Launching and running an E-commerce business are tough tasks. E-commerce business owners face a ton of competition these days. While several tools assist you in creating more efficient businesses, a side-effect these tools have had is lowering entry barriers.
As a result, you must repeatedly invest in business infrastructure to ensure competitiveness. In addition to infrastructure, there are other pillars that every successful E-commerce business has. Here they are in no particular order.
Cash flow, revenues, income, working capital. Whatever you want to call it, cash is central to an E-commerce business’ health. Without cash, you cannot pay expenses or conduct the various activities your business needs. Capital is scarce for most E-commerce business owners despite the presence of several sources of capital.
Whether it’s venture capital or a personal loan, every option comes loaded with caveats. Whichever option you choose, you must prepare in advance and meet the needs that an investor or creditor will have. Growth planning tools such as the ones offered by E-commerce funding startup 8fig will help you project cash flow needs and payouts.
8fig’s growth planning tool also gives you access to the company’s supply chain-based financing. Instead of receiving a lump sum of cash upfront, 8fig uses your growth planning projections to inject cash into your business just when you need it. Your plan is fully customizable and you can finance up to 90% of your supply chain costs.
In addition to 8fig’s supply chain financing model, you can opt for revenue-based financing or receivables financing. Both these methods place a premium on you projecting your cash flow. So always use growth planning tools to accurately map your needs.
Your supply chain is critical at all times. The slightest disruption will create customer dissatisfaction and leave you with lengthy refund requests. Take the time to design your supply chain instead of rushing in and doing what the average E-commerce business owner does.
For instance, most owners begin looking for manufacturers in China by default, citing low manufacturing costs. However, they neglect the impact Chinese manufacturing has on delivery times. You can engage the best fulfillment services, but it takes time for goods to physically move from China to the rest of the world.
If your customers are not located near China, will they accept lengthy shipping times? If not, how much brand damage are you creating? Relocating to a place closer to your customer base is a smart move since it will likely boost customer lifetime values and increase repeat purchases.
Fulfillment is another portion of the supply chain that is often unaddressed. What are the inventory facilities at your fulfillment center like, and can they accommodate increased supply? For instance, if you want to stock up on goods ahead of time to combat the holiday season rush, can your fulfillment partner rise to the challenge?
Dissect all portions of your supply chain like this and always evaluate conditions using the customer lifetime value metric.
Customer service is another aspect of your business that boosts customer lifetime value. Setting up customer service is challenging since your customers might be spread worldwide. If you’re a smaller business, you can get away with specifying fixed times to reply to customer queries.
However, you must work to install 24/7 customer service. Typically, owners choose to work with a service provider that offers multi-lingual support. Make sure you evaluate their credentials thoroughly and vet them for past performance.
It’s best to make their job easier by creating standard response templates. For instance, define a glossary of words that must be used, along with phrases or language that they must avoid. Keep your customer service language consistent with the rest of your business.
For instance, if your website is extremely formal and uses copy of that nature, installing a casual tone on customer service will likely put your customers off. Creating a style guide will help you craft uniform communication standards and offer customers a seamless experience.
Returns and dealing with product complaints are tricky subjects in the E-commerce world. Smaller business owners ironically have it easier since they have a quick insight into their margins and have the flexibility to make ad-hoc decisions.
Larger business owners are forced to standardize reverse logistics operations, and this might lead to unprofitable decisions. For instance, insisting that a customer return an item might create a loss since you must absorb 3X shipping costs.
You can disincentivize returns and refund money to your customers, but how will this impact your margins? Take a deep look at your costs and rely on analytics to make the best decisions. Reverse logistics also create issues for your shipping partners.
Some will flat out refuse to implement reverse logistics while others might charge you more for the service. Whatever your choice, make sure it doesn’t leave you short of cash.
Pillars to success
While E-commerce businesses face multiple challenges, ensuring you tick the boxes in these 4 areas will increase your odds of success considerably. Follow the tips in this article to ensure you’re never caught by surprise and always examine the details of these functions thoroughly.