Choosing the Right E-Commerce Model

Your online retail operation’s ultimate success will be greatly influenced by the decisions you make long before opening shop in cyberspace.

Web stores come in all configurations and sizes. There are superstores boasting the largest product inventories available anywhere, name-brand merchants offering the same merchandise found in their print catalogs and stores and specialty boutiques carrying a limited selection of made-to-order crafts.

Naturally, the services and functionality these online merchants offer vary considerably. With all these e-commerce models and options to chose from, how do you determine what is right for your company?

An effective and durable e-commerce strategy is not developed in a vacuum. It’s an extension of your business and requires the same care, discipline and systematic planning as any major initiative that will increase your company’s visibility, market reach and brand identity. Let’s examine key marketing and merchandising issues to consider when evaluating e-commerce software and solution providers.

Define your space. Experienced direct marketers, catalogers and retailers know their business. They know their target markets. They know their customers. They know how to market and merchandise their products. When expanding their operation online, the chief question is how to apply that knowledge to cyberspace. The answer can be summed up in one word: process. Define the Web store’s primary purpose and then design its features and functionality.

What is the role of the online store vis-à-vis your traditional business? Will customers primarily use the Web site to gather information, familiarize themselves with your merchandise, transact purchases or all three? Will these functions change over time?

Every e-commerce site must have a few basic features: shopping basket, search engine, product database, transactional engine and a fulfillment and delivery capability. Beyond that, a Web store can be as simple or as elaborate as you want. To make a determination of the type of store you need, consider the following:

Are you serving a mass consumer audience or a specialized niche market? How sophisticated and technically savvy is your target audience? What type of equipment will your average user own? What are their expectations when they visit your site? Is yours an impulse buy, or do you need to educate the consumer and nurture the sale over multiple visits? And finally, what is your competition doing?

Functionality also is a product of your online marketing and merchandising strategies. For example, booksellers migrating online have several givens with which to work. Books are a top-selling commodity on the Internet. A wealth of market research exists on this product segment. There are online booksellers to use as role models. Instead of starting from scratch, a bookseller formulating an e-commerce plan can visit competitive sites to see what they offer. The best of these sites can be synthesized into the new venture.

Obviously, the same does not hold true for someone contemplating selling grand pianos over the Internet. The vendor knows going in that there are formidable selling challenges. As a result, the merchant might view the Internet site less as a selling venue than as a product showcase to drive business to store locations, as automation by telephone has done. Educational in nature, the site could offer an extensive library of reference materials, product reviews and documentation. A store locator should be prominently featured. The e-mail function could be used to initiate dialogue with prospective buyers, provide pricing information, and then match the consumer to a store in a geographic area that would provide delivery and after-sales service.

Define the competition. Assessing the scope of your online operation and determining what to include at launch requires homework. Web store owners must regularly monitor the top e-commerce sites on the Web to stay abreast of market trends and to spot new design and service innovations. For individual customers, you need to narrow the search and track what specifically is happening in their market niche. This is crucial because things change very quickly in cyberspace.

Unlike brick-and-mortar stores, well-designed and operated Web sites should be able to change their look, merchandise and service offerings at will – often in real time. This chameleon-like ability means that e-retailers are constantly looking for ways to upgrade and improve their sites. Good marketing and merchandising ideas rapidly spread throughout the e-commerce community and are adapted to different market situations.

For example, recently introduced a circle-of-influence feature enabling readers to access the best sellers in their hometown. There is a wide applicability for this feature. For example, a Web apparel store catering to teen-agers might post the top-10, hot-selling accessories in cities across the county. Not only could teens keep tabs on their local scene, they could check out trends in trend-setting cities like San Francisco and New York City.

In the end, what differentiates a Web store from its competitors is not the originality of an offering, but its execution. As we remind our clients, “If you can’t be first … be the best.”

Define present and future needs. The secret to developing and implementing an effective e-commerce solution is to set realistic and affordable goals while building an infrastructure that can facilitate and support future growth.

Inexperienced Web designers can build a store that works fine during the launch stage when you’re market-testing a few products. But what happens when your Internet business picks up, and you attempt a full product rollout of hundreds or thousands of items? If the e-commerce platform wasn’t built to scale to this type of volume, you will have no other choice than to start the design and development process over, losing valuable time and jeopardizing your brand image.

The other common error of less-experienced Web designers is to build Web storefronts with all the bells and whistles that few visitors can use. While multimedia capabilities are one of the Internet’s big selling points, a retailer also must be aware of the limitations of today’s Internet browsers. The most exciting special effects – animation, 3-D graphics and audio/video – are of no value if the average visitor can’t use them. Requiring visitors to download special plug-ins and add-ons can backfire. Let’s face it, you have to be very motivated to wait five to 10 minutes for a Java Applet tool to download. The “World Wide Wait” is not – nor ever was – an endearing term.

A seasoned e-commerce solution provider will lead you through the process of evaluating your current and future needs. Unused resources are expensive, while having too few resources can do irreparable harm to a fledgling online enterprise. A system that crashes at the height of the holiday shopping season can cost an online merchant dearly both in revenues and reputation. To avoid this, the solutions provider must determine your minimum performance and bandwidth requirements by your projected customer base, peak and seasonal usage, and then test the uppermost capacity range with full-scale simulations.

Market-proven methods should be put in place for launching the Web store and introducing new features and functionality as needed. A system of measurements should be established to benchmark your site’s performance at every phase of growth. Contingency plans must exist for dealing with unusual surges in traffic and sales activity, as well as for minimizing service disruptions when adding features or functionality.

Selecting e-commerce software and solutions that support your online marketing and merchandising programs are critical to the success of any e-commerce site. Therefore, before undertaking any concrete plans, make sure you fully understand your online retailing mission and business goals. Simply stated: Plan before you build.

Kimberly Williams is vice president of R.R. Donnelley Online Services, Downers Grove, IL. Her e-mail address is [email protected]

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