Today, every generation is shopping online, a paradigm shift in consumer behavior that is here to stay. Fortunately, creating an online-first business with cross-channel distribution is now faster than ever.
Early on in the pandemic, L’Oreal unveiled an ambitious growth strategy. They announced their target to have digital sales comprise 50% of revenues and 80% of consumer interactions. Today, digital sales comprise only 24% of L’Oreal’s overall strategy, but by making use of new digital tools, technologies, and platforms, the company is dominating the beauty industry and future-proofing their business for long-term success.
So why this ambitious move? The statistics tell all. Consumers spent $861.12 billion online with U.S. merchants in 2020, up 44.0% year over year (Digital Commerce 360). That’s the highest annual U.S. e-commerce growth in at least two decades and nearly triple the 15.1% jump in 2019. During the pandemic, the business has been booming for those who have taken advantage of the situation, marking a 2 to 3 digit growth.
The sudden convenience factor of being able to shop for everything online means that consumers, used to quick and easy online services, will continue to seek this out. It can’t get easier than click-to-shop.
Moving forward, e-commerce will be a priority channel for all businesses to thrive in today’s climate that has ushered in a new era of digitally-native and digitally-adapted consumers.
Regardless of company size or audience (B2B or B2C), in just a few simple steps it’s possible to set up your e-commerce business.
Step One: Perform a Diagnostic
The first step is a rapid diagnostic of your current business. Assess the competitive landscape, inventory, and assets to determine the tools and scope of resources needed to create your digital-first business. Here are a few recommendations for this phase:
Review your existing assets such as digital properties, online platforms, and potential partners for the delivery of your e-commerce store. Evaluate key metrics and KPIs, and compare these to competitor and peer offerings. Define the customer journey, user interface, and clear brand guidelines for the online storefront. If your current system is incompatible with benchmark widgets and add-ons, consider upgrading your platform for growth and modular iterations.
Inventory and Supply Chain
Audit the supply chain, analytics, and customer service capabilities and compare them to market standards. Report on fulfillment operations and warehouse management to assess its capacity to scale. Estimate demand levels to determine if a 3PL (third-party logistics) fulfillment partner may be required.
Marketing and Support
Analyze your back office, aggregate and assess analytics, and funding for customer acquisition.
Develop a media plan to drive the acquisition of new consumers and awareness among existing consumers.
During each of the tasks above, delegate tasks with clear milestones, expectations, and timelines to prioritize efficiency and optimize results.
Step Two: Adopt a Fast-Paced Mindset
During each phase, it’s important to move quickly to develop your MVP. With these steps in mind, it’s possible to be highly effective:
Focus on Speed
Your team will operate in an agile environment where they use analytics tools and measurable KPIs to test learn and iterate. They will learn quickly, and in some cases, even take on new responsibilities as the company transitions from in-store to online customer service.
Define Workstream Ownership
- technology and design to build out the online storefront,
- logistics for fulfillment operations, warehouse management, and scaling
- planning for digital-first marketing
Test, Learn, Iterate
Build your e-commerce platform by working with newly available tools, infrastructure, and partners. Use analytics and measurable KPIs to continuously improve and funnel growth and customer acquisition.
Step Three: Stand-up an End-to-End E-commerce Business
Step three is about optimizing your e-commerce business.
This means planning your digital storefront, implementing third-party logistics (3PL) to outsource inventory management, warehousing, and fulfillment to reduce costs and automate the process.
This phase takes place in key geographic regions, with a limited number of SKUs for the transition. During this phase consider:
Choosing an E-commerce Platform
E-commerce websites, like Shopify for example, need little technical knowledge to launch, operate, and maintain. By choosing the right platform, you can focus on your business first, reduce costs, elevate the consumer experience, and stand out from competitors.
Expanding to online marketplaces like Amazon, Walmart, Target, eBay, Etsy and establishing vendor partnerships can play a vital role in boosting sales for digital commerce offerings with a built-in audience and demand.
3PL offerings include pick, pack, and ship capabilities, seamlessly connecting storefronts to marketplaces for a wide variety of SKU-types sold online.
Online-first success is driven by targeted paid media. Online transactions mean accessing unparalleled insights into customer behaviors, where they are, and how to reach them. Use paid media offerings and ad platforms to gain real value from your advertising spend through tools like Google PLA’s (Product Listings Ads) and LIAs (Local Inventory Ads).
Product Information Manager
Online tracking also means greater insights into your company’s most popular products and services. Product Information Management (PIM) will carefully store descriptions, datasheets, images, videos, and other data that can be seamlessly deployed across multiple digital channels.
Across every step of the value chain, new e-commerce solutions, digital marketing platforms, backend tools, and even fully integrated solutions allow for direct-to-consumer (D2C) brands to own their customer journey.
Step Four: Scale & Optimize
At this stage, you are already in the mindset of a Fortune 500 company like L’Oreal. It’s time to scale and optimize your company for the long term, future-proofing your business.
Data on KPIs will provide invaluable insights to determine the best long-term solutions. It will quickly become apparent where to cut costs and spend advertising dollars in a way that boosts the bottom-line, all while improving customer satisfaction and brand visibility.
When operating across a digital-first storefront, online marketplaces, and digital retailers, solution scaling can include these elements:
Develop an Effective Acquisition Funnel (CAC vs. LTV)
Entering New Acquisition Channels
Expand marketplace activity through paid media, or explore additional opportunities such as selling on Amazing business. Consider larger marketplaces such as Walmart, Target, eBay, and Esty that already have built-in audiences for your products. Conduct market research to identify relevant retailer websites and offer products that may not be available in their physical stores.
If you opted out of 3PL earlier, it’s time to opt in to connect a 3PL with your internal distribution center, the marketplace, and other systems. Use software that can integrate with Enterprise resource planning (ERP) programs that help to manage day-to-day business activities
For companies that serve business customers or need a password-protected storefront, functionality will have to be developed to provide these options, including PIM and DAM (Digital Asset Management) tools to house product listing details.
After these simple steps, your e-commerce business can launch. With the right partner, it’s possible to execute this process in just 6-8 weeks, driving significant, long-term value.
It may seem like a number of complex steps, but the ecosystem of digital tools and resources available for companies to develop and deploy a world-class digital-first business today is easier than ever before.