By Al Moore
Marathon Consulting
You have a great product. You are confident the demand for it will be strong. Launching an E-commerce website to handle product sales appears to be a viable approach. Now what?
Launching an E-comm site is neither as daunting nor as simple as it might appear. While there are risks, there are also several basic steps that you can take in order to avoid those risks. The steps are:
- Set Your Expectations for the entire scope of the initiative.
- Define “The System” requirements in as much detail as practical.
- Select your Storefront Software carefully—this choice carries a significant level of risk.
- Make it easy for your customers to find you—they cannot buy from someone they cannot see.
Each of these steps can be executed with just a little time and concentration. There are plenty of resources from which you can draw support. You might not describe it as “easy.” But if it were easy, anybody could do it.
SET YOUR EXPECTATIONS. This is fundamental, Business 101 stuff. The more fully you can describe your expectations, the greater your probability of success. Typical components include:
The Customers. How broad is the market that you want to reach? Who will be the customers and why will they buy from you? Is it a seasonal market? What are their expectations?
The Competition. Who are they? How do they go to market? How will you distinguish your product from theirs? How will you compete with them—price, quality, customer service?
The Products. If you are already selling through a physical storefront, which products will you sell online—the entire product line, or a selected set of SKUs? How will you price your products? Are there any constraints in your supply chain or manufacturing process that might impact online sales?
The Money. Be specific about your sales goals and the expected level of investment. What is your break-even point? Will you be under pressure from one or more investors? What will an effective, integrated marketing campaign cost?
The Risks. Identify them and take specific actions to mitigate them. If you are already selling this brand, what are the consequences of a failure in the E-comm initiative?
DEFINING REQUIREMENTS FOR “THE SYSTEM.” This is an extremely important step. When more time is spent here, the probability of success increases dramatically. Your website and store make the all-important first impression on the customer. This must be done well. System functionality can be split among eight areas:
- Customer Management
- Product Management
- Store and Website Administration
- Order Processing
- Payment & Collection Processing
- Shipment/Fulfillment
- Inventory Control
- Management Reporting
There are a few “musts” associated with a successful requirements definition effort. They are:
Include all project stakeholders in the discussion of requirements.
Be specific and unambiguous—state the requirements in terms of “the ability to….” For instance, “the ability to display ‘Available-to Ship’ inventory counts when a product is displayed.”
Assign priorities to each functional requirement—use a simple, three-tier hierarchy:
- Must Have – the business cannot function if the system will not do this.
- Nice to Have – the feature adds value, but the business can live without it.
- Limited Need – the feature does not add much value and should not influence the decision.
- Strive for consensus – disagreement over requirements can doom the initiative.
- Document the requirements and priorities—use them to evaluate and select the software and establish processes.
A good starting point is to gather several features lists from several software vendors. These will help align your thoughts and introduce features that might not come to mind otherwise.
SELECTING THE STOREFRONT SOFTWARE. While it is impossible to eliminate all risks inherent in this step, there are “best practices” that can be leveraged to mitigate the risks. A key consideration is the fact that a software functionality problem, discovered after the storefront launch, can be catastrophic. The impact goes far beyond the cost of replacing the software. While the cost of replacement software might only be $1,500 or $2,000, the cost of re-implementing can be tens of thousands. Re-implementing a package can take you out of the market for a long time. Disappointed customers can be lost forever. Internal disruptions can be significant.
One of the earliest steps is to determine what software is available, and affordable, to your business. Resources abound on the Internet. Look at what your competitors are using. Ask around.
Another critical step is to be relentless in the use of your requirements list. Functionality is the single most important factor in selecting software.
Careful consideration should be given to the licensing approach that the vendors offer. Hosted solutions typically offer the software on a monthly “per-user” fee basis. They have the lowest startup costs, but can be expensive if your business grows. A hosted system is often less flexible than a system offered on a perpetual license basis. A perpetual license offering usually requires a significant, up-front licensing fee, as well as ongoing maintenance fees. However, they usually offer a lower “total cost of ownership” in the long run.
Technical considerations can affect the long-term viability of the system. Under a perpetual license, it is often possible for you to acquire the application source code. Even if you have no plans to modify it, you should always acquire the source code. Doing so gives your organization the ability to modify the application whenever needed. You also have a great deal of protection should the software vendor cease business or be acquired by another company. Escrow arrangements are worthless to a small business owner. Avoid them.
Defining software requirements and selecting the storefront software are both areas in which the use of outside help can be valuable. Consulting firms offering such services typically have an established methodology and are experienced in its use. They are accustomed to performing in the role of a change agent and be a great help overcoming internal disagreements and developing a consensus. They often assist the buyer with purchase negotiations. If you opt to use the services of a consultant, ensure that the firm does not sell any software packages. Otherwise, they will probably be biased toward their own package, making it impossible to get a meaningful recommendation based solely on your requirements.
MAKING IT EASY FOR CUSTOMERS TO FIND YOU. If a potential customer cannot see you, he cannot buy from you. One of the most common pitfalls of E-comm initiatives is the belief that merely launching an attractive, functional storefront website will lead to sales. Unless you have a well-known national brand, you need more than a website. You need to take proactive steps in order to drive prospects to your site and convert them to customers.
Three of the most commonly used techniques to drive traffic to a website are search engine optimization (SEO), pay-per-click (commonly referred to as SEM or PPC) and social networking. A fourth option, internet advertising (banner and tower ads), is also popular. These are areas requiring special skills and are better addressed in an article on advertising.
Now, about that Business Plan…
Al Moore is the president of Marathon Consulting, LLC, a Virginia Beach-based Information Technology firm. Marathon specializes in the design and development of complex Websites, Web database applications, Internet Marketing campaigns, and Enterprise Reporting solutions. Marathon also provides a range of IT Advisory Services, including IT Assessment and Planning as well as Packaged Software Selection. You can learn more about Marathon at www.marathonus.com.
