It’s never been easier to get a digital shop up and running, but there are many eCommerce business lessons that operators don’t learn until it starts eating into revenue.
We spoke with experts, scoured LinkedIn conversations, and read far too many Quora conversations on eCommerce, drop shipping, and digital businesses — just to parse out some of the most vital knowledge that can help protect new and growing operations. Distilling all of that down into common concerns and valuable tips for businesses of any size, here are five eCommerce business lessons that many store owners wished they would have known sooner.
ECommerce business lesson 1: Software isn’t the answer by itself
Much of the advice eCommerce businesses, especially startups, receive is to find the right software to address an issue. That can create a “set it and forget it” mindset, which can help as you get things running but also cause long-term concerns.
Your software and tools enable you to achieve different goals throughout the life of your business. There may be a marketing automation service that streamlines creating ads on the marketplaces you sell. Email tools might immediately deliver tracking information to customers after they place an order. A warehouse management platform will tell you the correct box to use and where to put your inventory. And on and on.
The tools themselves may be great. But, many businesses get tripped up because they don’t continually review the suggestions and automation being done after these tools get started. Something as simple as not updating DIM weight calculations from carriers can cause you to pay too much for shipping an order. An update to your eCommerce platform may break an integration. And then, customers get blank emails instead of tracking numbers — something you won’t realize until it’s too late.
Suggested inventory levels based on 2019 data may not address your current needs.
Find platforms that you like and embrace what they offer, but don’t forget to verify that they’re operating well for your business. Check for updates. Review data. Address suggestions that do and don’t apply. When your business changes, from products and price points to fulfillment partners and marketplaces, update your tools and approach. Software is a bright start, but you still need to back it up with human effort.
ECommerce business lesson 2: Regularly review your expenses
Many eCommerce business owners sort operational expenses into two lists: fixed and variable costs. Shipping, unfortunately, complicates this because it combines both. Your business might be able to ship via flat-rate pricing and have a consistent estimate of costs. Or product and order sizes may vary enough that you’re never going to be that sure of what a month’s costs are ahead of time when you’re getting started or growing.
As businesses grow and get into a rhythm, shipping costs become a little easier to forecast, and there’s a temptation to move them close to that list of fixed monthly costs. Generally, companies review these expenses when looking to shift product lineups or during quarterly/annual reviews. Most cost-cutting advice you’ll get here is about slimming down package size and weight or finding ways to stage products closer to customers.
We’ve got a more detailed explanation of these and other methods here if that’s where your business is.
While you’re thinking about controlling costs within your processes, don’t forget to look outside the warehouse and see where partners can help you save.
Everything is negotiable, especially rates
As your eCommerce store grows, re-evaluate your relationships with carriers. The higher your shipping volume and the more reliably you can deliver that high volume, the more carriers will want your business. Scale, and you can often negotiate lower rates with carriers like FedEx and UPS. Even if you aren’t the biggest seller yet, there are three common ways for you to achieve discounts at any given stage:
- Review options available in your eCommerce platform. For example, if you’re running Shopify, there is a Shopify Shipping tool that offers discounts for many U.S. and Canadian carriers.
- Bring your latest shipping data, especially the volume and spend information, to existing and potential carriers. Ask about the best rates available now and what benchmarks you would need to reach for deeper discounts.
- Work with a 3PL like Red Stag Fulfillment and use their volume shipping discounts. Fulfillment service providers should be willing to pass on their savings to you.
ECommerce business lesson 3: Prioritize offers and value
Marketing is essential to eCommerce success, and many companies will focus on their offers in the marketing sphere. That’s a great start, but the offer and value proposition presented to customers should be a driving force behind how you structure your other operations.
Your offer’s value to the customer will drive your ability to generate revenue. That means it plays a role in how much space you can afford to lease, your workforce’s size, and inventory levels you can afford safely. Improving your offer makes it easier to run your business. Because when people want what you offer, they’ll take the necessary steps to buy from you. The value proposition is the follow-up, where you deliver on the promises made in your offer.
Value proposition tells you when you’re ready to expand and scale up with an investment in a new space or partner.
It takes time and focus to optimize your value, but that effort is an intelligent guiding light. When businesses struggle, thinking about their value proposition can help them understand why they might not be getting the traction they think their products deserve.
ECommerce business lesson 4: Simplifying helps you and your customers
“More” is a driving force behind many businesses. You want more customers and revenue, more people on your team, and more tools to get the job done right. More can be a great approach in your early efforts, but there’s a risk that you’ll reach “too much.”
On the customer side of eCommerce, we often see this in the checkout process. Your team wants more data to find customers and optimize offers. So, checkout forms start to get longer or require users to create accounts. Unfortunately, that often drives higher cart abandonment rates because people don’t want to provide that information, or companies present shipping costs later in the process, which often feels like a hidden fee.
Simplifying checkout instead can boost your order rate and give you a better chance at creating repeat customers. Adding carts to every sales or product page and providing fast payment and guest checkout options empowers visitors to buy as well. And making your returns policy less complicated helps people trust your business more.
These steps and other universalization efforts can also improve your operations. Standardizing your product packaging and box sizes, for example, can make it easier to control shipping costs. Packing teams will also be better able to use the right amount of in-fill to protect products. Having established processes for picking can speed up that fulfillment step. And using an inventory and order management system with barcode scanners introduces order verification to prevent mis-picks that can eat into your revenue.
Simplifying the returns process helps you, too, by reducing customer service inquiries and helping warehouse teams learn product requirements for accepting a return.
Look for options to streamline workflows and requirements when a process becomes too cumbersome for your team or your customers.
ECommerce business lesson 5: You don’t have to do it alone
The final lesson that eCommerce business owners say they learn too late is that they don’t need to become a master of everything. Partnerships, employees, and outsourcing can all play a vital role in your growth. Focus on your core values and activities, and then look to existing services and proven methods of addressing the rest.
This approach is why some of the better marketers will start by trying drop shipping, for example. They know how to reach people ready to buy and make a compelling pitch. Instead of then trying to learn how to create a product from scratch, they rely on others to do that development. Over time, they may learn more eCommerce business lessons and shift into a more traditional model. Gaining expertise and discovering partnerships makes it easier.
You got into the eCommerce space for specific reasons and enjoyment, and shipping probably wasn’t one of them. Red Stag Fulfillment was created to address how hard it can be for eCommerce businesses to understand and perform fulfillment tasks. We focused on becoming experts in protecting products in transit, optimizing labor and tools, and controlling costs as companies scale.
Trust the experts who can give you the best fulfillment services and advantages and see how these translate into improved customer experiences and revenue streams. Your business deserves it, and you deserve the extra sleep that outsourcing can provide.