What are the six main pillars of a successful e-commerce business?
There are plenty of people starting e-commerce businesses, and for the majority of the people starting, they think marketing is everything.
Although excellent marketing execution is a huge part of the success of an e-commerce business, it is not the most critical part.
I want to break down what I think are the six pillars of a successful e-commerce business:
1️⃣ Product: you can have the best marketing team in the world, but if your product sucks, you'll fail. A great example of this is Google Glass.
Google is one of the most successful companies in the world, with some of the smartest employees and they also had an unlimited marketing budget.
For some reason, Google Glass still failed. Why? It wasn't a great product.
When it comes to product selection, research is vital to understand what your ideal customer's problems are, what keeps them up at night and what their desired situation is.
Your product should take them from their current situation to their desired situation. That's the definition of a great product that sells itself.
If a product takes your ideal customer from their current situation to their desired situation, regardless of how bad your website looks or how terrible your marketing is, you can still sell that product.
2️⃣ Customer Service: Having your customer service dialed in is crucial if you want to build a long term business. As you grow your business, problems are going to arise; customers are going to have trouble with your product or your website.
Having a solid foundation in place to serve your customers will keep you in business for a very long time.
As you expand your e-commerce empire, your social channels will naturally grow, and your customers will want to ask you questions on different social channels. Why? Customers have the right to use whichever channel they prefer to interact with you.
So as a brand you should aim to serve those customers on every channel almost instantly. It's important to acknowledge that it'll be unmanageable, but most social platforms have allowed businesses to set up AI-powered chatbots to automate frequently asked questions.
Combining automation and human power is the key to optimal customer service efficiency. The mistake you want to avoid is having automation without a human managing it.
Automation works, but it won't get the right answer to your customer all the time and also it may not know the answer for unique questions. Humans are great at that so have humans take care of the rest.
3️⃣ Marketing: Open and they'll come. As a business owner, those are the last words you want to live by. Let me break it to you. If you open, no one will come other than your parents and maybe a few friends that's it.
So marketing is very important to bring in cashflow. Cashflow is the lifeblood of any business. Without cashflow, you don't have a business, and without consistent cashflow, you have a hobby.
The most reliable way to have consistent cashflow is by leveraging paid marketing. With paid marketing, you can drive targeted potential customers to your website at will.
Consider targeted Facebook, Instagram, Pinterest, Twitter and Google ads.
Free marketing strategies such as blogging, social posts, podcast, shoutouts are unsustainable and require you to rely on human power to drive growth for your business.
You can never estimate how much you'll make from free marketing initiatives, but with paid marketing, if you put in $1 and get $2 back, you can do it over and over again.
Paid marketing is trackable and predictable so that's what you should rely on.
4️⃣ Financials: Knowing your numbers is key to running a successful business. It's not just about your website numbers, your production and manufacturing numbers are also just as important.
You have to know how much it costs to make every single product, how much it'd cost to bulk order products to save money depending on demand and more.
Then your website. How much does it cost you to acquire a new customer, what's the average order value, what's the lifetime value, what's your returning customer rate, how much traffic do you get per month, what's your conversion rate, what channel makes up most of your orders, what are your top performing products and more.
Luckily most platforms today auto calculate those numbers for us and make it super easy to access them. You need to be looking at these numbers every single week.
Depending on what your goal is, assuming it is growth then looking at the number of orders per month should tell you if you are on the right track.
If it is profitability then looking at your average order value, cost per acquisition and more should tell you if you are on the right track.
You have to know your numbers.
5️⃣ Logistics: This ties directly into my last point of knowing your numbers. What's your shipping costs, how much inventory are you ordering, should you order more, should you bulk ship order and save? Knowing your numbers helps you ask the right questions, and it makes it easier to make smart decisions.
Shipping and logistics are very important as they can have a significant impact on your margins. Knowing your numbers is key to making the right decisions here.
It's important to evaluate your numbers all the time and depending on what your goals are; you can make smart decisions that optimize for that goal.
6️⃣ Branding: This will stop you from becoming a commodity. A brand is a business that has built a community of engaged customers who are loyal to that business.
Even though those customers know they could buy that same product somewhere at a lower price point, they choose to buy from the brand.
Branding is about building a meaningful relationship with every single customer at scale. In order to do that you need to know exactly who your customer is and how you engage with them.
You need to know what makes your customers tick. From there, every decision you make needs to be in favor of the customer. The moment you stop focusing on the customer is the moment you'll start to fail.
That you means you need to hire the right people to make the right decisions. In order to hire the right people, you need to have company values and brand guidelines. For example, what are your colors, your fonts, what can you say, what will you never say, and more.
If you don't hire the right people that believe in your company values or follow your brand guidelines, you will make the wrong decisions almost every time.
In conclusion, as an e-commerce business owner, you need to be full stack. Meaning, you need to know everything about your business.
It's common to outsource different parts of your business, but with you as the leader, you need to know all components of your business and how they affect each other.
That's the recipe for a successful and thriving e-commerce business.