For e-Commerce Brands, these 2 Factors Impact the Bottom Line

For both start-ups and larger brands taking their company online, e-commerce represents an incredible opportunity.

August 10, 2017
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For both start-ups and larger brands taking their company online, e-commerce represents an incredible opportunity. With 71% of consumers feeling that they can score a better deal online, it’s no surprise that customers are increasingly turning to their phones and tablets to find great deals (even while in-store).

There is a difference between scoring a huge amount of revenue online, and actually remaining profitable. A brick-and-mortar location is only directly competing with the other stores in the area offering the same goods and services. Online, that same location is competing with thousands of other providers with little more than a website and a drop-ship system.

Let’s take a closer look at what it takes to thrive online.

1. The Cost of Utilizing an E-Commerce Platform

The cost of operating an online store involves important calculations of overhead. The variables involved include:

  • Licensing Fees: How much will your e-commerce platform cost in terms of licensing the underlying platform?
  • Custom Coding: Do you need a programmer to customize the platform in order to wow customers?
  • Hosting Fees: Where will your site be hosted? Will it be a VPS or a shared-hosting solution?
  • Domain Registrations: When you register your domain, what is the lowest rate for private registration you can find?
  • Transaction Fees: When a payment is processed by your system, who is your payment processor? Do they charge different rates based on the type of payment?

Most e-commerce reviews use shopify as a benchmark for the broader market of online solutions. The ability for a relative novice to setup a store, using shopify’s premade themes, is an excellent option. But, for more complex brands, with specific needs, a pre-built solution might not be the best way to go.

Perform a cost-benefit analysis to decide whether a custom-built solution is cheaper in the long-run. If you’re a start-up or a small business with limited resources, pre-built content management systems are going to be your best bet. But, if you have a significant budget, custom-built solutions offer the best opportunity to wow online customers with a unique experience.

For example, on one project I consulted on, they realized that they needed a platform that could ensure compliance with the various agreements they had with their suppliers. Minimum Advertised Price (MAP) policies are a common issue that e-commerce companies need to comply with. A website that advertises a lower price than allowed by the manufacturer can be slapped with contractual penalties, and lose the right to carry specific goods or services from a vendor partner.

Pay close attention to the contractual requirements your suppliers have given you. Using a cookie-cutter CMS could mean unintended contract violations, which can have a massive impact on the bottom-line.

2. Advertising Costs & Search Engine Optimization

In the world of online shopping, the almighty Google ranking is an important factor in generating quality traffic for your e-commerce site. When your future customer visits Google and types a phrase into the search box, Google’s primary goal is to answer that query in the most complete and efficient manner possible.

If your website can answer the underlying question that searcher has, in a better way than the competition, you’ve got a real opportunity to earn qualified traffic and score a conversion.

The process for preparing your site to serve Google’s needs is known as Search Engine Optimization. SEO firms vary in cost and quality. According to one publication, you should expect to pay from $99 to $20,000 monthly. This huge range in cost is due to the varying levels of service that brands receive from the SEO teams.

You can probably find a random person on the internet, operating out of an RV at a truck-stop, that will promise to “do SEO” for a hundred dollars a month. But, cost is a secondary concern here. It’s possible that the advertising campaigns and SEO strategies they put into circulation could actually tarnish your brand.

Ask the following questions when engaging an SEO Firm:

  • Can you provide me a few case studies that show your impact on a brand’s online visibility?
  • What results can I expect after spending X dollars with your firm?
  • How quickly can I expect results?
  • Which specific strategies will you use to achieve these results?
  • What will you need from our side of the table as we move forward? (Graphics, Logos, Content, etc.)

With hard-work, an open-mind and a reasonable budget, you can build an e-commerce presence. In my experience, the process takes a few years to really get cooking. As long as you focus on keeping costs low (and the value received for every dollar high), success is only a matter of time.

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