01 Oct Looking Forward to the Future: How Traditional Businesses Can Pivot Towards E-Commerce
Recently, some of the biggest brands in the brick-and-mortar retail space have launched aggressive e-commerce initiatives aimed to capture additional sales by competing with established online retailers. Big-box retailers like Walmart and Target are investing heavily in expanding their own digital sales platforms, going after groceries, clothing, and more to compete with Amazon’s expansive product offering. Every day, more and more competitors emerge in the digital marketplace; some companies are larger, more established businesses and others are smaller, disruptive innovators hoping to alter the trajectory of e-commerce forever.
Small business owners can take advantage of the widespread popularity of online shopping to reach more customers. Building a digital brand presents a unique opportunity to engage with the market and instantaneously convert online traffic to sales. Established retailers have an advantage in that they already have a product or products and supplier relationships. Thus, converting to a traditional / e-commerce hybrid is often relatively easy with the addition of simple logistics processes.
The risks are minimal, and the growth potential is tremendous. As with any business decision, it is important to understand the metrics that govern an e-commerce platform’s success. Here are a few things to consider:
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In many cases, the main source of competition comes from within a product category. Not all products sell well in every market. It may be easier to sell kitchen appliances in a physical retail store than online. Also, hybrid businesses compete on two fronts, in the physical and digital spaces they occupy.
That said, if a product is well-suited for e-commerce (it occupies a niche product category, the market has fewer competitors, etc.), then launching an e-commerce campaign could very well be worth the effort.
Web Design and SEO
Amazon is a great place to sell and many established brick-and-mortar retail stores use the FBA program to alleviate some of the pressure on their own warehouses and shipping infrastructure. However, best practice is to pivot away from third-party platforms and build engaging, user-friendly websites with a built-in e-commerce backend.
Hybrid companies can capture a larger share of the profits by launching stores with Shopify and other e-commerce tools. Consumers value ease of use and accessibility above all else, so web design should be clean and intuitive. Checkout should be as easy as clicking a button and customer service representatives should be readily available to answer any questions.
Again, this is where traditional businesses have the advantage. Part of their sales infrastructure includes customer service personnel and they can be adapted to service online customers.
The trick is to convert digital traffic to sales on the e-commerce website. Entrepreneurs can organize a marketing campaign to appeal to new customers and encourage repeat business from old customers. An email drip or nurture campaign often helps nurture more sales from existing customers or customers who are on the fence, and PPC advertising helps spread the word of the brand.
Good copy is the backbone of any successful marketing campaign. Ensure that each ad targets specific keywords and that the message is direct. Build in a call to action to encourage more sales. Lastly, publish fresh content on the website to create a “lived-in” atmosphere.
E-commerce can lead to rapid growth and companies should be prepared to scale operations to meet demand in order to take full advantage of the opportunity. Considering alternative strategies to deal with increased sales volume is an important part of going digital. Business owners may need to expand their infrastructure as they tackle new online markets and earn more business.
Furthermore, if there is a cutoff point where the current owner(s) does not want to continue to grow the business, that should be factored into their exit plan. A company can only go as far as the stakeholders are willing to take it and the best time to sell a business is while it’s performing well.
For example, an entrepreneur who hopes to retire in five to ten years could launch an e-commerce division to grow the business while preparing an exit, then step away to let a new owner take the company to the next level. E-commerce businesses are highly desirable, especially firms with established infrastructure and well-built websites.
Build to Sell
Each of these factors impacts the value of the business. If going digital will not help grow sales, it is likely not a good idea. Conversely, if a company can be successful selling on Amazon and / or its own e-commerce website, then e-commerce presents a tremendous opportunity to grow and increase the enterprise value of the company.
Entrepreneurs should endeavor to maximize their business valuation because it will earn a better price at sale and will increase profits in the interim. E-commerce, although it should be carefully considered, is often an integral part of this process.
THE NEXT STEP
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