Here at Vaimo, we have a very clear understanding of how to get the best return on your investment when launching your eCommerce site. So when clients ask me how to invest in their online stores in a sustainable way, I always bring out a few points that I recommend them to focus on - prioritise, test and spend smart.
Time to market is key!
At Vaimo, all new projects start with a pre-study where we determine what the requirements and goals are for a new online store and advise on how to best reach those goals. What I often experience, particularly with the first time eCommerce businesses as well as with known brick and mortar brands, is that many of them still ask for projects with extremely fixed scopes and functionalities that are not particularly prioritised to drive value.
What they ask is essentially ‘a waterfall approach’ to software solution delivery, which is still very commonly used amongst eCommere solution providers. However, if you want value for money, it really isn't the way to go. This kind of approach tends to lead to a situation where merchants spend too much of their budget on the initial eCommerce project and very little on fine-tuning their site after the launch. This is unfortunate, because making educated decisions based on real-life data after the launch is so much easier than spending time and money on trying to set up enough realistic user tests during the implementation phase.
A more sustainable, agile, way of working would be to limit your initial project scope and delivery time by determining the highest priority features for your eCommerce site and launching something of great quality faster. Of course I don't mean that you should cut out business critical features or functionality that your brand depends on. Every project is different, but in general, I would say try to avoid eCommerce projects that take longer than 12 months to reach the initial go-live. Depending on the size and complexity of your website, you should aim to launch it in 3-9 months.
After all, time to market is the key in eCommerce - we all know it. A smaller initial launch can be followed up with testing, tweaking and optimisation, this makes more sense in the long run. Ecommerce and retail landscapes change rapidly and a successful merchant needs to keep up with the trends. At the same time, a smart merchant only spends money when it’s possible to make decisions based on real information and testing.
Something I would like to stress about eCommerce projects is that - saving money and time on the initial go-live really means that you should invest into the continuous improvement, testing, optimising and maintenance of your new eCommerce site, post-launch. This is where spending can bring in real returns for your eCommerce business.
No clients, no profits!
Despite the fast launch, all the great features and a beautiful design there isn't an eCommerce site out there that can start bringing in profits unaided. The goal for your business is selling value to customers, but if customers never get to know your brand or find your online store, they can’t buy your products. The riddle is - how can you make sure that when you finally launch your site, you'll actually start making money?
The answer to your problem is sustainable budget allocation. When starting an eCommerce project, a lot of merchants plan the biggest portion of their overall budget towards the software project. However, marketing and customer acquisition activities are just as important for bringing in the sales. Unfortunately, what I have seen is that budget allocation to these areas is often understated, especially in the first year of running the eCommerce site. This misalignment of funds might eventually become a big problem and impair a successful launch - i.e when most of the budget has been spent on the IT project and the client doesn't have enough funds to actively attract customers to the new site.
To be fair, determining how to allocate your budget isn't quite as simple as just spending more on customer acquisition activities. There is an interesting tendency with well-known brick and mortar brands who are launching their very first online stores. These brands don't have problems with acquiring enough traffic, rather, they have issues with acquiring traffic that actually converts.
The main problem for these brands is that most people aren't used to navigating to their websites to buy. Customers may want to check out a location of their offline store(s), the opening hours or other information. But since the customers aren't used to being able to buy online on the brand’s new site, they won’t convert. It takes about 3-6 months before the customer acquisition pattern starts to change and people get used to buying online rather than going to the brick and mortar store. For a smart merchant the signal should be clear - in order to have the best outcomes after launch, you need to start with marketing campaigns already a few months before go-live to build a converting customer base.
When determining how much to spend on the initial IT project of your online store and how much on marketing efforts, your best bet is looking at which industry you are in, which market(s) you serve and how well-known your brand is. The most successful merchants are those who prepare their customer acquisition strategy and start marketing campaigns already a few months before the big go-live. This makes it easier to build a solid customer base and estimate the amount of resources needed to reach your online targets.
It’s not exactly rocket science but building a sustainable eCommerce business can definitely be tricky. The goal should always be to prioritise and spend your budget on things that drive the most value for the longest time. Data-driven decision making is your biggest helper here - in today’s eCommerce there really isn't a place for “gut feelings” and “hunches”.
Of course, I can’t provide you with absolute truth. Rather, I'm sharing some observations and my own experiences gained from working in eCommerce solution delivery industry for more than 7 years. But all in all, I think that by following a few simple guidelines, it’s possible to launch a successful eCommerce business without discovering yourself with an empty purse half way through.
Focus on time to market! Launch your online business as fast as possible and take it to the next level by investing into continuous post-launch testing, tweaking and optimising.
Focus on marketing and customer acquisition activities already before the big go-live. A successful launch depends on attracting enough customers who actually convert.
David Holender, CEO at Vaimo