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Being a small online retailer comes with a lot of challenges, but that doesn't mean it's impossible to create a successful e-commerce business — it just means you need a strategy that can compete with your bigger competitors.
So how do you turn your online store into a huge success? Henry Kim, CEO of commerce application service company Symphony Commerce, shared his tips for an effective e-commerce strategy.
The key, Kim said, lies in mastering four different components: online branding, marketing, fulfillment logistics and shipping costs.
1. Online branding. How you brand your company is the first thing your customers will notice, so it's especially important for smaller online retailers to make sure their branding is effective and consistent.
"A customer's first impression is determined by your branding," Kim said. "A consistent brand message sets you apart from an increasingly saturated market where the barriers to entry are continuously falling."
Your brand should reflect the values and priorities of the customers you want and turn away the customers you don't want, Kim said.
"A great brand is hard to build but easy to squander, so make sure that all your business efforts are aligned to your branding strategy," he added.
2. Marketing. No matter how great your product or service is, you'll get nowhere without good marketing.
"Marketing is the lifeblood of your business," Kim said. "Even if you have a great product, great customer service, great retention and great organic growth, the question you should ask yourself is, 'Do I want to reach my next revenue goal faster?'" If your answer is yes, Kim said you should invest in marketing.
Kim also noted that it's easy to measure return on investment (ROI), making your marketing strategy one of the safest investments you can make in your business.
3. Fulfillment. Of course, fulfillment is very closely tied to customer satisfaction, which Kim notes is not always easy to get right when you're still a growing brand. This is especially difficult for small online sellers as compared with bigger retailers.
"Amazon has already set the bar on the level of service your customers expect," Kim said. "This means same-day fulfillment and incredibly fast shipping."
Meeting those standards will keep your customers happy and benefit your business in the long run, too.
"If operationally you’re having a hard time meeting these expectations, you end up eroding your customers' goodwill and reducing the chance of repeat purchases, which means you have to pay those customer acquisition costs all over again," Kim said.
4. Shipping costs. Shipping is usually one of the top marginal costs of running an e-commerce business, Kim said, and many brands are put into a position where they lose money on shipping.
"Streamlining shipping processes frees up working capital to reinvest into initiatives that will move the needle for your business," Kim said.
Kim also suggested that, if your shipping costs are low enough, you can give free shipping to a subset of your customers as part of a marketing campaign — for example, if they spend a certain amount of money, their shipping costs are free.
What you charge for shipping is more important than you might realize.
"Shipping actually helps you close a sale and becomes a part of the marketing budget rather than a cost center for a subset of customers," Kim said.
The most important thing to remember, however, is that all four of these components need to work together.
"Since the workflows of these business areas are intertwined in e-commerce, it’s impossible to achieve success in one area without paying close attention to the others," Kim said.
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