use a tax software such as Avalara or TaxJar to ensure compliance and automate tax collection. These solutions should integrate with your E-Commerce back-end (Shopify, BigCommerce, Lightspeed, etc.) to ensure the appropriate tax is collected from the customer at checkout. Remember to always consult a tax professional to ensure taxes are setup compliant with all regulations.
Accounting Systems: Speak with your finance professional to ensure that the transaction detail provided by the E-Commerce system is sufficient for business accounting and tax remittance. Most small to medium-sized businesses used QuickBooks or QuickBooks Online, which is often easily integrated to E-Commerce tools via API or pre-built plug-in.
Email Marketing: Whether you are starting your business or scaling it, you will want to take advantage of every single visitor to your site. Email marketing gives you the ability to contact visitors even after they leave your website. As such, you will likely want to engage with your audience through newsletters, helpful content, and promotional messages.
Now that you have a rough framework as to the elements that will be necessary for your E-Commerce business, it is important that you apply this framework to your unique context! Your business will have its own combination of a value proposition, marketing strategy, operational strategy, target customers, and core competencies.