Expert tips for online merchants to break even and beyond
Given how rapidly e-commerce market changes, it’s important to consider a flexible and back-up plan to address any sudden market shiftsBy Shingo Okamoto 25 Apr, 2014
Global business-to-consumer (B2C) e-commerce sales are expected to reach US$1.5 trillion in 2014, driven by the rapid growth of smartphone and tablet users, improving confidence in m-commerce, and the emergence of innovative yet secure, shipping and payment methods.
To take advantage of this surge in e-commerce, current and potential merchants need to understand how to optimize their businesses to compete in today’s growing and dynamic e-commerce industry.
Here are some tips to help online merchants get ahead of the game, while still providing a differentiated and engaging experience that customers demand.
Planning and finance
As with any business, it is essential to know what you want to achieve and what your action plan is to reach the targets you’ve set. Given how rapidly the e-commerce market changes, it’s important to consider a flexible six-month plan, as well as a back-up plan to address any sudden market shifts.
However, developing a plan is only part of the equation. To truly understand if you’re making an impact and breaking even, one needs to set and monitor specific KPIs. Whether you’re looking at Gross Merchandise Sales (GMS), site visits, conversion rates, or the average order volume, you should monitor KPIs on a daily or weekly basis to see what is or isn’t working and how you can improve your business. To determine when you’ll hit your breakeven point, take a step back and see if you are meeting your targets on a quarterly basis. This won’t be the only factor to consider, but it definitely is an important one!
Another important thing to note about the data from metrics as conversion rates and average order volume is that it tells you a lot about the behaviour of your customer, and at Rakuten we believe it’s important that merchants understand how to interpret the data in order to optimise their shop page as well as promotional activities and campaigns. Our eCommerce Consultants (ECCs) assist merchants in this regard which in the long run greatly assists the growth of the merchant’s business.
Owning an online business gives you the chance to reach multiple audiences, but the key to success is understanding who you want to target, what they want to hear, and how to engage them.
Let’s look at an online toy merchant as an example. Although children are the ones that will actually enjoy the toys, it’s obvious that parents are the number one target audience, and they have limited time to dilly dally around. They need to get things done quickly and at a reasonable price. To address these needs, it would be ideal for a toy merchant to highlight its USPs that will gain the parent’s attention, whether it is the brand’s reputation, quality products at the best price, or a high level of customer service.
Other ways to target your customers is through promotions, and not necessarily price discounts. Seasonal campaigns are very effective (i.e. school holidays and Christmas are perfect for toy merchants), but this varies from merchant to merchant. Depending on your business, you need to do what’s best to acquire new shoppers and cater to existing ones. As long as your campaigns are fresh and attractive, you can explore daily, weekly or monthly campaigns and evaluate what works best and when.
Once again, depending on what products you are offering, it’s also wise to leverage social channels that buyers use to support your e-commerce efforts. For example, Rakuten’s Shop Together encourages people to ask their friends for their opinions while viewing the same product, enabling them to mirror the experience of asking their best friend’s opinion. This may not lead to direct sales, but social networking sites can help promote your brand, improve customer loyalty, provide buyers with insights from their peers, and provide you with market insights to help improve your business.
Service & Fulfilment
Providing good customer service is one of the best ways to differentiate your business from the rest of the crowd. At Rakuten, we believe in a principle called Omotenashi that embodies a service that anticipates the needs of a customer in advance and goes above and beyond in terms of service quality – and also encourage merchants to do the same. This also includes working with the best partners to ensure fast delivery and secure payments.
Take it a step further and develop your customer’s trust in you by sharing your brand story, your vision and having open channels to communicate with them. According to the Rakuten Smart Shopping Survey, 40 per cent of consumers reported that they rarely or never interact with merchants when they shop online. While you may already offer a general contact email address to answer questions about products, it’s important to provide consumers different channels for engaging with you, including social media like Facebook and live chat options so that potential customers can receive real-time answers to their questions.
The B2C e-commerce market continues to grow and is expected to hit $2.34 trillion in 2017. Businesses that catch the current wave of growth in e-commerce, and empower themselves with the tools and opportunities to run their businesses online, will be best positioned to succeed in the future. Those that miss the wave may never get another chance.
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