Retail stores need to think about a lot before building an ecommerce website for their business. In this article we discuss three key things to consider before you ever hire a developer to begin coding.
Before building an ecommerce website you need to do each of the following.
- Evaluate the Competition
- Define your Opportunity Cost
- Investigate your Industry
Competitive Analysis
What are your competitors doing online? Take the time to check your competitors. Identify their strengths and weaknesses. What are yours? Take a hard look at your business model as it relates to your competitors.
Who are all your competitors?
Don’t limit your evaluation to your big-box competitors. Check out other independent retailers and e-retailers in your industry. How many competitors sell the same products as you on Amazon?
As you check what your competitors are doing you may decide that you should be doing the same thing online. Or you might discover that you can offer something different.
Find your strategy
For instance, we work with stores in the vape industry and pet industry. After evaluating their online competitors, they each found ecommerce strategies that worked for them.
In both industries everyone is selling the same major brands online. So, the vape store decided to bring in high end manufacturers and sell those online. These were luxury brands in the vape world. By the end of the year, they were receiving orders from as far away as South Korea. The pet store discovered that customers in their area couldn’t order a particular high end organic dog food online. Yet, customers in their market desired these products. The pet store began carrying these products in their store and selling them online for local delivery. It was a hit. They further penetrated their local market. They quickly became the main source for this product in their target market.
A competitive analysis will help you discover the game you can win online. Sometimes, that game is building a better website to attract people to your store.
What are the trade offs?
It is important to consider the opportunity costs of any business decision. An opportunity cost is the trade off cost of doing one thing instead of doing another.
A simple example of an opportunity cost is the choice between making one sales call versus another. If I have the choice between visiting two different prospective customers. Let’s call them Prospect A and Prospect B. Both customers are interested in my widgets, but I can only go to one customer. If I choose to visit Prospect A and he buys $10,000 worth of widgets. I may be happy. However, I later learn that my competitor went to Prospect B and sold her $25,000 worth of widgets. If I had spent my time visiting Prospect B instead of Prospect A then I would have made $15,000 more. That was my opportunity cost.
Because of this business principle, it is important to consider alternatives before making a decision. In our context, how does dedicating resources to an ecommerce website stack up against every other business decision you can make?
Are there better uses of capital allocation in your business?
How could you use your ecommerce budget in other ways? If you budgeted $10,000 a year for ecommerce consider how else you could use $10,000 in your business.
You could spend $10,000 more in local advertising. How many fliers could you run per year? How many videos or radio ads could you run? Does this afford you spots on local television? These investments may be more profitable ventures than building a transactional website. That’s what you need to consider.
Don’t limit your thinking to marketing. How else could you use $10,000 per year in your business? What if you build out another section of your store? When was the last time you renovated your store? Does that $10,000 help you hire another part time employee that you need for a certain department?
Services add value
I’ve worked with a lot of retailers concerned with ecommerce. One thing I always encourage is to consider enhancing their service offerings. Services, like key cutting or dog grooming, cannot be done online.
What are the most common retail services? Depending on your industry consider things like:
- key cutting
- small engine repair
- pet grooming
- pool water testing
- paint matching
- how-to classes
- ring cleaning
- repairs
- appraisals
Quality in-store service offerings deepen your relationships with your customers. These services grow foot traffic. They enhance the in-store experience and convenience of shopping with your business.
There are many ways of reinvesting in your business as retail changes. Everything you do as a business owner represents a trade off. When you choose to do one thing instead of another there is a potential cost. I encourage you to consider alternatives before building an ecommerce website.
Industry Evaluation
Talk to your distributor sales rep! Attend trade shows! Join your industry trade group and read their publication!
There are clues all around you for what is working in your industry. Don’t miss the most valuable resources available to you.
Full disclosure, I work in a lot of retail industries. Currently, I am involved in the following retail industries:
- Hardware
- Lawn & Garden
- Lumber & Building Materials
- Pet
- Sporting Goods
- Farm
- Wine & Liquor
- Equipment & Party Rental
- Apparel
Attend Trade Shows, Ask Questions
Every single industry is adopting tools to compete online. The problem is that many stores do not attend trade shows. What’s worse is that they don’t use their sales reps as a resource for their business.
Trade shows and sales reps are the best ways to find out what other stores like you are doing.
The hardware coops are offering great ship to store programs. Other industries have offered more localized ecommerce options like Orgill’s ‘Promotional Ecommerce’ program. Phillip’s Pet built the ‘Endless Aisles’ program. Other industries promote vendors like Lightspeed that provide great, affordable omnichannel solutions.
It’s hard to know these things if you’re not involved. Rather than trying to reinvent the wheel for your store. Find out what is available and what is working for other independents in your industry.