Walmart is one of the largest retailers in the world. With hundreds of millions of customers each week between their physical Walmart stores and ecommerce marketplace, they continue to ramp up their ecommerce presence and improve their ad tech to compete with Amazon and Google.
And Walmart is hot on Amazon’s heels: Between early 2017 and last year [early 2019], Walmart saw 207% growth in its ecommerce buyer base. In 2018, Walmart became the third-largest ecommerce retailer in the United States, with online sales up by 43% in the third quarter of 2018.
.Right now, the Walmart marketplace presents a fantastic opportunity for ecommerce sellers. More than 110 million people shop on Walmart.com each month, and the marketplace has grown 2020 sales at a higher rate than eBay.
In this guide, we’ll cover everything you need to know to make Walmart marketplace a part of your ecommerce growth strategy through Walmart advertising.
Walmart Advertising Needs to be a Part of Your Businesses’ Growth Strategy
If you sell on Walmart and want to improve your digital marketing strategy and reach more ecommerce shoppers, you need to be advertising through Walmart.
This is especially true if you want to target Amazon shoppers: According to Consumer Intelligent Research, the average US Amazon Prime customer spends more than $1,300 a year, and there are more than 100 million Prime members around the world. However many Americans also shop at Walmart or Walmart.com.
Plus, advertising on Walmart can help you reach more in-store customers, too: 62% of Walmart customers say their ad experiences on Walmart’s site or app influence their in-store experience.
Here are some additional reasons you need to make Walmart advertising part of your growth strategy.
1. Measure the effectiveness of your performance ads.
The self-serve advertising portal Walmart rolled out in January 2020 makes it easier for sellers to:
- Target the right consumers
- Measure the impact of their Walmart ads
Lex Josephs, Walmart Media Group’s VP of Sales and Media Partnerships, explained in the official release:
“With 90% of America shopping at Walmart every year and nearly 160 million visitors to our stores and website every week, Walmart Media Group enables brands to reach more customers at scale and measure advertising effectiveness across the entire shopping journey. Now, brands can tap into Walmart’s shopper footprint to get the right sponsored ad experience, to the right shopper at the right moment.”
Walmart claims that this new omnichannel advertising portal offers a closed-loop advertising strategy that can accurately measure your digital campaign’s effectiveness on its site, mobile apps, and in-store.
2. Supports your organic strategy.
Clicks and views generated by your Walmart advertising can boost your long-term Walmart SEO efforts.
Walmart itself has stated that investing in Sponsored Products ads can increase organic ranking. When products get views from your ads, it increases their relevance for the terms that you bid on and that the user searched for. You can also use Sponsored Products ads to give new product listings a jumpstart in gathering data and increasing visibility in the Walmart search engine results pages.
3. Get visibility for new and low performing products.
Walmart.com brings in up to 100 million unique visitors a month. Those visitors interact with the search results page, product detail pages, and category pages — all primary places for Walmart sponsored ads.
Advertising on Walmart can drive visibility for your products, especially new products or low-performing SKUs. Effective, targeted advertising can help get your lesser-known products in front of a wider audience across the site.
How Walmart Advertising Actually Works
Walmart’s self-managed service ad platform enables advertisers to purchase ad space within Walmart’s marketplace directly. This new ad platform works similarly to Amazon’s self-serve advertising.
In the official announcement of the new ad platform, Walmart shared:
“Today, we’re kicking off 2020 with the launch of our Walmart Advertising Partners program to expand advertisers’ direct access to their Sponsored Products campaigns, a bidded auction-based marketplace, giving them more transparency and control. Brands will now be able to increase visibility with Walmart’s diverse, sizable audience of shoppers.”
Walmart has invested in building an in-house advertising platform through Walmart Media Group that lets advertisers buy on-site search and Sponsored Product ads that appear on Walmart’s ecommerce sites and apps.
4 Ways to Advertise with Walmart
All of Walmart’s advertising options operate on a CPC (cost-per-click) model, so you’re only charged when users click on an ad.
Walmart’s ad offerings are similar to Amazon’s Headline ads. Each ad links to the Walmart product detail page for the product advertised.
In this post, we will discuss the following Walmart Product Ads including:
- Walmart Sponsored Products
- Search Brand Amplifiers
- Buy Box Banners
1. Sponsored product in-grid search results.
Walmart’s Sponsored Product ads can help increase conversions and boost visibility for new products. According to Walmart, Sponsored Products are chosen “based on a combination of relevancy and bid” and must be in stock to be promoted.
There are two ad types for Sponsored Products:: In-grid search results and Sponsored Product carousels.
To appear in the in-grid search results, the Sponsored Product must appear organically within the top 128 results and win the buy box. In-grid search results ads look like this:
The ads drive traffic to product detail pages. Brands can set budgets for the ad campaigns; however, the minimum campaign spend for in-grid Sponsored Product ads is $100, with a daily minimum of $50.
2. Sponsored product carousels.
Sponsored Product carousels show up on the search results, category, and product pages. They look like this:
Items promoted via carousel don’t need to rank within the top 128 organic listings; you just need to pay to have your products listed. Sponsored Product carousels are only available for automatic campaigns.
3. Search brand amplifiers.
Walmart SBA (Search Brand Amplifier) is a branded group of products that show up at the top of a search result listing for specific keywords. This advertising placement is managed through the Walmart internal media team and needs at least 4 Base IDs to be booked.
These ads can help your business drive sales and improve brand awareness, which can be a big help for new sellers or brands launching new product lines.
4. Buy box banner ads.
This is a coveted spot that is not directly targetable. It’s possible to win the buy box banner only through automatic campaigns depending on relevance and a competitive bid.
Pro-tip: Walmart does offer additional Display ad options, but keep in mind those ad placements often come with a commitment requirement and higher price tag.
How Walmart Advertising Differs from Amazon
Walmart’s self-serve advertising platform is much newer than Amazon’s and is similar to Amazon’s in its early stages.
But that’s not the only difference. At this time, Walmart offers limited targeting capabilities, centered mostly around keywords and bids. Unlike Amazon, they don’t have audience, page placement type or sales data to use as ad targets in the self-service model.
In addition to targeting and reporting, you should know these three differences between advertising on Amazon and Walmart marketplace advertising.
1. Types of ad auctions.
Walmart uses a first-bid auction, which means that the winning bidder pays their full cost-per-click (CPC) bid. Amazon uses a second-bid auction, where the winning bidder pays the cost of the second-highest bid plus one cent.
This means that brands can wind up paying a lot more bidding on Walmart ads than on Amazon.
2. Bidding strategy.
Different auction types require different bidding strategies.
On Amazon, you can bid high and know that you may not pay your full bid. (Instead, if you win, you’ll pay the second-highest bid plus one cent). This flexibility means that you can bid on less expensive long-tail keywords to drive sales, then bid higher on more competitive keywords to win share of voice.
On Walmart, on the other hand, bidding high can end up costing you a fair chunk of your advertising budget. Instead, start your bid low, then scale them up gradually until you find the right mix of reach and return on ad spend (ROAS). Because fewer advertisers are competing for share of voice on Walmart than on Amazon, brands tend to see a higher ROAS on Walmart when they bid strategically (as opposed to starting high).
3. Auto bids.
Walmart allows advertisers to set automatic campaign bids at the item level, which lets you group similar products into the same automatic campaign and set individual bids for each product.
On Amazon, automatic campaign bids are set at the campaign level. To set product-level bids for automatic campaigns on Amazon, you’d need to set up different campaigns for every product. Walmart’s setup allows for much more specific bidding than Amazon.
5 Steps for Getting Started with Walmart Advertising
By now, you can probably tell that advertising on Walmart can be a great way to get your products in front of more shoppers and drive sales both online and off.
Still not convinced? Take a look at this quote from Elizabeth Marsten, Senior Director of Strategic Marketplace Services at Tinuiti:
“Today, Walmart presents a viable and promising opportunity for brands to expand beyond Amazon. The functionality and performance of Walmart’s self-service advertising platform mirrors much of what we saw with Amazon Sponsored Products when it launched in 2014, where early investors had huge competitive advantages.”
If you’re ready to get started with Walmart advertising, here’s how to do it.
1. Become a Walmart Marketplace seller.
To sell on Walmart’s website as an approved Walmart Seller, you have to apply via Walmart.com.
The application requires the following info:
- General contact information (name, email, company name, website, etc.)
- Business information
- Product assortment information
- Ecommerce and marketplace experience
- Operations information
Once you submit your application, the Walmart team will review it. If your application is approved, you’ll sign the Retailer Agreement and start onboarding as a seller.
“There’s no magic formula for being accepted into Walmart’s Seller program, but there are a few key requirements that brands and sellers should fit,” explains Elizabeth. “These include reputation, sales projections, and alignment with Walmart’s values.”
2. Create a product catalog.
When listing products on Walmart, consider starting with products that already sell well and have positive feedback on Amazon. Our recommendation for Amazon sellers looking to expand to Walmart is to have at least a 95% feedback or seller rating on Amazon and at least 50 product reviews.
Additionally, keep in mind that the following products are prohibited or restricted by Walmart:
- Used products
- Drugs and medical devices
You can view a full list of prohibited items here.
When you create your product catalog, make sure you have the following info ready to add to your product listings in Walmart Seller Central:
- Product details
- Product images
There are three ways to upload your products to Walmart.com:
- Via the Walmart API
- As a bulk upload using Excel spreadsheets
- Through a Walmart channel partner like SellerActive
3. Request to use Walmart advertising.
To advertise on Walmart, you have to submit an additional application. To apply, reach out to Walmart Media Group with the following info:
- Company name
- Contact information
- Number of SKUs
- Product category
- Primary campaign objective
- Target audience
- Desired advertising plan
- Anticipated monthly budget
Approval depends on your company’s performance on Walmart Marketplace; however, Walmart Media Group doesn’t list its performance requirements publicly.
4. Attend Walmart online training.
If the Walmart Media Group approves your application, they will contact you and invite you to a mandatory online training webinar.
Walmart Media Group hosts weekly webinars that cover the basics of the Walmart ad platform, how to create ads, and other relevant information. There is also a live Q&A session at the end of the webinar.
5. Launch your campaigns.
Once you’ve fully onboarded, you’re nearly ready to launch your first campaign.
Before you do, make sure you have a clear plan for your Walmart advertising budget. We recommend budgeting advertising costs for the following strategies:
- Paid advertising to boost organic presence and increase discoverability and visibility
- Digital advertising to improve new product performance
- Target ads to increase the visibility of low-performing SKUs
- Seasonal product ads to take advantage of seasonality spikes
You’ll also need to decide the length of your campaign, which specific products to promote, and how much you’re willing to budget for each specific product.
Once your campaign launches, don’t forget to monitor campaign performance and adjust your strategy and spend accordingly.
4 Best Practices for Successful Walmart Advertising
Walmart advertising is similar to Amazon advertising in many ways, but it’s essential to create a dedicated plan for each platform. Here are four best practices to get the most out of your Walmart advertising strategy.
1. Be mindful when using automated campaigns
Elizabeth Marsten recommends making careful use of Walmart’s automated campaigns: “Automated campaigns tend to perform better over time than manual campaigns, but you need to have at least 10 SKUs in the product group and start by controlling it with minimum bid and ad budgets, working your way up to find that sweet spot.”
When bidding on automated campaigns, try starting your bids at about $0.30-$0.50 and increasing from there. Because they’re eligible for more placements on Walmart.com, automated campaigns can potentially take off quickly (and end up costing much more than you’ve budgeted for). Check on your automated campaigns frequently to keep an eye on their performance and spend.
2. Test keywords for manual campaigns
For manual campaigns, use Walmart’s suggested keywords and test out higher bids for closely related keywords. Try starting your bids around $0.50, and use cascading bids by match type. Cascading bids let you make higher bids on the most closely related keywords, and lower bids on broader keywords.
Also, keep in mind that you’ll probably see lower volume with manual campaigns than with automatic campaigns, and that success for these campaigns is category-dependent.
3. Optimize your product listing and creative
Great ads will get shoppers on your product page, but your product listing content will make them convert. Optimize product listings and product visuals to create better customer experience on Walmart.com
To make the most of your Walmart product listing content:
- Be concise
- Make the value proposition front-and-center
- Use relevant keywords, but don’t repeat the same keyword more than three times
- Include high-quality images that show your product in use
- If your product category allows it, add video
- In the Walmart Seller Center, add product attributes, tagging, and backend keywords
“Detailed content is the best way to convey the value proposition of your product to the consumer. A Walmart shopper is much more likely to convert on a product online when it has clear and concise information regarding its use.” – Megan MacDonald, Senior Advertising Account Manager at Tinuiti
4. Consider partnering with an ecommerce agency.
If you want to ramp up your Walmart advertising quickly and effectively, consider partnering with an ecommerce agency. Ecommerce agencies offer marketplace expertise and experience that make it easier for brands to get started and see results more quickly.
An ecommerce agency like Tinuiti will also have a proven methodology of campaign structure, keyword research and optimization, and product promotion in Walmart advertising, which can take a lot of the guesswork out of the equation. Tinuiti also works directly with Walmart as a partner in product development and business development to improve functionality, features, and scalability of its advertising products.
Finally, an agency can help you optimize campaigns to make your ads more effective and offer creative services to make your ads and listings more likely to convert.
As Walmart continues to ramp up its ecommerce presence to compete with Amazon, it’s never been a better time to start advertising on Walmart.com.
If you sell on Walmart and want to reach more ecommerce shoppers, you need to be advertising through Walmart’s new self-serve platform. By following the best practices in this guide, you’ll be set up for success to make Walmart advertising an integral part of your ecommerce growth strategy.
It’s time to gear up for the most wonderful time of the year: the holiday shopping season. After an unexpected year of events, many retailers are looking to capitalize on the merriment of the season. This is where planning early and prioritizing online efforts come into play.
The holiday season has always benefitted brands and online shoppers alike. To little surprise, it drives some of the highest sales of the year.
But, a successful holiday strategy in 2020 requires much more than an online presence. To compete during one of the busiest and most unprecedented seasons yet, brands need to create meaningful connections with consumers, offer personalized online experiences, and provide holiday shoppers with added conveniences and peace of mind.
This year, retailers face new challenges and many unknowns. Here are a few key factors to keep top of mind:
- Customer behaviors have wildly shifted during the pandemic and expectations have increased
- Sustainability and transparency are front-of-mind for Gen Z and Millennial shoppers who continue to rise into more purchasing power.
- The ecommerce industry experienced five years of digital transformation in two months due to the global pandemic. This means immersive technology like voice shopping, AI-influenced browsing and machine learning are no longer seen as nice-to-have’s, rather crucial to facilitating a great customer experience
10 Leading 2020 U.S. Holiday Season Trends
Take a peek and discover the leading 2020 U.S. trends, and see if there are any ideas you should bake into your holiday strategy.
1. Ecommerce will soar.
March 2020, the timestamp when consumers’ lives changed overnight. Ever since the pandemic made its way to the United States, ecommerce sales soared instantaneously. This was in part due to lockdown orders and temporary closures of non-essential businesses, but consumer sentiment toward the virus played a large role as well.
2. Mobile and social commerce will gain popularity.
With more consumers spending time online, social commerce will play a large role in converting holiday shoppers across every stage in the funnel.
Consider creating a mobile app experience for your store or leveraging social commerce tools like Checkout on Instagram or Facebook Shops to offer a more optimal customer experience.
3. Consumers’ new lifestyles will play into products purchased.
Consumer behavior has shifted through four phases since the coronavirus pandemic:
- The stock-up phase: Consumers were anxious and panicked at the start of the shelter-in-place orders.
- The settle in phase: The new normal began to seep in. Consumers turned to digital activities – like Xbox – to virtually hangout with loved ones.
- The let’s do something phase: Consumers begin feeling stir crazy at home and summer weather begins, which meant more outdoor activities.
- The stimulus phase: As consumers received their stimulus checks, they were ready to spend a little extra cash.
As we head into the holiday season, we know consumer behavior will continue to shape what products are being purchased. Be sure to garner feedback from your customer base to better understand what they’re shopping for this holiday season.
4. Unique, experience-driven commerce will drive more conversions.
You’ve heard it before — but innovative brands are constantly trying to connect with customers both online and offline. Creating an experience around your product helps customers remember your brand and return for more purchases.
“Around the holidays, consumers are looking for a bit more “magic,” when it comes to their experience, so offering an unusual and different experience will engage an audience. Whether it’s a pop-up shop for a digitally native brand or an AR experience through a phone and a physical product, I think we’ll see some cross-over in some holiday campaigns.” — Tessa Wuertz, Director of Marketing, Efelle Creative
So how exactly do you create an experience in 2020?
Consider launching an experience-driven online “pop-up” — an ecommerce store where products are only available for a limited time. Here you can add new products, special offers, or holiday gift guides for last-minute shoppers. Want to take it a step further? Augment an in-person experience with immersive technology.
5. Brands will find more ways to personalize the shopper experience.
Every step in the buyer journey leading up to a transaction can be recorded and marketing efforts can be tailored depending on where a shopper ends up.
For example, using page journey tracking through a CRO tool like Optimizely or CrazyEgg, brands can see exactly where a customer’s cursor is before they abandon a page. From there, they can make recommendations — decrease page length, add a CTA, add an exit-intent popup, etc.
Now, customizations can be done at the shopper-level — as broadly or as personalized as you’d like. Different pages can show different information depending on what products a user has previously browsed, what content they’ve interacted, what they’ve seen in third-party advertisements, and more. You can also tap into Google Analytics to get more information on how your pages are performing.
“Many brands have been collecting details about purchases and people without knowing what to do with them. This year, all that information can help brands customize the experience for their customers and prospects. Way beyond inserting someone’s name in an email, expect to see more focused product/service recommendations, customized emotional appeals, and time/labor-saving offers like drop ship with personalized greetings.” — Mike Wittenstein, Founder + Managing Partner, StoryMiners
The perks of personalization have also found a way into the product experience. Online shoppers are now able to curate more thoughtful gifts via customization, a product feature that is expected to increase in popularity over the years.
“Personalizing products is a growing trend — and is a good way for a product to be special to a customer — which can drive higher engagement and AOV, compared to a race to the bottom on price.” — Keith Karlick, Principal + Head of Strategy, Mercutio
Having a fun interface that allows users to customize a product online is a clever and memorable way to delight customers.
The BonBon Builder from BonBonBon lets customers select the perfect tasty treats for a gift box.
6. Retailers will get smarter about online and offline connectivity.
Just several years ago, it was almost impossible to study a multi-touch customer journey. If a shopper interacted with your ecommerce business on social media before hopping into your brick-and-mortar store, you’d have no way to identify that touchpoint and make marketing decisions based off of it.
Now, online-to-offline tracking tools have changed that — and you bet online retailers will use that within their holiday strategies, especially now that they may be using their brick-and-mortar locations as a fulfillment center or offering curbside delivery services.
“Simply stated, online-to-offline tracking shows you who saw and/or clicked your Facebook or Instagram ad, and then made a purchase in-store. If you have the technical abilities, staffing bandwidth, and discretionary time to execute online conversion tracking in-house, it will work. Whether you do it yourself or hire a marketing partner to help, you can track and optimize your marketing spend better than ever.” — Scott Ginsberg, Head of Content, Metric Digital
In addition, options for customers to buy online, pick-up in store (BOPIS) will be table-stakes for brick-and-mortar retailers. Customers expect an easy shopping experience that saves them time and keeps them safe, so they can purchase their gifts and get back to celebrating.
For the post-holiday rush, brands will need to allow customers to buy online and return in-store (BORIS).
7. Targeted campaigns will be favored over a one-size-fits-all approach.
Once ecommerce emerged as an alternative to brick-and-mortar shopping, brands quickly attempted to reach as many customers as possible with marketing tactics like direct mail, email marketing, holiday promotions, and paid advertising.
Once budgets got leaner and customers got smarter, brands turned to using less general campaigns and more tailored approaches — and technology made that easier.
In the 2020 holiday season, expect brands to double down on tailored and target approaches to their customers through every facet of marketing.
“I hope that brands will highly segment and target their campaigns this year. The temptation is to spray and pray, but due to slim margins driven by holiday discounting, campaign ROIs are compressed, meaning you need to make every marketing dollar count!” — Jason Greenwood, Founder, Greenwood Consulting
8. Brands will need to meet higher customer service expectations.
Savvy shoppers know the ins and outs of online browsing, but sometimes they have questions — especially during the holiday season:
- When will this be shipped out?
- Where is my order?
- Will it get here in time for the holidays?
- Is there a promo code?
They expect answers to these questions quickly, and in the format they prefer: email, phone, text, social media message, or chatbot.
Having multiple forms of customer communication is pivotal for any business that expects a surge of traffic during the holidays.
Customer may have questions about holiday shipping. If you sell and ship internationally, beware of time zone differences — no one wants to wait five hours to get a response from a customer service representative who is across the globe.
On-demand chatbots help to solve this problem, according to Davd Feng, co-founder at Re:amaze.
“Chatbots and automated messaging will be the bread and butter of holiday campaigns this year. Chatbots work around the clock and can help you assist customers in finding the products they’re looking for.”
Since more stores are moving online month over month, it makes sense that digital interactions will subsidize the in-person customer service experience during the holidays.
“As brick-and-mortar stores have been replaced with online shops, customer service has been replaced with chatbots. Customer service will no longer be driven by someone behind a keyboard; questions and support will be handled by automated workflows.” — Chelsey Dewitt, Marketing Strategist, DigitlHaus Agency
9. Smart retail partnerships will help brands stand out.
One of the common dialects of marketing is that it takes more time to acquire a new customer than to get a repeat one — and the same is true for brands who work with each other to create a mutual audience.
“I think we will see brands start to find innovative ways to partner with other brands. Rising acquisition costs are going to force brands to come up with creative ways of reaching new customers through organic channels.” — Ryan Shaw, Director of Growth Marketing, Shogun
If Brand X and Brand Z both have a collection of shoppers who enjoy their products, and their products work well together (wine and chocolate, for example), then it makes sense to combine forces and co-market for the holidays.
“I think relationships and cross-promoting in others’ email lists will be big this year. If you have any relationships where you can leverage others’ customer lists and do cross-promotions, you should definitely take advantage.” — Duran Inci, CEO, Optimum7
This could mean anything from a simple email drop described above, through to a clever collaboration through a pop-up experience.
10. Brands not using video will already be behind the curve.
The rise of digitally fluent shoppers is pushing traditional outreach methods to the back-burner.
Brands are rapidly making the move to YouTube and IGTV advertising — and it’s safe to say that video advertising will become even more popular during the upcoming holiday season.
“I think videos will be a big part of this year’s holiday campaigns, and brands will also use platforms like IGTV and Instagram Live to share promotional videos. Videos are on their way to becoming the most popular content type, and they are the most engaging one as well. Marketers realize this and, therefore, you will see a lot of brands using videos for their holiday campaigns.” — Shane Barker, Founder, https://shanebarker.com/
“Video and AI are going to be used more and more throughout marketing campaigns. The ability to utilize these resources is becoming more readily available now more than ever with the advances in technology and the results are worth the investment.” — Julie Causseaux, eCommerce Strategist, Revenue River
Making sure you have all of your campaigns and logistics planned in advance of the holidays will prepare your brand for greater success.Failing to get all of your ducks in a row may cause you to lose out on real game-changing revenue from holiday ecommerce sales.By planning earlier, bringing in all stakeholders, and taking a look at these new approaches, brands can easily succeed at any holiday revenue goal.
Butterflies. We all know that feeling. The swirly, gooey, fluttery feeling that tumbles in our stomachs when something exciting is about to happen. Maybe it’s a first date, maybe it’s an interview for a dream job, maybe it’s Christmas morning and we, as little kids, ran and jumped our way down to the Christmas tree before everyone was awake.
Pits. We all know that feeling too. A pit in the stomach is heavy, burdensome, lethargic, dragging us down in our core when something we wait anxiously for something to happen. Maybe it’s…a first date, an interview for a dream job, or it’s Christmas morning and we, as little kids, ran and jumped our way down to the Christmas tree to only find no presents under the tree.
We may not have experienced this as little kids, but that’s simply a matter of generation. Our parents likely shopped at malls, mom-and-pop shops, and department stores for us as kids. These days, everyone is turning to the internet for their holiday shopping. It’s a breeze to have holiday delivery for all our goodies sent right to our doorstep. The postal service really knows how to offer us the white glove treatment as we celebrate the holidays and ring in the New Year.
Ecommerce businesses work hard all year to engage with their customers, offer promotions, and land sales, all leading up to the big one — holiday shopping. But the entire experience can be ruined all in the last few moments if the package doesn’t arrive within the expected number of business days. This time of year is not only stressful for consumers if the package doesn’t arrive but for brands as well hoping to keep their customers happy.
With the added layer of stress and economic impact of COVID-19, the holiday shopping season is going to look far different this year. Black Friday doesn’t exactly lend itself well to social distancing efforts. This year’s holiday shipping demand is projected to be so high that the three major carriers, USPS, FedEx, and UPS, have all announced they’ll no longer have a flat rate and instead will have holiday shipping surcharges. Holiday shipping deadlines will likely have to be earlier in the year.
What is Shipping Insurance?
Shipping doesn’t always go accordingly. Packages are sometimes stolen, lost, or damaged in the process and that can really snatch away our family’s holiday cheer. Tiny Tim wouldn’t be so full of holiday cheer if the post office doesn’t get him his new smartphone on time. Panicked parents have to either watch their kids go giftless or pay for next day air shipping rates to get the package within shorter delivery times. Carriers aren’t perfect and the cost of that can be significant for shoppers and merchants alike.
To remedy that, shipping insurance is a service provided to both consumers and manufacturers that protects them when a package does not arrive at its destination due to loss, theft, or damage. If the parcel is insured, the insurance holder will be reimbursed the declared value of the items in the package.
The declared value is important to understand. The declared value is based on the value of the goods in the package. Let’s say you’re shipping or receiving $75 of merchandise and it gets lost, the insurance holder will be reimbursed. If a buyer is reimbursed, it is likely through refund or a no-charge reorder. If a sender is reimbursed, it’s through money back for the sold goods.
Depending on the carrier, some packages are always covered. For domestic shipping carriers, FedEx and UPS, all packages are insured up to $100 of value at no cost. Below is a chart of included insurance values for the three main domestic carriers in the United States:
Included insurance package value
Up to $100
Up to $100
Priority Mail (domestic)
Up to $100 (CPP) and up to $50 (CBP)
Priority Mail (international), Priority Mail Express (domestic and international)
Up to $200
First Class Mail (domestic and international, Media Mail, Parcel Select
But there are some packages that cannot be insured. Commonly uninsurable products are currency and other financial instruments, gemstones, hazardous materials, and high-value items that may have a lower coverage limit than others (for example, flat screen televisions are only insured up to $1,000).
Shippers often have a maximum declared value senders can set. UPS, for example, supports up to $50,000 in declared value with a UPS account number. For packages eligible for Enhanced Maximum, packages can have a declared value up to $70,000 per package.
Providing insurance to your customers in the holiday season is absolutely critical for both your customer retention and your bottom line.
Differences Between Buyer and Sender Shipping Insurance
There are two categories of shipping insurance, buyer and seller. The basic difference is: buyer shipping insurance is funded by the consumer and seller shipping insurance is sender-funded. There are different processes for each.
Buyer Shipping Insurance: Buyer insurance is consumer-funded, meaning at the point of checkout, the buyer has the option of adding shipping insurance to their overall cart and charged to their credit cards. The cost is typically around 1.5% of the cart value to protect your purchase from lost, damaged, or stolen parcels.
There are two options for merchants to offer buyer shipping insurance: opt-in and opt-out. The difference between them is the default setting. For opt-in insurance, consumers check the box if they would like to insure their package for an additional cost, as the default is no insurance. For opt-out insurance, buyers will check the box to decline insurance on their package, the default is to add insurance.
An example of opt-in buyer shipping insurance can be seen from Group 6 Boutique’s shipping policy page. Orders valued at $50 or less are covered with Priority Mail from USPS, but above that, consumers have the option to protect their package with shipping insurance.
One example of opt-out buyer shipping insurance is from Solo Stove. Upon checking out with Solo Stove, shipping insurance is automatically included on the order and consumers have the option to opt out of the additional charge.
One more example of an opt-in shipping insurance option comes from The Kitchn. They also offer a choice in adding shipping insurance to an order, as you can see below.
Seller Shipping Insurance: Seller shipping insurance is sender-funded, meaning insurance is included on all packages sent to the buyer. Sender shipping insurance is growing increasingly common, as it’s now often expected that the seller is responsible for the package until it makes its way to the buyer’s door. (And even more, into the buyer’s hands and not stolen off their porch.)
Some sellers will try to shift the responsibility to their package fulfillment partner. However, this can often be a frustrating experience for consumers who engage directly with the brand. Part of the difficulty is there is often a wait period required from the brand to the consumer, ensuring the package is actually gone and not just late. As you can imagine, this doesn’t go over well for consumers.
For sellers to actually offer true shipping insurance, it must be backed by an insurance provider such as Lloyds, Shipsurance, InsureShip, and others. If a shipping insurance is not backed by a provider, then the brand can either upcharge a consumer or accept responsibility with the full-cost burden to the seller.
Why You Need Shipping Insurance for Your Brand
If brands can hand the cost of insurance off to the customer, that seems like a great idea, right? It’s actually not always in the best favor for the brand or consumer to add those upcharges. In an increasingly digital world, especially during the coronavirus, it likely makes more sense for sellers to absorb the cost of insurance instead. While it may seem like a high cost, the positive impacts will be far greater. Here are four reasons why it’s in brands’ best interest to pick up the insurance costs:
1. Mitigate risks of costly theft, loss, or damage.
The first and most apparent benefit of shipping insurance for businesses is risk mitigation. If a product is uninsured and gets lost, stolen, or damaged, typically the seller is on the hook to cover the costs. They’ll have to fully absorb the mailing and product costs to ship another product out to the customer. With insurance, the value of the package is reimbursed in these cases. Sellers can protect their bottom line while keeping the customer happy.
2. Protect your brand image at a lower cost.
A negative post-purchase experience such as an unresolved stolen, damaged, or lost package will likely lend itself to angry customers, poor word of mouth, social media backlash, and a customer who will not return. In order to keep your customers happy, investing in their experience can ensure (pun intended) your brand’s reputation. Sellers can think of it this way: Choose between covering the full price of a product or the cost of insurance to keep customers happy and your brand reputation protected. A great example of a brand protecting their brand image is The Loco Mama, they focus on fun kids toys so they have to keep a friendly, relatable, and approachable image. By offering shipping insurance, they keep that friendliness intact through strong customer service and problem resolution if things do go awry.
3. Increase your revenue.
A positive experience will bring your customers back and increase their brand loyalty. By providing great customer experience through every customer touchpoint, including product delivery, you’ll keep customers coming back. The relative low cost of shipping insurance will protect the customer experience after purchase, while likely creating increased revenue in the future through higher customer lifetime value, as well as positive word-of-mouth marketing.
4. Ease of use and peace of mind.
Many insurance carriers now offer simplified claim filing processes — some even let you file one-click claims. This ease of use leads to even more positive experiences as customers no longer have to fill out page-long insurance claims or deal with lengthy approval processes. All of this offers consumers and brands peace of mind — consumers’ packages will arrive and brands’ bottom line is protected.
Shipping Insurance Costs
It’s important to note the cost of shipping insurance. Each carrier offers different options and prices to insure your packages on top of shipping costs. See the table below for a breakdown of carrier options:
Value of Package
Up to $50.00
$50.01 to $100.00
$100.01 to $200.00
$200.01 to $300
Value of Package
Up to $100.00
$100.01 to $300.00
Every additional $100.00 value over $300.00
Value of Package
Up to $100.00
Every additional $100.00 value over $100.00
Value of Package
Up to $100.00
Every additional $100.00 value over $100.00
Minimum for $300.00
What Are the Risks if I Don’t Use Shipping Insurance?
Without shipping insurance, there is considerable risk to your order fulfillment process. But not all risk is created equally. These two considerations will guide sellers in their decision making for whether or not they should purchase shipping insurance. Considering these factors, brands can be even more cost effective in determining their risk level and whether or not they should mitigate.
1. Item types.
The risk of the failed delivery service is dependent on the type of products. Some categories are more likely to be stolen than others. Designer brands, items that are more likely to be resold or pawned, and small and lightweight packages are some examples of the types of items that are most likely to be stolen. Porch pirates look for packaging or return labels with brand names, so a best practice would be avoiding an exterior box that showcases a flashy brand name or shipping labels that indicate what’s inside.
The risk of the failed delivery is also dependent on where the products are being delivered. Some areas are simply riskier to send to. As you may guess, highly populated urban areas face the most package theft, but suburban and rural areas aren’t out of the woods either. Porch pirates will often follow delivery trucks and steal the package moments after it’s dropped at the door, unseen by anyone. Adding tracking or signature requirements can help minimize this risk, but even then many carriers impose coverage limits. When shipping internationally, best practice is always to insure the order, as customs adds another risk factor.
The risk of a failed home delivery also depends on the time of year the order is placed. Unfortunately, the most wonderful time of the year is also the season when a high percentage of packages get stolen. An influx of online shopping translates into an influx of package theft. Holiday shopping season is a much riskier time for package theft than other times of year.
A Few More Considerations About Shipping Insurance
The final question after merchants have considered all of the above — is it worth it? While benefits are substantial, it may not make financial sense to insure your products. If your brand sells inexpensive products, it may not make sense to insure them. If your brand sells high-end, expensive products, it’s likely there would be a return on investment.
Know your numbers. The answer is found by comparing the average cost to replace a lost, damaged, or stolen item against the average cost to insure it. To find the average cost of replacing items, brands must utilize internal data — the percentage of lost, stolen, or damaged shipments multiplied by the average order value. If 5% of orders are in need of replacement and average order value is $100, the average cost of replacement is $5. If that brand is partnered with USPS (insurance cost for order values of $100 is $2.05) then it makes financial sense to insure items at that price.
If the average insurance cost per item is less than the average replacement cost, then getting shipping insurance makes sense.
The holidays are almost upon us (have you seen any Christmas decor up already in stores?) and brands must prepare quickly to be ready for the holiday shopping season, especially a season that will lean into the digital buying experience like never before. To be ready for Black Friday and Cyber Monday, brands must create positive experiences across the entire customer journey to win customer loyalty and outperform their competition this holiday season.
One of the best ways to create positive customer experiences during the post-purchase part of the customer journey is to provide easy, generous policies in the case of loss, theft, or damage. Such an experience can be costly to brands, so investing in shipping insurance can be a great protection to take responsibility for their products until they reach the customers’ hands.
So the option is yours — offer the butterflies or the pit in your customers’ stomachs. Once a product is purchased, the brand is winning but the experience isn’t over yet. Don’t offer your customers a pit in their stomach, wary of whether or not they will receive their package. Instead give them the butterflies as they wait for their exciting product to arrive and give it to their smiling child’s face.
The news for online merchants is good and bad.
The good news is that ecommerce sales are expected to grow to more than $6.5 trillion.
The bad news? This growth in online sales will be matched by a growth in ecommerce fraud.
Online retailers currently deal with around 206,000 attacks on their stores each month. As the popularity of online shopping grows, so does the opportunity for cybercriminals and unscrupulous consumers to scam online businesses.
If you own or operate an online store, you must protect yourself against fraudsters who steal from you, wreck your online reputation, alienate your customers, damage your brand, and hurt your profits.
This comprehensive guide tells you everything you need to know about ecommerce fraud protection—what it is, how it works, and what you must do today to protect your online store from the growing threat of online fraud.
Let’s get started.
What is Ecommerce Fraud?
Before you can protect yourself against ecommerce fraud, you need to understand what it is. So, let’s define our terms.
When we talk about ecommerce, of course, we’re talking about commercial transactions conducted electronically over the Internet, typically through an online store. These transactions are usually made from desktop computers, laptops, tablets, and phones. When we talk about fraud, we’re talking about criminal deception intended to result in financial or personal gain.
Ecommerce fraud, then, is criminal deception conducted during a commercial transaction over the Internet with the goal of financial or personal gain of the fraudster while negatively affecting the bottom line of the merchant. Ecommerce fraud is also called payment fraud.
Two things to remember about ecommerce fraud are that the target is an online merchant and the deception is intended to remain undiscovered.
Why Does Ecommerce Fraud Take Place?
Online payment fraud takes place for several reasons, some of them historical, some of them geographical and some of them legal.
Before the Internet, fraudsters generally had to steal physical credit cards and make purchases with them. Breaking into homes and cars and robbing people on the street with the aim of obtaining credit cards was a risky business in itself. Occasionally, fraudsters were lucky enough to obtain credit card slips that a store had carelessly discarded and would use those card numbers to fraudulently order merchandise over the phone.
Today, fraudsters have it much easier. They simply visit a website on the dark web and buy as many stolen credit cards as they need. During the first half of 2019, there were at least 23 million stolen credit cards for sale on the dark web.
Payment fraud is also popular because it is conducted unseen. The fraudsters don’t have to walk into a store, say a word to anyone, or risk getting captured on store cameras. All they need is a computer and an Internet connection. They can operate from any location, at any time of day, unseen.
Online fraudsters typically create fake email accounts and rent post office boxes using aliases that reveal no personally identifiable information about themselves.
Ecommerce fraudsters know that police departments do not make ecommerce fraud a priority. For one thing, the amounts of money involved in each fraudulent transaction are typically small relative to other types of crimes. Plus, online fraud is increasingly conducted across international borders, making it hard for the police to locate and prosecute online criminals in other countries.
Six Types of Ecommerce Fraud
When you hear the term “ecommerce fraud,” you likely think of stolen credit cards being used by criminals to buy products from online stores. But credit card fraud is just one of the most common types of fraud. Here are the top six.
1. Credit card fraud.
Credit card fraud is the umbrella term for fraud that is committed using a credit card or debit card. In the context of ecommerce fraud, credit card fraud is also known as card-not-present fraud and payment fraud. In credit card fraud conducted online, the fraudster uses stolen credit card information to purchase products or services from a web merchant.
In a typical scenario, a criminal visits a site on the dark web that sells stolen credit cards. The criminal buys the card data and visits an online store, using that stolen card number to buy a product or service. This initial transaction defrauds the cardholder whose card was stolen. But eventually it defrauds the store owner, who must refund the purchase (and sometimes pay a chargeback fee to the bank that issued the card). Merchants can also become victims to card testing scams, where multiple credit cards are attempted to test which are still active and will allow for purchases. These types of purchases are usually small, low-risk orders, but can add up to a big hit on a merchant’s bottom line.
2. Affiliate fraud.
Affiliate fraud is illegal activity intended to generate affiliate commissions. In affiliate marketing, online merchants pay affiliates a commission for sales that affiliates refer. The merchants give affiliates a unique, trackable web link that points shoppers to the merchant’s store pages. When a shopper clicks on one of these links and makes a purchase, the merchant rewards the affiliate for the referral by giving the affiliate a commission (typically a percentage of the sale price).
In affiliate fraud, criminals game the system and defraud the online merchant using fake activity to either generate commissions or to increase the amount of the commissions.
A common form of affiliate fraud is “typosquatting,”in which a criminal registers domain names that match commonly mistyped versions of an online store’s legitimate URL. The fraudster then redirects that domain name to the merchant’s website—but with an affiliate link.
3. Chargeback fraud.
In the world of credit card transactions, a chargeback is a demand that a credit card provider makes to a retailer to refund a fraudulent or disputed transaction.
In the online commerce world, chargeback fraud occurs when an online shopper makes a purchase with their credit card, receives the purchased goods or services, but then requests a refund from the credit card company, who pushes that through the issuing bank (the bank that issued their credit card, also known as the card issuer). Commonly referred to as “friendly fraud,” this type of fraud results in the payment processor demanding that the retailer refund the purchase amount to the issuing bank. When a bank demands a chargeback, the online merchant is responsible for refunding the purchase.
In a typical scenario of chargeback fraud, a shopper makes a purchase from an online store. After receiving delivery of the goods or services, the criminal waits weeks or months, then contacts their bank and disputes the transaction, claiming it to be unauthorized or fraudulent. The fraudster hopes that the merchant lacks the time and resources to dispute the claim, or simply gives them the benefit of the doubt.
4. Phishing/account takeover.
Most ecommerce stores provide customers with accounts that store personal information, financial data, and purchase history. Cybercriminals hack into these accounts through phishing schemes. In one of the most common tactics, fraudsters send emails to trick customers into revealing personal data like usernames and passwords. They then log into the customers’ accounts, change the passwords, and make unauthorized purchases. Social media logins are a common way that shoppers can create accounts easily on ecommerce sites, but if that information is hacked, it can be devastating. Criminals are also using bots to steal confidential information, resulting in customers being plagued by the fallout of identity theft.
5. Interception fraud.
In interception fraud, fraudsters use stolen credit cards to make online purchases, ship the goods to the address that’s on file for the credit card at checkout, but then intercept the package before it is delivered. For example, a criminal will visit an online merchant such as Amazon and use a stolen name, address, and credit card to purchase an item. After the transaction is completed, the criminal calls customer service before the item has shipped and changes the delivery address to the criminal’s desired pickup location.
6. Triangulation fraud.
Triangulation fraud uses three steps to defraud online merchants. In the first step, criminals create a fake online storefront, typically one that offers popular brand-name goods at bargain-basement prices. The only goal of the site is to steal names, addresses and credit card numbers from unsuspecting shoppers.
In the second step, the fraudsters use the stolen customer credentials and credit card numbers to visit a legitimate online store, buy exactly what the victim purchased from the fake store, and ship it to the customer.
The third step is the payoff for the fraudsters. They use the stolen customer data to make additional online purchases that they ship to themselves. This type of fraud typically remains undiscovered for a longer time than other types of online fraud because the original purchase (from the fake site) raises no suspicions on the part of the victim.
How to Identify Ecommerce Fraud Online
As an online merchant, you can spot ecommerce fraud in a number of ways. Just remember that the success of ecommerce fraud depends on the skill and ingenuity of the fraudsters. As merchants increase their defenses against online criminal activity, online crooks also up their game and devise cunning ways to defraud their targets. Here are the most common red flags to look for:
- Inconsistent order data: The zip code and city entered don’t match. Or the IP address of the shopper and their email address don’t match.
- Larger than average order: The order is far larger than your customer typically spends. Other red flags include multiple units of the same SKU in one order, and expedited shipping (the crook wants to receive the order before getting caught).
- Unusual location: Your customer always purchases from an IP address in North America but suddenly makes a purchase from an IP address in an unusual location (Nigeria, for example).
- Multiple shipping addresses: The buyer makes multiple purchases under one billing address but ships the products to multiple addresses.
- Many transactions in a short timeframe: The fraudster makes multiple purchases back to back—and it’s not the holiday season.
- Multiple orders from many credit cards: Someone makes multiple purchases using multiple credit cards (either in one day or over a longer period.
- Multiple declined transactions in a row: The purchaser makes not just one or two attempts (honest shoppers make mistakes, after all), but four, five, six, seven, eight or more attempts without getting the card number, expiry date, and card security code correct.
- Strings of orders from a new country: You’ve never received a single order from the Kingdom of Bhutan, and then you suddenly receive 11 orders from that country in the space of a week.
11 Steps for Preventing Fraud on Your Ecommerce Store
The key to protecting your online store from fraudulent credit card transactions, affiliate fraud and other types of ecommerce fraud isn’t just recognizing these activities when you see them—it’s taking preventative measures that will reduce your fraud risk in the first place.
You have several tools at your disposal for fraud detection and prevention: some technical, some non-technical, some based on software and some based on good-old-fashioned know-how. Here are the steps you can take today to implement ecommerce fraud prevention strategies for your online store.
1. Conduct regular site security audits.
Want to discover flaws in your security before criminals and fraudsters do? Conduct security audits—often. Ask yourself these questions:
- Are our shopping-cart software and plugins up-to-date?
- Is our SSL certificate current and working?
- Is our store PCI-DSS compliant (Payment Card Industry Data Security Standard)?
- Are we backing up our online store often enough?
- Are we using strong passwords for admin accounts, hosting dashboards, CMS, database, and FTP access?
- Are we scanning our website regularly for malware?
- Are we encrypting communication between our store and our customers and suppliers?
- Have we removed inactive plugins?
2. Make sure your store is PCI compliant.
If you operate an online store that accepts credit card payments, you must be PCI compliant. PCI stands for Payment Card Industry. PCI standards for compliance are developed and managed by the PCI Security Standards Council to ensure the security of credit card transactions in the payments industry. PCI compliance means your online store and your businesses processes meet these PCI standards. If you operate a SaaS-based ecommerce store, your platform will typically provide this compliance.
3. Monitor your site regularly for suspicious activity.
Bricks-and-mortar stores hire fraud prevention officers to catch shoplifters. You can protect your online store against fraudulent transactions by monitoring your store for suspicious activity. Monitor your accounts and transactions for red flags, such as inconsistent billing and shipping information, as well as the physical location of your customers. Use tools that track customer IP addresses and alert you to any addresses from countries known as a base for fraudsters.
4. Use an Address Verification Service (AVS).
Credit card processors and issuing banks will usually offer an Address Verification Service to detect suspicious credit card transactions in real-time and prevent credit card fraud. The Address Verification Service checks the billing address submitted by the card user (the customer) with the cardholder’s billing address that’s on file with the issuing bank. This check takes place as part of the merchant’s request to the payment processor for authorization of the credit card transaction. When addresses don’t match, the system either declines the transaction or flags it for investigation.
5. Require Card Verification Value (CVV) numbers for all purchases.
The three-digit security code on the back of VISA®, MasterCard® and Discover® credit and debit cards and the four-digit security code on the back of American Express® credit and debit cards is called the Card Verification Value (CVV) or Card Security Code (CSC). By requiring all purchasers to supply this code for every transaction, you ensure that customers have the physical credit card in their possession. This helps to keep you safe and reduces fraud.
6. Use Hypertext Transfer Protocol Secure (HTTPS).
HTTPS is the secure version of HTTP, which is the primary protocol used to send data between a customer’s web browser (like google) and your online store. HTTPS encrypts this data to protect sensitive information, such as customer names, addresses and credit card numbers. Using HTTPS prevents your online store from having its transactions broadcast in a way that’s easily viewed by hackers, cybercriminals, and fraudsters. You use HTTPS by buying an SSL certificate.
7. Avoid collecting too much sensitive customer data.
One way to protect your store in the event of a data breach or hack is to collect and store as little customer data as possible. Hackers can’t steal what you don’t have. So only collect the data you need to complete a transaction and ship the product. Avoid collecting Social Security numbers, birth dates and other unnecessary sensitive customer data.
8. Set limits on purchases.
Based on your order and revenue trends, set limits for the number of purchases and total dollar value you’ll accept from one account in a single day. This reduces your exposure to a minimum should fraud occur.
9. Try an anti-fraud solution.
When it comes to detecting and preventing online fraud, there are a variety of software solutions to suit your needs and your budget. Additionally, the tools you select may vary widely when it comes to how much work is involved in installation and ongoing management. Some may prefer a more hands-on solution, while others would rather leave it in expert hands.
- Rudimentary anti-fraud tools perform a specific, single function. They are typically integrated into online shopping carts and ecommerce platforms. These tools use machine learning algorithms to identify fraudulent transactions through IP geolocation, validate email addresses, conduct device fingerprinting, and verify addresses.
- Mid-level anti-fraud tools offer a wider variety of functions, including chargeback guarantees, auto declining of high-risk orders, protections against new account fraud and account takeover protection.
- Top-level anti-fraud tools offer everything the other tools offer plus outsourced case management, expertise working with large merchants, loyalty fraud management, policy abuse protection, automatic decisions, and manual review of suspicious transactions, ensuring that no good order is mistakenly declined by the software.
10. Double check that the IP address and credit card address match.
Every order placed on your online store comes from a unique, public IP address (a string of numbers separated by periods that identifies each computer using the Internet Protocol to communicate over the Internet). From the IP address, you can generally detect the city or region of the world where the purchaser is making the purchase. If this city or region does not match the address of the credit card being used, that’s a red flag.
11. Avoid non-physical shipping addresses.
Fraudsters commonly avoid detection by protecting their physical address, preferring to use a PO box or other anonymous location. After all, the police can’t come knocking if there’s no door to knock on.
If you are an online merchant, and if you want to prevent this type of fraud, never ship online orders to PO boxes and other virtual addresses, such as those of freight forwarders. You can spot addresses that belong to freight forwarders because they have a container number in the address, such as 726 Dock Road Suite 300 #KXQ-582899328.
Knowledge Is Power
Yes, fraudsters are getting more sophisticated in how they attack online merchants. And the number of attacks on web stores is increasing as ecommerce grows in popularity. But ecommerce merchants are also getting more sophisticated in how they detect and deter online crooks.
Once you understand what ecommerce fraud is and why it is so prevalent, and once you learn how to detect online fraud, you are empowered to take the necessary steps to prevent fraud on your online store.
It feels like there isn’t a single person alive who hasn’t bought something online. In fact, eMarketer predicts that by 2021, there will be over 230 million digital shoppers in the United States.
This statistic comes as no surprise. After all, we have a whole internet full of goods at our disposal. After COVID forced us all to stay inside for months on end, the popularity of ecommerce has exploded. In May 2020, online store spending was up by 77% on previous years, says Forbes. And this trend is only set to continue.
Yet, it’s not enough for a business to simply think about website design at the outset, fill the site full of new products, and expect the rest to take its course. Like anything that you do, an ecommerce website needs ongoing maintenance.
Think of it as moving into a new house. At first, everything is shiny and clean. After a while though, dirt builds up, the washing machine isn’t quite doing its job, and the wardrobe door won’t shut properly.
But because you care for the house, you clean it, you replace the washing machine, and you fix the door. Basically, you maintain it.
Having an ecommerce website is much like this. You need to keep up the ecommerce maintenance on the site to make sure you have the best online presence possible. Replace products where needed and fix any problems that may occur. Give people not just a good, but a great impression as to who you are, whether you are a fashion enterprise or a B2B events development company.
Maintaining your site isn’t just about changing the color scheme or marking things as ‘out of stock’. It’s about creating great content, keeping it safe from hackers, and making sure the marketing team is doing its job.
This guide will talk you through why all this is so important and what you can do to make sure you are maintaining your ecommerce site.
Ecommerce Website Maintenance Has Benefits
The point of having an ecommerce website is to make sales. So, naturally, failing to keep your website properly maintained can lead to loss of sales. There are several ways that keeping your site fresh will help your sales figures. They include:
1. Reduced cart abandonment.
Let’s say you sell shoes. A customer is on your site and after scrolling through, they add three pairs to their cart. However, a technical glitch causes the basket to empty. Frustrated, the customer leaves the site and chooses a competitor instead.
Keeping on top of an ecommerce website means that you can spot when something is wrong and fix it straight away. Before the customer notices, and you lose out on sales.
Keeping these glitches at bay, then, helps arrest your customer churn. You’ll lose fewer customers to your competitors. Anyone who’s looked into customer churn analysis will tell you how beneficial that can be to your business.
2. Better user experience.
Think about things from a user’s point of view, and how you navigate around any site.
Now consider how your site is laid out. Are new products showing on the landing page? Are contact details easy to find?
It may be that as you have added more products to your pages, things have become jumbled. So, it’s important to maintain a clear website, ensuring navigation is straightforward. It’s all about being clear and organized.
You can link your website maintenance to other business processes here, too. Your product mapping, for instance, can help you plan out where to put products on your site and how to link them together.
Maintaining an ecommerce website ensures a smooth shopping journey and user experience from start to finish. Meaning customers will be much likelier to return.
There are lots of landing page examples across niches that show strong awareness of user experience. Skullcandy is a great example of a successful ecommerce site that gives great customer experience. Look at the following screenshots from the brand.
They show some of their most popular products on the above landing page. Then, once clicked on, customers instantly have the option to add to their cart. The product pages aren’t filled, making it very easy for the customer to choose an item and check out.
What Can Happen if you Don’t Maintain Your Ecommerce Website?
Maintaining your ecommerce website is critical. Not doing so can cause you to lose revenue. Worse yet, in extreme scenarios poor maintenance may cause your business to shut down. Here are a few issues that may occur if you don’t care for your ecommerce platforms. It should be apparent how some or all of them could spiral out of control:
1. More prone to hackers.
If you don’t have the right security in place, not just your site, but your company as a whole is at risk. Losing valuable data, after all, can cause terminal damage to a brand’s reputation.
Website maintenance services are a straightforward way to keep your site protected. Keeping your site in tip-top condition reduces the vulnerabilities available to hackers. Don’t let laziness make you an easy target.
2. Likely to fail on other updates in the future.
Your site needs to keep up to date with basic web standards, languages, and coding. If not, it runs the risk of failing when it’s updated. CSS and HTML codes change every year and if your site was developed some time ago, it’s probably carrying around a lot of codes that will be slowing it down.
3. Considered suspicious by web browsers.
Having a suspicious site means that your webpages are considered “unclean” by web browsers. This means that they think you’re a ‘phishing’ site and web browsers will flag you. What this means is that your site is poorly set up and has bad security. From a business standpoint, it means you’ll get less traffic and therefore, fewer sales.
4. Decrease site rankings on Google.
If your website looks unappealing on the first click, people will not use it. Furthermore, if you aren’t posting the right content, it will affect the search engine optimization (SEO) of your site.
Putting together regular SEO articles reduces your risk of falling down the Google ranks. Unique content after all, has always been vital to moving up the SERPs and staying there. Maintaining your site, and refreshing content helps keep your SEO on point.
5. Site traffic will slow down.
A poorly maintained website won’t get as much traffic. Pages, links, or other site elements that don’t work are noticed by both Google and visitors. The latter will start avoiding your pages, and the former’s ranking of them will respond accordingly.
Falling traffic caused by poor site maintenance can be a vicious cycle. Even with the best call center software to help you take telephone orders, you can’t replace your web traffic. Arresting its decline takes vast amounts of time and effort. It’s far more straightforward to practice effective ecommerce website maintenance from the get-go.
3 Types of Ecommerce Website Maintenance
We’ve talked at length about why it’s important to maintain an ecommerce platform. Now it’s time to put the microscope on how to do it. There are three types of ecommerce website maintenance tasks to focus on. These are:
1. Security maintenance.
Security is the number one reason for website maintenance. Hackers are always searching for ways to try and break into a company’s site. Especially those websites with access to customer details and financial information. Like every ecommerce site.
It doesn’t matter if you have built the website yourself on WordPress or if you have hired professionals in web development to take on the task. Your security needs to be tighter than tight. Regular maintenance checks are what will reveal vulnerabilities and allow you to fix them before they’re found by anyone else.
2. Marketing maintenance.
Digital marketing not only drives people to your site, but it also keeps search engines happy. If your site is doing well on Google, then even more people will end up on your site. So, it’s important to maintain marketing to make sure things are staying fresh and relevant.
This is done by creating new content in the form of SEO articles, messaging, blogs, social media posts, gifs, products, email, videos, and more. Your marketing team can use Google Analytics services to fine-tune your site and content. Such analytics help you understand both your site and its audience. You can discover the elements of your site that work well and those that don’t. You can also explore visitor behavior to get insights into what your website may be missing.
If you’re in the software niche, using a SaaS marketing Agency can also help you in this regard. Many can professionally review your site with digital marketing in mind. This would be particularly useful if you have let maintenance slide, as it can show you what to prioritize to arrest your site’s decline.
3. Storefront maintenance.
Just like a brick-and-mortar shop, online storefront maintenance helps improve a customer’s first impression. This is essential as if a customer’s first impression is poor, then you’re scrambling to rebuild their trust before they’ve even looked at your products.
Your virtual storefront shows you are selling what the customer wants. Look at this landing screen for the confectionery brand, Bon Bon Bon, for example.
Source: Bon Bon Bon
The background is made up of bright colors and fun patterns, reminding the visitor of a traditional candy store. It also moves every few seconds, to show the viewer what is on offer. Everything is categorized at the top, to make it easy to navigate, and the company even uses playful words like ‘swag’ to keep up with the humorous tone.
Ecommerce Security Maintenance
Now you know the three main types of ecommerce website maintenance, let’s look at each in more detail. Starting with security maintenance. You have your security software set up, but like all things digital, it needs to be maintained. Here are a couple of ways in which to keep things running smoothly, and securely, for your site.
1. Website backups.
Backing up your website is essential. Major breaches, on top of everything else, can lose vital and personal customer data. It can be very costly to restore, too, and extremely time-consuming. Any ecommerce brand should back up their website data regularly.
Most companies will be adding new information to their website daily, so data backups should be carried out as often as every day. It should be stored separately from everything else. Having more than one iteration is also a good idea. That way you’re doubly protected in case something goes wrong with your primary backup, too.
2. Maintain security patches.
When something needs fixing, you patch it up. This is why you should always keep an eye out for suggested updates and patches with your security software. Ecommerce websites are at a high risk of cyber-attacks, and hackers will aim for weaknesses in your security.
Downloading patches when available will make sure your security stays strong. If you use any hosted software from a third-party provider, too, this must also get regularly patched and updated. If you use a SaaS product, keeping the product patched and updated is off your plate. Pay attention to your provider’s SaaS customer service emails, and make sure they’re fulfilling this part of their duties.
Ecommerce content marketing is key to helping your business thrive. Keeping on top of what you put on your website is crucial. Here are some things to keep in mind.
1. SEO and broken links.
If you don’t consistently add SEO-driven content, you run the risk of losing traffic and your site slipping down the Google ranks. A blog is a great tool for adding content related to topics that may draw readers to your site.
You can also place links throughout your posts to take potential leads to a page where they can make a purchase. The key is to make any article genuinely relevant and interesting to readers. Don’t create content purely to upsell or redirect users to product pages.
There’s obviously more to SEO than merely building and maintaining a blog. Precisely what you need to do depends on your niche and the size of your business. Enterprise SaaS SEO, for instance, looks very different to that undertaken by an ecommerce startup.
What doesn’t change is that SEO is essential. It drives new customers to your site and allows you to create partnerships. You should be posting a new blog or article every week or every month. That’s as well as checking and maintaining existing content.
One crucial part of maintaining your content for SEO purposes is identifying and fixing broken links. A vital part of your website maintenance checklist is to conduct a backlink audit to make sure that you have a successful campaign.
This essentially means looking at your links and assessing if they are natural and relevant. And equally crucially checking that they work. Most internet users will have come across 404 error messages. They mean that a link is dead and needs to be changed. This should be part of your ongoing auditing and maintenance. Dead links are off-putting to site users and search engines alike.
You will also need to be aware of redirects. When you come across one in your SEO, you need to ensure that it’s placed somewhere that still makes sense. Otherwise, it’s a pointless link.
Finally, you need to make sure that your desired pages are indexable. If your pages aren’t properly indexable, Google won’t recognize them and they will not work when clicked on. To make your pages indexable, remove any 404 errors, and make sure the content and site are both genuine.
2. Updated content and consistent messaging.
It isn’t just SEO that gets traffic for your site. The content you post on social media is also a good way to drive people to your site and so needs upkeep and maintenance. Content helps you build a voice and connect with people, making them realize how much they need your company.
Updating your social media creates brand awareness, more traffic, and higher customer interaction. For the same reasons, responding to customer messages and comments is also important and should be done ASAP. Doing this will also give you a good reputation and make people want to visit your site if they feel they can relate to you.
Social media posts should go up every day on each channel. They can vary from a “Good morning world. What are you doing today?” on Twitter to sharing an interesting white paper on LinkedIn. With technology literally in the palm of our hands, there is no excuse for a bad social media presence. Using a CMS will help with knowing when and where to put out content.
Take a look at this interaction from Bliss World:
Source: Bliss World
The company has posted an inspirational quote that relates to their products. The clever part of this though, is that they asked a question to their audience and have created a dialog around it. Again, building up trust with their customers and subtly advertising their products, too.
We mentioned earlier the importance of a great first impression. Keeping up the maintenance on your storefront needs to draw people in and keep them there with great user experience. Here are some ways to keep up with your maintenance plan and stay ahead of the competition.
1. Changes with products.
A successful ecommerce company will change their products with regularity. A fashion brand, for example, will need to make regular changes to their website. This is especially important as the audience of those brands will only want the latest trends.
Not only do regular updates encourage people to return, but they also help you attract new customers. Ideally, you should be updating your shop front every time you get a new range of products, and let customers know what’s newly released.
It’s also important to update the site when products are low on stock, out of stock, or discontinued. Communicating with customers like this avoids disappointment and pushes them to look for other, similar items. If there is a change in product images or descriptions, this should be updated ASAP to avoid any sort of actionable false advertising.
2. Promotions and price changes.
The same goes for promotions and price changes. If you make a promotion or decide to put any discounts on products, make the message loud and clear. Say where the price changes can be found, how long they will be changed for, and if there is a discount code.
Not updating any changes can be seen as false advertising. It can also make you appear unorganized – losing your customers. The storefront should be updated any time you change the price, as well as add or take away any discounts or promotions. Your marketing team should send out emails and update social media when this is the case, too.
Burrow gives the perfect example of this:
We know there is a sale because it says it on the landing page. We know the sale is for Labor Day. We know that storage and tables & benches are new because it says it clearly in red. And we also know there is a permanent sale page for the products labeled ‘outlet’.
Specific details further down the page, too, tell us that there is a special code to use and how much you get off each price range. We are also told when the offer runs out. This site is clearly up to date.
Ecommerce Maintenance Costs
Whether you are maintaining a home, a car, or a website, these things cost money. It’s the same with ecommerce website maintenance. How much you spend will depend on the size of your business. Some costs may be included in the platform you choose. But if you have chosen a free platform, you may have to pay for maintenance.
Let’s break this down a little bit. All these depend on which platforms you use and the site you choose to rely on. However, these are some average prices.
Maintaining a small ecommerce website (who sell around $4k- $50k a year):
- Hosting costs (not if self-hosted) – $11.95
- Domain registration and renewal costs – $1.25 a month depending on which site you choose.
- Backups and Migrations – free, depending on which platform you use.
- Security – also free
- Additional site plugins – $10
- SSL certificates – free.
For a medium-sized company (selling around $10k-$120k a year):
- Hosting costs (not if self-hosted) – $19.95
- Domain registration and renewal -$1.25
- Backups and migrations – $7.40
- Security – $17
- Site plugins – $20
- SSL certificates – free
For a large company (selling $40k to $500k a year):
- Hosting costs (not if self-hosted) – $200
- Domain registration and renewal -$1.25
- Backups and migrations – free depending on the platform
- Security – $25
- Site plugins – $40
- SSL certificates – free
All the above information is according to Commercegurus. You may also need to consider the conversion rate, depending on where you are based.
With these costs in mind, it’s definitely worth the financial investment to keep up with the maintenance of your site.
What are my Website Maintenance Options?
There are several options for maintaining your ecommerce website. You can do it in-house or hire a consultant/ freelancer. Which option is best for you depends on your business. Here, though, are some details on each alternative.
1. Hire freelancers.
It may be that you are eager to make changes, but your current staff isn’t quite aware of how to do this successfully. Or perhaps your team does not have the bandwidth to keep up with the maintenance. So, should you hire a freelancer to keep up with the website?
Hiring a freelancer is a good idea because you know you will be working with an expert in the field who will provide results.
But what should you look for in a freelancer?
First, you need to decide if you want a freelancer for specific areas, or the whole process of ecommerce website maintenance. For example, if you only need to sort out your security, then look for a cybersecurity expert. The same goes for marketing, web design, functionality, etc.
If you want someone who can do everything, then ideally you want a webmaster with years of experience. They should also know about marketing, current trends, and what does and doesn’t work for a site.
Always make sure to ask for a free quote.
2. Hire a web maintenance team or consultants.
On the other hand, you may already have a web team. If you are finding problems with your site, though, it might be time to upskill your staff. Or find a team that stays more up to date with maintenance issues.
You may look to outsource to consultants to check over your site. Tell them to have a look at the website and see where the problems lie. They can then feedback to your team on what they need to do better. Alternatively, you might hire a specialist maintenance team to take everything on themselves.
3. Rely on the in-house marketing team.
Make sure that for your in-house marketing team, maintenance is a priority. It’s important that they are posting content, whether that be making blogs or sharing social media, as part of their daily routine. They should also be checking and maintaining all existing content.
After all, their job is to lead people to your site and make sure your company is getting the traction it should be.
Website maintenance may seem like a hefty job, but with regular updates, it’s not as daunting as it appears. It’s important to stay on top of your website management. Better user experience means more sales.
If you don’t maintain your ecommerce website, you are leaving yourself open to hackers. You may also let your site slip down Google rankings, and risk the search engine presuming you are a dodgy website. All of those issues mean you will lose customers.
The three principle ways to manage maintenance are through marketing, security, and the storefront. Marketing means keeping up with SEO, social media, and general content. Security means ensuring your site is protected, patches are fixed, and details are kept safe. Maintaining a storefront involves giving customers a great first impression and letting them know about price changes and new products.
You also need to decide if you want to use your staff to do the required maintenance, or if you want to hire freelancers or specialist teams. Keeping up to date with your ecommerce website maintenance keeps you ahead of the competition and tells customers that you are worth visiting.
Window shopping looks a whole lot different today than it did five years, or even five months ago — which means there’s never been a better time to launch an online boutique.
With the convenience and safety online business offers, it’s no wonder people are more likely to scroll through their smartphones than they are to get in their cars and drive to the store.
Plus, ecommerce makes it much easier to launch your business and make money without the additional expense of a physical store. Of course that doesn’t mean you don’t still have to put in a lot of work to get your business started.
The good news is that we’ve compiled everything you need to get your online boutique up and running, from how to choose your product niche to mass marketing tips from the experts.
Online Boutiques by the Numbers
Before we get started, let’s review the definition of an online boutique. Basically, it’s a small shop that typically sells fashionable clothing or accessories through the internet. For instance, an online boutique might sell highly specialized products at a significantly higher price point than what you’d find in a traditional brick-and-mortar department store.
And one of the most appealing aspects of an online store is the growth potential. According to Statista, the value of ecommerce apparel sales in the United States is projected to grow to 100 billion U.S. dollars in 2021.
Additionally, in 2019, online fashion sales accounted for almost 30% of total retail ecommerce sales in the United States.
More and more shoppers are going online to purchase clothes, shoes and accessories — and this is especially true right now with many brick-and-mortar retailers temporarily closed.
As you can see, now is a great time to start that online boutique you’ve been dreaming about. And to make launching your online clothing business much easier, we’ve identified some important traits and skills.
Skills and Traits Needed to Start Your Online Boutique
1. Passion and drive.
Do you love spending your weekends scouring vintage shops for unique finds? Are you obsessed with coordinating your shoes with your outfits? If so, this passion for fashion will help you succeed.
Running a small business isn’t easy. When you’re knee deep in tax paperwork, you need passion and drive to keep you going. So before you make any kind of time or monetary commitment, make sure you’re passionate about what you’re doing — and you have the drive to succeed.
One of your most valuable assets is your network. Because even though you’re an expert jewelry designer, you might not know how to set up an LLC or design a professional logo. Through the power of networking, you can find people who do know how to do these things — and enlist their expertise.
If you’re new to networking, that’s okay. Here are some ideas to get you started:
Also, don’t forget to reach out to your friends and family. They’re a great resource for expanding your network.
3. Digital marketing.
As a business owner, you’ll need to wear a lot of hats. While you don’t have to be an expert in everything, it’s extremely helpful to have some background in digital marketing.
The good news is that it’s easier than ever to learn about digital marketing online. There are some great resources you can tap into to get familiar with search engine optimization (SEO), paid advertising, social media, email marketing and more. Here are a few options you can check out:
- DigitalMarketer offers everything from tips and tricks to full certification courses on a wide range of topics.
- HubSpot Academy has a full library of online certification courses, covering everything from content marketing to digital advertising.
- LinkedIn Learning includes easy-to-watch video courses that provide an introduction to digital marketing topics.
You can also search for blogs that cover digital marketing topics or watch YouTube videos from experts.
4. Business finances.
Similar to digital marketing, it’s helpful to have an understanding of your startup costs before you open an online store. The good news is that you can also do research online and take classes to gain a better understanding of how to manage your finances. Some things you’ll want to focus on include:
- Understanding your credit score.
- The different types of business loans.
- How to manage a budget.
Also, keep in mind that many people make mistakes along the way — and that’s okay. You just want to do everything you can in the beginning to set yourself up for success.
5. Time management.
The best part about being your own boss is that no one is telling you what to do. However, that means you’re responsible for getting everything done. And passion and drive can only take you so far. If you can’t manage your time, you’ll burn out fast.
Make your time a priority and work on developing this skill. Also, take advantage of the many books, apps and tools designed specifically for managing your time.
To have a successful online boutique, you need confidence. Believe that you can do this and don’t let negative thoughts get in your way.
If you’ve never read the story about how Sylvester Stallone persevered to get the movie Rocky made, you should check it out (spoiler alert: it has a happy ending).
While you might not need that level of confidence, you can take inspiration from his story and remember that even when things get rough, you can keep going.
10 Steps for How to Start an Online Boutique
- Decide your product niche.
- Find the best ecommerce platform for your online boutique.
- Create a business plan.
- Select a name and domain for your online boutique.
- Locate and vet your clothing suppliers.
- Create your website with an online store builder.
- Add products and descriptions to your online boutique.
- Launch your online boutique.
- Begin mass marketing.
- Revise, reinvent, and renew.
Decide Your Product Niche
While some creative entrepreneurs already know what they want to sell, you might have no idea. But that’s part of the fun — figuring out your product and niche.
So what do we mean by niche? When you’re starting an online boutique, you shouldn’t try to appeal to everyone. You want to target a small, specialized section of the population. Here are some examples for your business:
- Vintage clothes.
- Children’s clothes.
- Plus size women’s clothes.
- Men’s athletic wear.
- Hand-beaded necklaces.
- Metalwork rings.
- Stained glass earrings.
- Women’s purses.
- Men’s hats.
- Children’s shoes.
- Handmade scarves.
Also, think about your ideal customer. Keep them in mind so that you can ensure the products you offer will keep them interested. For example, if you decide to sell men’s athletic shorts and shirts, it wouldn’t make sense to then expand to selling women’s swimsuits. However, it would make sense to offer accessories like socks, jackets and shoes.
A great BigCommerce customer example is Modern Vintage Boutique. From the images and colors on their website, you can see who they’re targeting and the types of products they offer their customers.
Another important thing to keep in mind is customer lifetime value. It’s much more difficult to get a new customer than it is to sell to an existing customer. To maximize your profits and grow your online boutique, you’ll ideally want to offer products that keep your customers coming back to load new products into their shopping cart.
Find the Best Ecommerce Platform for Your Online Boutique
Now that you’ve got a product to sell, it’s time to build your store. For online businesses, this means your ecommerce platform. And there are some great options that make it incredibly easy to build an ecommerce website — even when you have no experience.
“You want a good partner that is not only going to be right for you today, but provide solutions for you to scale. It’s not impossible to change platforms but it is a lot of work and you make a big investment setting up your online business. So making sure you have the right platform partner is the #1 thing I encourage people to take their time understanding and ultimately making a decision on.” — Shayda Torabi, Owner, WithShayda, Restartcbd
Who is it for?
BigCommerce is for everyone. If you’re doing everything yourself as a solopreneur, the ease of use makes it simple to get started. On the other hand, if you’ve got an established business that you’re trying to take online, BigCommerce has the integrations you need to make the transition seamless.
- Robust SEO capabilities, giving you full control over your URLs, title tags, header tags and metadata.
- An integration with Instagram that allows your customers to make a purchase without leaving the app.
- Page Builder tool, which offers drag-and-drop functionality so you can make quick changes to your site
- Abandoned cart recovery, coupons and discounts, and single-page checkout are included out-of-the-box.
- 24/7 live agent support, as well as a dedicated help center and active community of merchants.
- Can handle up to 600 SKUs per product with 250 options for when you need to grow your catalog.
- Won’t charge you any additional transaction fees for using one of the 55+ supported payment gateways.
- A large partner network to help with everything from shipping and fulfillment to marketing and advertising.
Plans and Pricing
With BigCommerce, there are three plans you can choose from. Plus, there’s an additional option for larger businesses that need an enterprise solution.
Online sales per year.
Calculated on a trailing 12-month basis.
Up to $50k
Up to $180k
Up to $400k
As you can see, the plan you’re on depends on your online sales. However, you get access to an extensive list of features no matter which plan you’re on, which takes the headache out of selecting the right plan from the beginning.
Who is it for?
Out of the different ecommerce platforms, Shopify is probably the most well known. With a strong focus on ease of use, Shopify is an excellent option for small business owners looking to quickly launch an online store.
Stand out features
- Over 70 professional and responsive themes to design your website.
- Shopify Payments, which if you use it, lets you avoid the additional transaction fees you’d need to pay if you use a different payment gateway.
- More than 4,100 integrated apps to help you add additional features and functionality to your online store.
Plans and Pricing
Shopify also has a number of pricing models available that are very affordable. Plus, they have their Shopify Lite option for merchants who simply want to sell on their existing blog site.
If you want additional features added to your plan, that’s when you’ll need to upgrade your Shopify account. Make sure you evaluate the features most important to your business before you decide on an ecommerce platform so that you don’t need to unexpectedly upgrade.
Who is it for?
WooCommerce is an open-source ecommerce plugin for WordPress. So if you’ve already got a WordPress website or blog and want to get your online boutique open quickly, this is a great option for you. Additionally, developers and experienced website managers will enjoy the level of control they get with WooCommerce.
Stand out features
- Because WooCommerce is open source, you have complete control to customize and manage your store.
- There are several Core Payment options that are free to use, as well as over 100 premium payment gateways you can choose from.
- Hundreds of extensions you can install for help with shipping, accounting, marketing and much more.
- A large community of WooCommerce Meetup groups that you can tap into for help managing your store.
Plans and Pricing
You don’t need to pay anything to get the WooCommerce plugin itself. However, with WooCommerce you do need to cover the costs of hosting, an SSL certificate and other features that ecommerce platforms like BigCommerce and Shopify include with their pricing.
Create a Business Plan
Now, it’s time to create your own business plan. This will be your guide that lays out your goals and the steps you’re going to take to achieve them. You can then show your business plan to investors and banks when you’re ready to get additional financial assistance. Below are some of the main elements you should include in the business plan for your online boutique.
1. Market research.
You probably did some market research when you were deciding on your product and niche, but now it’s time to dive even deeper into your target audience. Here are some exercises you can complete to fill out this section:
Create buyer personas
Really think about the specific customers you want to purchase your products. You can include demographic information, such as their age, geographic location and income. Then, take it a step further and document what social media platforms they prefer, who they trust most for product information, and information on their personal style.
Conduct a market analysis
This is where you can determine:
- Is there a market for your product?
- How big is the current market?
- How fast is the market growing?
Make sure when you’re doing your research you find numerical data to back up your claims.
Complete keyword research
How you talk about your brand and your products makes a big difference when you’re trying to get people to find you. You want to conduct keyword research to ensure you’re using the right terminology. Down the road this will also help with your SEO when you’re building your online store.
Perform a SWOT analysis
This is a great technique for sizing up your competition. First, you can identify your main competitors. Then, you create a table that reviews strengths, weaknesses, opportunities and threats. This will help you position yourself in the market against competitors.
2. Business model.
Once you have a good understanding of your ideal customer and the overall market, it’s time to decide on a business model. The model you choose will also help inform which type of business licenses you’ll need. When it comes to clothing and accessories, most online retailers fall into one of these four categories:
Print on demand
For this business model, you’re simply adding some type of logo or design to a clothing item when a customer places an order. And you can either do this yourself or use a third-party printer.
Custom cut and sew
This is the most labor-intensive and costly of the models because you’re making everything yourself — or paying someone else to make it for you.
Private label, also sometimes called white label, means you’re partnering with a manufacturing company who makes the product. Then, you can add your branding.
Dropshipping requires the smallest investment — but faces the toughest competition. Dropshippers are essentially middlemen who order from a third-party company for delivery directly to the customer.
3. Financial planning.
This is the part of your business plan where you estimate your costs and your revenue. Here are some questions you’ll want to answer:
- How much money are you investing versus what do you need from an outside source?
- What expenses are you anticipating (e.g. production, shipping, materials)?
- How are you going to price your products?
- How much revenue do you expect to earn in the first year?
If you’re not sure how to calculate these numbers, this is an excellent opportunity to reach out to your network and see if anyone can help you plan your financials.
4. Marketing strategy.
Finally, you can lay out a high-level marketing strategy. While there’s basic marketing that every business owner should do, this is your opportunity to define your launch strategy.
For example, you might want to focus heavily on influencer marketing to build anticipation and excitement. You can collaborate with micro-influencers to promote the launch of your online boutique on their social media platforms.
You should also ensure that you have a press release or some kind of plan for the big announcement.
Since there are so many ways to market your business, you want to narrow it down in the beginning and focus on the channels that will have the biggest impact for your target customers right away.
Select a Name and Domain for Your Online Boutique
Now, it’s time to make your clothing business a reality by giving it a name. While you don’t necessarily have to keep this name forever, it can be extremely costly to re-brand. So definitely use these tips when you’re thinking about what you’re going to name your store.
You want to stand out from the crowd, so make sure you choose an original name. Go back and visit your ideal customer. What do they care about? Can you tie that into your brand name? Tap into the emotional and aspirational aspect of your ecommerce business to help you come up with a unique name.
In addition to being original, you want your brand to have some personality. Infuse yourself and who you are in the name. For instance, if you’re selling t-shirts with funny sayings on them, come up with a brand name that will make people laugh! This will help you with the next tip, which is to make your brand name memorable.
Once you’ve put together some ideas that are unique and personable, the next tip is to make sure people will remember it. Of course, you don’t want to be remembered for the wrong reasons. So this is another opportunity to reach out to your network and get feedback on your ideas. That way, if there’s something you didn’t account for, such as how your name might translate to an audience in another country, you can change it now before you’ve made any investments.
Even if you’ve come up with the perfect, most awesome name for your store, you can’t do anything with it if it’s not available. Check for trademarks, domain name availability, existing social media handles and more to ensure you can proceed with your business name.
Locate and Vet Your Clothing Suppliers
This is where your products come to life. Because even if you’re making everything yourself, you still need supplies. And you want to make sure you’re balancing the quality of the supplies with your budget. Additionally, you want to make sure this is a business (or a person) that you can have a good relationship with since you’ll be working with them frequently.
Here are some things to consider when you’re vetting suppliers:
1. Quality of the clothing.
Is the quality of the clothing up to your boutique’s standards? Request samples to get a better idea how the products will look and feel.
2. Level of support.
Are you going to have a point person to speak with every week or month? Make sure you have a conversation with them so that you can evaluate their communication style.
3. Reviews of the supplier.
Does the supplier have a history of success? Check online for reviews or reach out to your network to see if anyone has worked with them before.
Create Your Website With an Online Store Builder
You’ve got your product, your ecommerce platform and your business name, now it’s time to actually create the website for your boutique. Before you start though, make sure you have a logo, brand colors and pictures of your products. This will make building your website much easier.
Another thing that makes building a website from scratch much less intimidating is drag-and-drop functionality. If you’re a BigCommerce customer, you can use the Page Builder tool to create a beautiful website that’s easy to navigate — without having to touch any code.
1. Choose a theme or template.
The first thing you’ll want to do is pick a theme or template for your website. Most ecommerce providers, including BigCommerce, have both free and paid theme options that you can customize for your brand. And if you do have an interest in changing the code within your theme, BigCommerce’s website builder allows you to make those changes.
2. Add products and descriptions.
Once you’ve got the basic template in place, you can add your products. Plus, you can apply the keyword research you did for your business plan to your product descriptions — which will give your SEO a boost.
Also remember to think about your product pages as an opportunity to let your personality shine. For example, you can give tips on how potential customers can wear the clothing. Can they use a scarf for their neck and their hair? Let them know!
3. Generate checkout policies.
This is where you share the rules for your online clothing store. Typically, this includes your policies for shipping, returns, sizing and promotions. You can find a great example of checkout policies from BigCommerce customer Dainty Jewell’s.
4. Select accepted payment providers.
You may not realize it, but selecting the right payment provider can make a big difference for your boutique business. They keep credit card transactions secure and improve the checkout process for enhanced customer experience.
BigCommerce works with a variety of payment gateways so that your customers can use whatever payment method they prefer, such as PayPal or Apple Pay.
Also, as a side note, when talking about payment ensure you have a plan in place for calculating sales tax. Even online shopping requires you to collect sales tax in either your state or the state your customers live in.
5. Determine shipping.
Finally, you’ll need to set up shipping so that your awesome products can reach your customers. While you might not want to put a ton of thought into shipping, it’s actually one of the most important parts of your ecommerce store.
Amazon has set the bar extremely high. Customers almost expect everyone to offer 2-day shipping, which isn’t really feasible for new online businesses. If a potential customer feels that shipping costs too much or their items won’t get to them fast enough, they could abandon their cart.
If you’re a BigCommerce customer, you can collaborate with one of our shipping and fulfillment Partners to help ensure this won’t happen to you.
Launch Your Online Boutique
Once you’ve built your website, you can set up everything you need to launch your online store:
- Fill out your social media platforms with information about your boutique.
- Set up your transactional emails so they’re ready to go when you get your first order.
- Get your Google Analytics and tracking pixels set up to get data right away.
- Test all the functionality and links so that you know everything’s working correctly.
- Hit the actual launch button and go live!
It’s also time to put the marketing strategies you laid out in your business plan into action. Additionally, you’ll want to make sure you have some kind of press release ready that you can send out to generate additional buzz about your business.
Begin Mass Marketing
After you’ve done the initial push for your online boutique, you can settle into the day-to-day marketing activities. We’ve rounded up some expert advice to help you focus your efforts in areas that will make a big impact.
1. Social media.
Jessica Lago, manager of marketing and partnerships at iMedia, shares how you can succeed on social media.
“1. It’s okay to not use every single social channel out there. Pick the top 3 channels your target market is actively using and optimize your strategy for those. 2. If there is a shopping feature available on the social channel, take advantage of it. The shopping feature is an easy tool to set up and a seamless way to convert your followers who are already interested in your brand onto your site.”
If you’re a BigCommerce merchant it’s easy to put this into practice because you can now take advantage of checkout on Instagram.
2. Content Marketing.
Jordan Brannon, president at Coalition Technologies, stresses the importance of content marketing.
“People don’t consume products online (except, perhaps, in mobile or online games). People consume content. What are those product photos on your product listing page, if not content? What about the title and price and reviews? Content. What about the product description? Content. People buy content online, and hope a product follows.”
3. Email marketing.
Val Geisler, email conversion strategist, offers some great advice for how to approach email marketing.
“Get an email onboarding strategy in place (yes, I mean beyond confirming the order and shipping notifications) and go from there. It’s one of the reasons I built The Dinner Party Strategy™. It’s as simple as a handful of emails that focus on building a relationship with your new customers that goes beyond the transaction. That is, in fact, the magic of email marketing.”
Revise, Reinvent, and Renew
Now that you’ve launched your store, it’s time to dig into your data and analytics to understand what’s working and what’s not. Then, you can make changes and improvements, such as:
- Merchandising your best-selling products on your homepage.
- Testing new product copy or imagery on underperforming pages.
- Making changes to your cart where people tend to drop off.
- Adding product reviews and customer testimonials.
- Trying out holiday discounts and promotions.
You can also reach out directly to your customers to gain a better understanding of their specific needs and wants.
Build Engagement for Your Online Boutique
Once your store has been opened for a little while, you can go beyond the basics to build relationships with your customers and other brands.
1. Add an “about us” page.
These days everyone can sell a t-shirt. What shoppers want is a connection with the brands they’re supporting. You can build these connections on your About Us page. Write about what inspired you to start your business and how your passion for it keeps you going.
2. Partner with other brands.
A great way to grow your business is to partner with other brands. For instance, if you sell accessories, you can partner with another brand that sells only clothing to offer customers full head-to-toe outfits.
Additionally, you can cross-promote each other’s products on your website, social media and emails, creating a win-win for both partners.
Online Boutique Examples
If you need some examples of great online clothing stores, check out these BigCommerce customers.
1. Elka Collective
Elka Collective’s brick-and-mortar boutique storefronts are specially designed for high-end simplicity with layered textures and natural tones to complement their clothing collections. And you can see how they’ve seamlessly translated that same aesthetic to their ecommerce store for online shoppers.
Plus, they use imagery and descriptions that will resonate with their ideal customer who “seeks quality, fashionable and relaxed garments to fit her lifestyle.”
2. Pop Threads
Pop Threads takes advantage of the fact that BigCommerce works great with large catalogs and multiple options so that they can offer their customers a wide variety of styles and sizes — everything from infant bodysuits to men’s 6xL.
As more and more customers turn to online businesses for their shopping needs, there’s never been a better time to open that boutique store you’ve been dreaming about. With the right combination of skills, a solid business plan and a flexible ecommerce platform, you can get your online boutique up and running in no time.
There’s a lot about ecommerce that’s complicated. An ecommerce business must be agile, and its decision-makers switched on to succeed. When you get right down to it, though, the heart of online retail remains simple.
Strip everything else away, and selling is still selling. It’s all about having what a customer demands when they want it and getting it to them. That straightforward premise is at the core of what is now a vast global ecommerce market.
But how do you know what consumers want? And, more importantly, what might they demand next week, month, or year? Ay, there’s the rub, as Shakespeare might say. It’s also where ecommerce demand forecasting comes in.
Read on, and you’ll learn all you need to know about ecommerce demand forecasting. We’ll cover what it is and how it works. Then, we’ll discuss areas of your business, like inventory management and warehousing, that demand planning can support.
To help you get demand forecasting right, we’ll talk about its challenges and variables. Finally, you’ll get a step-by-step guide covering how to forecast demand. As well as the broad retail tech trends to take advantage of when doing so.
What is Demand Forecasting?
Ecommerce demand forecasting is the process of predicting the future demand for products. That could be new products or those that you’ve been selling for years. The best way of forecasting demand is by using historical data.
You can ID patterns and trends by raiding your order management system or other sources for sales data. From those, you can estimate future sales and how they may fluctuate. Getting ecommerce demand forecasting correct is essential for businesses in the niche.
Only through accurate data analytics and decision making can a firm maintain the correct stock levels. Achieving that is critical for keeping a healthy bottom line. We’ll talk more about that later. First, let’s delve deeper into the different types of demand forecasting.
Types of Demand Forecasting
In general terms, demand forecasting is about using historical sales data to predict future sales trends. You can categorize forecasting models, though, by different factors. They include time scale, scope, and more. As such, the following are four common varieties of demand forecasting:
Macro-level demand planning puts forecasting in the broadest possible context. It’s a demand forecasting method that looks at the market in which an ecommerce business exists. That means it needs market research and is most appropriate for firms with certain aims.
That may be companies looking to launch new products or target a new market segment. For instance, say the audio brand, Skull Candy, wanted to branch out into clothing. They’d need to perform macro-level demand forecasting. That’s how they’d get their inventory planning and supply chain management correct.
As the name suggests, micro-level ecommerce demand forecasting is the opposite of the above. It’s when a firm drills into its own operations for sales forecasting and planning.
There are many things an ecommerce business may consider here. They include:
- Past sales performance of product categories and individual lines (by SKU).
- Profit margins achieved on different items.
- Cost of production and cash flow considerations that may impact inventory planning.
Forecasting demand is always about looking to the future. How far, though, is up to the brand doing the forecasting. Short-term demand planning usually limits predictions of sales trends to the next 3-12 months. If you forecast demand in this way, you’re typically looking to learn about seasonality. That’s how product demand changes by time of year.
The National Baseball Hall of Fame’s online store, for instance, would likely see more sales during baseball season. Would purchases spike more, though, during the World Series? Or is the sweet spot the week after the regular season gets underway? It’s these types of questions that short-term demand forecasting can answer.
Long-term ecommerce demand forecasting is the most comprehensive variety. It utilizes data analytics to ID demand patterns for the next 12, 24, or even 48 months. This far-reaching demand planning feeds into broader business strategy.
Patterns in sales data, for instance, might suggest new sales channels to adopt. It could also reveal that a brand may need to change its supply chain fundamentally. The trends may, for example, predict a sharp spike in customer demand for a particular product. Present suppliers, as a result, may not be able to provide the inventory levels required.
How Does Demand Forecasting Work?
Demand forecasting involves predicting trends in sales and customer demand. The premise is that with prior knowledge of sales trends, a firm gets a jump on its rivals. They can, for instance, boost inventory levels of a product to avoid suffering a stockout.
We’ll talk more about ecommerce forecasting’s benefits for inventory management later. For now, let’s consider precisely how it works. In short, it’s by either qualitative forecasting or quantitative data analytics.
The qualitative method looks at the broader economic environment to create forecasts. You may consider any of the following:
- Market research – target audience surveys, etc.
- Industry expert’s opinions
- National or global economic circumstances – recession, etc.
Quantitative forecasting leans more on hard data. It’s the type of planning that develops a trend projection based on prior information. That typically means looking at sales data or website analytics and finding patterns. Can you extrapolate from sales of an individual SKU, for instance, that sales will rise sharply? As a result, do you need to change your inventory management?
Demand Forecasting Can Help Ecommerce Stores
So, now you know what ecommerce demand forecasting is and how it works. We’ve also touched a little on how it benefits an ecommerce business. It’s advantages, though, are diverse and well worth some further attention.
1. Helps reduce financial risk.
One of the main benefits of accurate forecasting is that it provides a basis of evidence for your budget. If you can understand changing customer demands, it improves your financial decision making.
For example, historical data may tell you to expect new products to take a while to start selling in high volume. When you launch a new line, then, you’ll know to spend a little less on inventory. That, as a result, reduces the risk of getting left with dead stock.
2. Provide customers with products when they want them.
Modern consumers have more choice than ever before and are savvy and demanding. They know what they want, and they often want it right now. If you can’t deliver, one of your rivals will. Ecommerce demand forecasting ensures you’re not left in that situation.
Knowing product demands and how they fluctuate keeps you ahead of the curve. You can boost your inventory level before replenishment would generally occur. Your inventory planning, after all, gets based on future customer demand. All predicted by your forecast.
3. Decreases inventory expenses.
Ideal inventory management is when you have precisely the right amount of stock at all times. Too little, and you risk disappointing customers. Too much, and your inventory and warehousing costs can spiral. Warehouse space isn’t cheap, so you must use it as efficiently as you can.
Get ecommerce demand forecasting right and your warehouse management system benefits. You’ll have the right amount of stock on hand, after all, to meet requirements. That means no wasted space and no slow-moving stock wasting space. Robust inventory forecasting, too, could help you find new warehousing methods to cut costs further.
4. Create a pricing strategy that reflects demand.
Other areas of operations benefit from effective demand forecasting, too. Take pricing strategies as an example. One of the most critical factors in choosing such a strategy is the demand that exists for a product. You can charge more, after all, for items in higher demand.
Get sales forecasting correct, and you can tweak your pricing strategy to match. Say, for instance, that shoe company, Hush Puppies, commissioned some market research. That, alongside historical sales data, suggests rising demand for women’s sandals. Customers, then, would be prepared to pay a higher price for those lines.
Challenges that Face Ecommerce Demand Forecasting
Nothing that’s worthwhile in business – or life – is entirely straightforward. Demand forecasting for an ecommerce business is no exception. The following are a pair of significant challenges that you may face.
1. Applying the wrong methodology.
We’ve spoken at length about the different demand forecasting methods. Choose the wrong one, and your predictions are worthless. You need to take a step back, therefore, and assess your options. The following are three common ones:
- Expert Opinion – Gather insights from industry experts on the market in which your business operates.
- Collective Knowledge – Ask all your sales team members for their input on product performance, sales trends, and more.
- Time Series Analysis – Using historical data to make predictions. For instance, you may find purchases of a product spiked around Black Friday for the last two years. You could then conclude that sales will rise again around the same time.
2. Leveraging incomplete data to make decisions.
Even with the right forecasting model, your predictions may fail due to incomplete data. This is particularly true if you adopt a quantitative forecasting method. For such processes to work effectively, you need as much accurate information as you can get.
For instance, if you can’t collect real-time data on sales or inventory, your conclusions may be out of date. In the same vein, if you’ve only got sales figures from the past month, you can’t make informed decisions.
Fortunately, in this era of big data, incomplete information is less of an issue. Every ecommerce business now has the chance to capture info from many channels. That’s crucial, as the more extensive the data set, the more effective the conclusions which you can draw from it.
Variables that Impact Ecommerce Customer Demand
You might be wondering at this point just how much customer demand for products can change. Is it really that critical to forecast any changes in demand? Will it genuinely make that much difference? The answer to those questions is yes. And it’s yes because of the many variables that impact ecommerce customer demand.
One of the best things about ecommerce is that a brand can serve customers across the globe. Where consumers reside, though, will affect their demand for products. People from different nations and cultures have varied needs and expectations. A line that’s popular in one country may get no sales at all, across only one border.
Seasonality is another factor that makes a massive difference to product demand. Significant events – like Black Friday – often generate a need or desire for products that doesn’t exist at other times of year. It’s a good idea for ecommerce businesses to draw up a retail calendar to keep track of such events.
3. Types of products.
The goods you sell can also impact customer demand. Say, for instance, you sell high-priced luxury items. There will be less repeat custom in that niche. As such, product demand will be more unpredictable. It could, therefore, be trickier to forecast demand effectively.
How competitive your marketplace is will also impact customer demand. If a new rival enters the field, for example, they may siphon off some of your customer base. Your product demand, therefore, will fall.
It doesn’t even have to be something as drastic as a new firm opening. Perhaps a competitor runs a terrific video marketing campaign. If it really catches the imagination, it could win your customers over. You would then see lower product demand. That would impact your decision making as regards inventory management, cash flow, and more.
Steps for Demand Forecasting in Ecommerce
The above should have convinced you of the importance of demand forecasting. For ecommerce businesses, it’s as vital as a SaaS marketing strategy is for firms in that niche. How, though, can you start forecasting demand more accurately? The following are a few straightforward steps to get you started.
1. Identify goals.
As with many business processes, the first step to excellent demand forecasting is planning. Before you start collecting or analyzing data, you must know what you want to achieve. Set timeframes for your forecasting and devise the questions you want to answer. Examples may include:
- What volume of particular products will we sell?
- Will demand for certain lines fluctuate over time?
- What events or external factors could influence demand?
- Might changing consumer expectations affect sales?
- If demand shifts significantly, will our commercial infrastructure cope?
Once you’ve identified your goals, get buy-in from all your stakeholders. Ensure your sales team, social media marketers, and decision-makers agree you’ve covered all bases. Then, you can start forecasting demand in earnest.
2. Collect and record data.
We’ve already discussed that more data leads to more accurate forecasts. Whatever demand forecasting method you use, then, you must gather as much information as you can. There are loads of ways to collect insights and hard figures.
Remember at this stage that internal and external factors influence product demand. As such, you’ll want to gather historical sales data and information from beyond your organization.
The former should be easy enough to source from your CRM or order management platform. For the latter, you could perform your own market research or lean on existing reports and surveys.
3. Measure data.
With your data at hand, you need to use it to draw conclusions. That means analyzing your results to find patterns and trends. It’s possible to do this manually, but that’s only viable for smaller firms.
When you have lots of diverse data, your best option is to lean on a data analytics platform driven by AI. Such solutions can utilize machine learning to derive insights from your data swiftly. Remember not to rely wholly on tech, however. Use your experience and nous to interpret the insights you gain intelligently.
4. Make adjustments.
You’ve collected your data and found illuminating patterns. So, what’s next? Well, that would be the part of the process that actually delivers the benefit to your business. It’s where you make adjustments to business operations in line with your forecasts.
Say, for example, that you forecast falling customer demand for a particular item. You could then adjust future purchase orders to put fewer of those products into stock. Alternatively, you might discover that a product has a highly seasonal life cycle. You could then decide only to stock it at the relevant times of year. That way, the inventory doesn’t clog up your warehouse when it’s not needed.
People in charge of decision making at ecommerce businesses have to wear lots of hats. They must be marketers, salespeople, and accountants. When it comes to demand forecasting, you could also add soothsayers to the list.
Ecommerce demand forecasting, after all, is all about predicting the future. Get it right, and you can tailor your operations to meet customer needs perfectly. It’s that kind of service that modern consumers demand.
Add to that the fact that forecasting demand delivers a raft of other benefits, and you’ll see how essential it is. So now you know all you need about the process, it’s time for you to get started – no crystal ball required!
Like smoke and fire, commerce and inventory have been intrinsically linked since the early days of business. The beginning of business, in fact, started with a product that was exceptionally hard to keep tabs on: cattle. They were the first item recorded to be sold for a fixed value, rather than as a bartering item.
For early traders and merchants, tracking inventory such as cattle was physically demanding, complicated and inaccurate. Beyond livestock, these early traders needed to transport large swaths of inventory across oceans and deserts, all the while keeping track of how many products they’d sold, acquired and produced, monitoring prices and costs to boot. So how did they do it? How did they remember what they’d sold, what they had, what they’d be acquiring, and where it all was?
The answer is simple, yet staggeringly complex: inventory management.
At its core, inventory management is defined as “the process of ordering, storing and using a company’s inventory. This includes the management of raw materials, components and finished products, as well as warehousing and processing such items.”
Depending on the size of the business, inventory management can be anything from a deep web of complexities, to a simple list of stocked items. For growing ecommerce businesses, the options for and challenges of inventory management become big issues as stock grows. Increasingly, ecommerce merchants scaling their businesses are faced with a new spin on the age-old question of “where do I keep my inventory?”
Historically, merchants simply stored goods in a single warehouse or fulfillment center. Orders were placed and shipped directly from that location, regardless of order details or where the customer lived Today, merchants must consider whether their inventory should remain in a single location, or if it should be distributed across multiple locations. This is known as decentralizing inventory.
Centralized vs. Decentralized Inventory
To understand the difference between this and centralized inventory, just think of the old adage, “putting all your eggs in one basket.”
1. Centralized inventory.
Centralized inventory means everything a merchant sells is stored in the same location. This simplifies things on a number of levels. First, anything produced or manufactured goes to the same place and ships out from there. This simplifies shipping rate and speed calculation. For centralized inventory, there are three major considerations:
Shipping: When you’re shipping everything from the same location, you quickly learn how to optimize operations. On the plus side, you’ll have foolproof lead time, transit day and rating data to ensure accuracy in customer pricing. The down side, however, is that with just one location, you’re stuck with slow shipping speeds to many customers.
Costs: With a centralized warehouse, merchants only need to pay operating costs for a single location. This might include rent, utilities, wages for skilled workers, surcharges and other expenses. Consolidating these expenses to a single place can also increase margins on high-value items, making it an ideal option for oversized product sellers.
- Customer service: Centralized inventory can potentially help or hurt your customer service. While you are providing customers with a single source of truth and centralized service location, you also sacrifice the agility to ship items to them quickly if they are outside your region. With centralized inventory, you’re putting all your eggs in one basket. A shoe retailer, for example, might hold all inventory in a single location to simplify operations and keep things tidy. With a single warehouse in New York, everything ships from the same place.
Pros of centralized inventory:
- Lower operating costs thanks to a single location
- More control over warehouse processes and personnel
- Potentially higher margins
Cons of centralized inventory:
- Slow shipping speeds to some customers
- Liability of all inventory in one location
- Lack of agility and adaptability to serve customers
2. Decentralized inventory.
Decentralized inventory means you have distributed your inventory across multiple locations. Retail giants like Amazon typically rely on these multi-channel distribution processes. There are also many benefits to this system. Merchants can reach customers in more locations in less time when products are located in warehouses closer to them. It also mitigates the risk of holding all inventory in one place, in the unlikely event of mismanagement of catastrophe. Let’s check back on those three considerations:
- Shipping: Fulfilling orders from multiple locations means faster shipping speeds and happier customers. Customers expect speedy shipping and easy returns and exchanges. With multiple locations, merchants can deliver this and lessen frustration with slow transit.
- Costs: With inventory across multiple locations, merchants have to consider storage and management costs of each warehouse. Expenses like rent and utilities may be significantly increased. Of course, the expectation relies on the savings incurred through shorter-distance shipping, thanks to multiple locations.
- Customer Service: The sooner an order is delivered, the more satisfied the customer. The closer an order is shipped from, the sooner it will arrive, and the happier customers will be. With multiple locations, merchants should consider the need to manage operations and personnel in several places, a task which can be challenging without the right tools in place.
With decentralized inventory, you’re spreading eggs across multiple baskets. For example, that same shoe retailer, after shifting to multi-warehouse management, could add a warehouse in LA. They might decide to hold some styles at one location, and others at a different one. All the while, if that retailer were wise, they’d likely hold their most popular styles at both (or all) locations, giving more customers quick shipping times on those items.
The difference between shipping from a single warehouse, and multiple warehouses. More locations mean shorter transit times to more customers.
A real-world example of this comes from Jeni’s Splendid Ice Creams. Using their BigCommerce platform with ShipperHQ integration, the company was able to seamlessly transition to a multi-warehouse fulfillment system. Because of the nature of their product, quick transit times were vital, and couldn’t be optimized by shipping out of just one location, so expanding locations was urgent.
Chelsea Clements, Director of ecommerce at Jeni’s said, “We were opening Scoop Shops across the country, but only shipping out of one fulfillment center,” said Clements. “We realized that in order to sustain our online business and our cold storage supply chain, we needed multi-warehouse fulfillment. This wasn’t native to our platform BigCommerce, so we knew we needed a solution.”
Pros of decentralized inventory:
- Faster shipping speeds to more customers
- Less risk with distributed inventory
- Increased customer satisfaction
Cons of decentralized inventory:
- Margins on certain products may be reduced
- Costs of multiple locations
- Higher transportation costs
How Can a Decentralized Inventory Help Your Ecommerce Business Grow?
For ecommerce businesses on the rise, decentralized inventory may be a worthwhile investment. With smaller, regional facilities, they can get products into customers’ hands, sooner.
Additionally, depending on the location of warehouses, these locations may be able to serve as a pickup spot for customers as well, an option growing-in-demand by the day.
1. Reduced shipping costs.
When you add even a single warehouse location for your products, you instantly double your distribution opportunities. Depending on the strategic location of your warehouses, you may be able to seriously cut down on transit times and shipping costs thanks to closer proximity to more customers.
When warehouses are located closer to delivery locations, shipping costs go down.
2. Reach a wider customer base.
Much like the benefits you get from reduced shipping costs, having more locations can increase your reach to customers spread across a larger area.
A customer interested in a pair of shoes from our trusty shoe retailer is much more likely to order if their purchase will be delivered in just a few days. If that retailer had just one location, shipping might take a few weeks, giving customers a reason to shop elsewhere.
Expanding your footprint will expand your potential customer base, earning you more business.
3. Manages warehouse risk.
Remember the analogy about putting all our eggs in one basket? Managing risk is the central reason for that egg distribution.
One example that illustrates this in action is the case of two banana suppliers that were hit hard by Hurricane Mitch in the 90s. With more than 80% of the region’s banana crop washed away, both companies faced major obstacles with distribution. Dole lost 70% of its crop, ultimately reducing revenue by 4% overall. Chiquita, its competitor, held inventory and had relationships with multiple suppliers. Thanks to this preparation, the company increased its revenue by 4%.
While this is a somewhat dramatic display of the difference in strategies, it’s a lesson to apply to businesses everywhere, that putting all our eggs – or bananas – in one basket is risky.
Jeni’s Splendid Ice Creams faced a similar situation when landslides threatened one of its fulfillment centers. “If that had happened before we used ShipperHQ, we would have had to shut down our entire ecommerce business until the roads reopened,” Chelsea Clements said.
With inventory across multiple warehouses, retailers are less likely to suffer a total loss because of mismanagement or catastrophe.
4. Faster local deliveries.
Especially in the age of curbside pickup and same-day delivery, having multiple warehouses increases a local customer’s ability to pick up orders themselves, or give them access to same-day delivery. With these options in place, customers can potentially buy and receive items on the same day.
With just one warehouse, you only give customers in one area the chance for immediate pickup. Distributed warehousing, however, puts your products closer to more customers.
Issues that Face Having a Decentralized Inventory and Multiple Warehouses
With so much management science supporting decentralized warehouses, we’d be remiss to not mention the challenges it brings. Between multi-warehouse communication, management, inventory visibility and personnel issues, there are a few aspects we need to consider.
1. Inventory management.
With inventory spread across multiple distribution centers, supply chain management becomes increasingly complicated. When everything is in a single central location, management is centered around that location, streamlining operations and costs.
With goods in multiple places, retailers sometimes feel like they have to sacrifice inventory control because of a lack of clarity. While ERP systems should theoretically support these operations, they’re not perfect and can sometimes result in inventory shortages or mistakes.
2. Cross-warehouse standardized procedures.
Managing multiple locations is, understandably, more complicated than handling a single one. With several warehouses in the mix, more personnel, inventory and management is required.
If warehouses are shared, work as distribution centers, or operate as drop shipping locations, warehouse procedures can quickly become convoluted and messy. While everything may work smoothly in one location, adding inventory locations complicates processes and can become a liability for everyday operations.
3. Managing shipping rates between warehouses.
When shipping out of one location, calculating a rate or lead time is virtually always consistent. Shipping from the same place every time means clear cut rates and transit times, providing transparency customers want in their shopping experience.
When you add locations to the mix, you suddenly have many more factors to consider. Which warehouse will the order ship from? Does your warehouse closest to the customer have the range of products they require? Do you have high inventory at one location, and dangerously low supply at another?
Decision making with more than one location is more complex than with multiple ones, of course. But how will this affect your inventory decisions? It’s important to develop a strategy for these considerations before expanding locations.
When it comes to managing shipping rates between warehouses, having the right tools in place is vital.
Using Multi-Warehouse Management to Combat Challenges
Despite the challenges, a multi-location distribution system has many benefits that can’t be replicated by other methods. Merchants struggling with long lead times, customers unsatisfied with transit times, or a lack of flexibility in distribution should take a hard look at multi-warehouse management and how it can solve these problems.
Ecommerce stores that benefit from a decentralized supply chain also get the benefit of the flexibility of using smaller or fewer warehouses. These warehouses can be managed nimbly and flexibly, giving merchants clearer insights into inventory replenishment needs, levels and shortages.
At the end of the day, the flexibility gained from multi-warehouse inventory management nearly always proves beneficial for merchants.
Best Practices for Managing Multiple Warehouses
Ready to dive into the world of distributed inventory? It’s a smart decision, and one that will pay off. In the meantime, you’ll need to set up your distribution the right way to reap all the benefits. Here are a few of our tips on managing multiple warehouses smoothly.
One of the first steps you’ll need to take is to research and implement a warehouse management system or an ERP. With a software solution in place to manage things, your job will be much easier, and operations much smoother.
1. Keep stock levels balanced.
This may be a bit of a learning curve. Our shoe retailer with warehouses in New York and Los Angeles will need to understand which warehouses need how many of which product. Trends will certainly play into this, perhaps customers in LA order high-tops by the dozen, but New Yorkers are all about the slip-ons. With purchasing data, you can keep stock levels consistent and lessen the chance of inventory shortages or delays.
2. Keep a close eye on your bestsellers.
Your most popular products will be the most important ones to manage. It’s a good idea to set up minimum inventory levels of these products at each location to ensure you can quickly ship them out from every warehouse. Because they’ll sell out regularly, it’s important to get ahead of these trends and have excess inventory of these products.
Our shoe retailer might see trends differing from NY to LA, but sales of their signature trainers are consistently sky high. Keeping stock levels at each of these locations high will ensure customers expecting those popular items won’t be disappointed by slow delivery speeds.
3. Count product stock in each warehouse separately.
Never consider your inventory as a singular entity. Separate warehouses have separate inventories, and it’s important to not convolute these differences. For example, if you’re monitoring levels of those popular trainers and see that you’ve got 6,000 pairs on hand, you may be able to breathe easily. However, if 5,000 of those are located in NY and just 1,000 in LA, you’ve got a serious problem. Be sure inventory is counted by warehouse rather than as a business overall. This will provide clarity and inform inventory distribution.
4. Use wave picking and cross docking.
Wave picking, or picking items for more than one order at a time, is crucial to your warehouses’ efficient operations. Rather than an employee walking through the warehouse to select specific items for a single, also known as “batch picking,” wave picking has that employee select multiple items from the same area of the warehouse, reducing picking time.
Cross-docking is an under-utilized strategy that can avoid inventory handling completely. With cross-docking, products shipped to your warehouse are immediately relocated to a delivery vehicle. Effective cross-docking requires a lot of planning and purchasing insights to understand where to send products as they come in. Despite the required logistical coordination, cross-docking offers many benefits including reduced warehousing costs and less risk of inventory damage.
Things to Consider Before Opting For (Decentralized) Multi-Warehouses
In our rapidly evolving ecommerce landscape, a decentralized inventory system may seem like a silver bullet for a struggling ecommerce business. However, there are certain factors that can affect its efficacy, and might mean it’s not the right strategy for everyone.
Before taking the leap into decentralized inventory control, consider a few factors that may affect the way it works for your business.
1. How heavy are my products?
If you sell heavy products – think furniture or fitness machines – arranging inventory holding in more than one place may not be worthwhile. Because shipping costs for items like this are so high to begin with, it may not be a good investment to first send inventory to a warehouse, rather than shipping directly from the manufacturing or import location.
2. Where do I ship my orders?
If you’re a heavily regional company, it may not be smart to distribute inventory beyond your normal customer base’s location. An umbrella seller, for example, probably doesn’t need to expand from Seattle to Arizona, and may suffer financially from taking a step like this.
3. What are the operating costs for many warehouses?
If your products require special care like refrigeration or regular quality checks, it may not be beneficial to spread them across more than one location. Because storing inventory like this is so costly to begin with, doubling the costs of warehousing them may make it a bad investment.
4. What is the monthly order volume?
If you’re shipping just a few high-value products a month, it’s probably not necessary to use multiple warehouses. While ecommerce stores are in initial or growth stages, it may be wiser to keep things simple and central with a single location. Once you’re ramped up and receiving a higher influx of orders, it may become necessary.
5. Is there a business need for more warehouses?
Decentralized inventory is a hot topic in the ecommerce world at the moment. With so much chatter about it, it may seem like it’s required to successfully grow your business. But if your shipping challenges don’t involve inventory location, it may not be the time to pursue decentralizing your inventory.
6. Is the existing technology infrastructure ready for multiple warehouses? Do you need a multi-warehouse management system?
Do you have an ERP in place? A warehouse management system? What software is helping you run your business as of now? Before taking the leap to distributing your inventory, be sure your systems are powerful enough and equipped to handle the change. Being well prepared will be the single most vital step to take before beginning the shift.
Summing It Up
For ecommerce merchants, handling inventory is an everyday challenge that’s only getting more competitive. Those who take steps now to implement a smart inventory strategy will be the ones who continue to thrive. It’s important to understand the pros and cons of this style of management, and whether it’s right for your business. With the right tools, people and strategies in place, decentralized industry can prepare your business for future success, while making for happier customers and lessening risk.
You can handle your decentralized inventory effortlessly with ShipperHQ’s comprehensive shipping management platform. Speak to a shipping expert now to understand how it can benefit your business.
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The internet impacts every area of our lives. We use it for socializing, entertainment, working, and research. We also use it to shop.
There’s now a generation of adults who have only known a world where the internet exists, and as they, and the generations that follow, spend more money, ecommerce will continue to grow. Currently, 43% of shoppers use the internet and social networks to research products before purchasing, and by 2024, ecommerce revenue will be worth $476 billion in the U.S.
Retailers cannot afford to stay offline if they want to reach customers. Ecommerce sites empower businesses to reach new markets and gain resilience by selling if their brick-and-mortar stores have to close. If you’re just starting a business, an ecommerce site can give you a worldwide market and brand recognition before you even open a physical store.
Starting a dedicated ecommerce website gives you the ability to control every aspect of your customer experience, from branding to shipping and customer service. You can choose to build it yourself or go with a developer, but either way, knowing about the process can help you make informed choices, so you get a website that’s optimized for selling your products.
Ecommerce Selling Statistics
Ecommerce is growing every day and offers businesses unique opportunities to connect with their target market. A well-designed ecommerce store can benefit from providing convenient shopping options for consumers.
1. Ecommerce will make up 22% of global retail sales by 2023.
Sales in online stores are expected to reach 22% of global retail sales by 2023, compared to 14.1% in 2019.
While some of this growth is driven by more ecommerce sites being created, most of it is due to a shift in shopping trends. Business owners can take advantage of this global phenomenon by giving customers opportunities to buy as soon as they decide on a product and also reaching overseas consumers with international sites and shipping.
2. Ecommerce sales in Q1 of 2020 accounted for 11.5% of total sales.
It’s estimated that 11.5% of sales in the first quarter of 2020 were ecommerce sales. The impact of COVID-19 means more people are shopping online, and ecommerce sales have continued to grow throughout the year. As more consumers buy on the internet, opportunities exist for business owners to prove that the best ecommerce sites offer excellent online services, building loyalty for the post-COVID-19 world.
Why Create an Ecommerce Website?
It’s clear that the growth in ecommerce brings many benefits for a business’s bottom line, but there are more reasons to create an ecommerce website. An online presence gives businesses ample opportunities to create connections that lead to growth.
1. New market acquisitions.
For many companies, especially small businesses, it can be hard to reach customers in new markets with just a storefront. An ecommerce site enables you to reach new customers online that you couldn’t reach with only brick-and-mortar sales.
2. Create unique shopping experiences.
Online businesses are also able to directly impact the customer journey by creating a unique shopping experience through videos, stories, and personalized services. These shopping encounters don’t need to end at the checkout either, as you can reach customers via email or social media. These extraordinary experiences have a way of convincing customers that online shopping offers inclusive opportunities that a brick-and-mortar store typically doesn’t provide.
3. Strengthen your brand.
If you sell on an online marketplace, like Amazon, your products are listed generically and often use the marketplace’s brandings. Some customers may not even realize they’re purchasing from you and consequently won’t learn about your brand. Building your own ecommerce site ensures control of how your products are presented. Your customers remember you, not the marketplace.
9 Steps for Building an Ecommerce Website
Building an ecommerce site may be simpler than you imagine. There are now ecommerce solutions that do most of the work for you, but you still need to understand what’s offered and what your site needs. If you do enough research, you can make decisions that lead to a magnificent site that grows and evolves with you in the years to come.
- Select your perfect ecommerce platform.
- Purchase a domain name.
- Find a developer.
- Pick your ecommerce theme.
- Customize your ecommerce template.
- Add your products.
- Set up payment methods.
- Sort out your shipping settings.
- Preview, test… and publish your online store.
Find Your Perfect Ecommerce Platform
Finding the right ecommerce website builder is the first step in your journey. It’s important to have one that can meet the needs of your products and brand.
1. Types of Ecommerce platforms.
There are three main types of ecommerce platforms to choose from, which suit different kinds of businesses. Here’s what you need to know:
As the name suggests, open-source platforms offer their source code freely to everyone who wants to use it. It’s free to install and endlessly customizable. However, open-source platforms usually require advanced coding knowledge to use properly. Security breaches are also a concern, and users often need to hire people dedicated to maintaining the security, which may end up costing more than a subscription to another type of platform.
SaaS, or Software as a Service, is an ecommerce platform that’s offered as a subscription service. These systems are generally easy to use, scalable, and have robust security. As they’re designed specifically for ecommerce, they can handle the logistical processes, like checkout and payment processing.
Cost is a concern with SaaS, as there’s a monthly subscription fee, transaction fees, and expenses for plug-in apps. Some services may also have restricted branding, which limits your creativity when designing. Sites built on Wix, for example, have “powered by Wix” at the bottom of the screen, so not only are you promoting your brand, but you’re sharing the spotlight with Wix. Premium services usually give you more leeway to create a look and feel that reflects your brand, alone.
Headless commerce keeps the shopping cart and display layer of ecommerce sites separate. This means you can use a content management system (CMS), digital experience platform (DXP), progressive web app (PWA) or other technology on the frontend and power that with an ecommerce engine on the backend.
Headless commerce enables customer-facing changes to be made quickly and gives businesses plenty of creative control. It also lets companies get to market faster, with a lower total cost, and businesses get increased control over their store while outsourcing security and PCI compliance.
2. Ecommerce Hosting.
Ecommerce hosting is where your data is stored. It can have an impact on security and costs, so take the time to understand your options.
Cloud hosting refers to ecommerce sites hosted off-site. It’s generally offered by SaaS or headless commerce companies. The platform manages the uptime as well as updates, patches, and upgrades that help keep sites secure. Open source solutions may also have a cloud option that includes the costs of hosting, but will still require security maintenance to be done by the merchant.
On-premise hosting refers to ecommerce sites that are hosted on servers owned by the business and is usually found with open source solutions. The company needs to have space for the server, handle the installation, and hire people to look after it to ensure that the site stays up and secure. This usually is more feasible for large corporations.
3. Things to consider when choosing your ecommerce solution.
Several systems have to work seamlessly to give your customers the best ecommerce experience. Look at how your preferred ecommerce platform works in the following areas to ensure it performs optimally now and into the future.
Make sure the platform works consistently and has a strong uptime record, so your website is available when customers want to shop. Unlimited API calls help make your site easier to manage, and pages that load quickly give customers the best experience.
Can the platform meet your current traffic needs? Does it have the scope to grow with you as your business expands? Does it handle big days like Black Friday and Cyber Monday?
More consumers are shopping on mobile devices, so it’s essential that your platform can optimize your website for an excellent mobile encounter. Look for ways to enhance customer experience through mobile technology, like geolocation, which helps customers find the nearest store.
Secure payments and data
The platform must be able to protect your data and your customer’s data. SaaS solutions include security, like SSL and PCI, as part of their monthly plans. Self-hosted and open-source solutions require you to have a greater understanding of security, as there’s a higher chance of attack.
4. Ecommerce website builders to use.
Your website builder is the foundation of your online store. Options explicitly designed for ecommerce give you more options and room to grow than generic website builders with an ecommerce add-on. Here are a few to consider:
BigCommerce is a SaaS solution that’s known for being scalable. It has 24/7 customer support, with priority support available for large accounts. There are plenty of built-in features. Multi-layered security keeps data safe, and local payment methods bring in customers from around the world. BigCommerce supports headless, so brands can deliver API-driven experiences through a CMS, DXP, application, device, or custom front-end — with BigCommerce powering the commerce engine.
Shopify is another SaaS solution that’s fully hosted and known for being quick and easy to set up. They have an extensive range of plug-ins, but if you need to use a lot, the price can quickly add up. Shopify can handle a high number of transactions per minute, so it can easily cope with traffic spikes.
Magento is a self-hosted solution, so you have total creative freedom; however, you need someone with coding knowledge to take full advantage of the platform. There’s a wide choice of integrations, and it can handle instant purchases and product suggestions.
WooCommerce is an open-source WordPress plug-in, so it’s free to install. It’s generally used by those with an existing WordPress site. WooCommerce is flexible, has limitless customization, and industry experts audit its secure code.
Purchase a Domain Name
If you already have a domain name, it can be transferred to your online store builder. If you don’t have a domain name, make sure it follows these best practices below.
1. Avoid creative spellings.
A domain name should be easy to remember and type, so avoid creative spellings. It doesn’t necessarily need to pass a spelling test, after all, google wasn’t a word until Google created it, but it must be easy to spell. Make sure that it’s also easy to pronounce, as you want customers to tell their friends about it. Avoid hyphens and numbers because this makes it harder for people to easily share the web address.
2. Avoid generic names.
A generic name has two problems: people will forget the name, or they’ll go to a similarly-named company that has a better SEO ranking. A brandable name is memorable, so make sure your domain name stands out.
3. The shorter, the better.
Aim to make your domain name 6-14 characters in length, making it easier for your customer to remember. Shorter names are also more straightforward for you to use in marketing, which leads to more customers, even if people are finding you through a search engine.
Find a Developer
Even if you’re bootstrapping your business, a developer can make the process of setting up an ecommerce site simpler. They have the technical know-how to get you set up quickly, meaning you can start selling sooner. When considering a developer, ask them about their timeline, so you can plan your launch date. Ask to see other websites that they’ve built and get references from those businesses. Make sure the developer shares your vision and can create what you’re looking for within your budget.
Pick Your Templates: Find a Theme that Matches Your Ecommerce Website Vision
Templates, or themes, are ready-built pages that you can customize to suit your brand and help your site look good without design or coding skills. Think about the following areas when selecting a template:
1. Customer navigation.
Smooth navigation is essential to an excellent customer experience. If a customer can’t find what they want, they’ll hit the back button and shop somewhere else. A navigation bar is easy to read and located on the left side of the page, as customers read from left to right.
2. Style of the homepage.
Does the template’s homepage reflect your brand? Does it have areas where you can include images, slideshows, or videos? Is there space for you to share your story with site visitors? A customer should be able to tell what type of business you are from first glance, so make sure the template communicates that clearly.
3. Customization options.
What parts of the page can be customized? Is there a font and color scheme that matches your branding? How many images can you include? How are products displayed, and can they be changed? Can social media be embedded? Most online store builders use apps to add features that aren’t built-in, so consider how many apps you need to interact with the template.
Add Your Products
Product pages are among the most critical pages on your site, as they show your customers what you have to sell. Take the time to ensure you display your products in their best light by including optimized product descriptions, eye-catching images, and easy to navigate categories.
1. Product descriptions.
Product descriptions are an essential part of your ecommerce site. They describe the usefulness, colors, textures, measurements, and/or value of the product to your customers and allow bots to index your page for SEO. Avoid cliches, long sentences, and complex phrasing when writing descriptions, and make sure the descriptions answer the following questions:
- Who is the product for?
- What are the product’s basic details?
- Where would someone use this product?
- When should someone use the product?
2. Product images.
Website visitors are engaged by visual information, so high-quality product images are essential. When producing photos, consider the following areas:
Use high-quality images.
Images represent the perceived quality and value of your product. High-quality photos make your products stand out. Vibrant photos also make the images more appealing, keeping customers browsing.
Make sure each image is the same size.
It’s essential that each image is the same size, as different sized photos can often misalign your gallery. Use an image editor to adjust each picture to the required size.
Add product variation image.
Most images should be product-only images that show the product from all angles. You should also include an in-context photo that shows the product being used. These are helpful on product pages and can also be used in social media to boost emotional engagement.
3. Product categories.
You can add products to categories, like clothing, books, and movies, to help customers find what they’re looking for. Categories can also be used with filters to enable people to sort through specific brands or price ranges, keeping them within their budget. And featured items are a great way to lead customers down your preferred shopping path.
Set up Payment Methods
The right payment method is essential for closing a sale. If the method is too complicated or not trusted, your customer could abandon their cart and not return. Make sure it also meets your payment processing needs.
1. Three types of ecommerce payment gateways.
There are three types of payment gateways, which all have their own pros and cons. When deciding on a gateway, think about the steps you need to take to keep payments and information secure.
A redirect takes the customer to a separate site to process the payment. The most widely used example is PayPal. This is a simple solution for retailers and passes on security concerns to the third party, but adds another step for customers, which may drive some away.
Checkout on-site, payment off-site
This gateway hosts the front-end of the payment, including collecting details, but the payment is processed off-site. Stripe is a popular company offering this service. It takes away extra steps for customers, but you have to ensure your site is encrypted correctly so information can be safely sent to the payment processor.
On-site payments happen on your site, which gives you complete control and responsibility. It’s suitable for large corporations who process a lot of payments, as they can afford to keep it working and secure.
2. Tips for choosing your payment integrations.
A payment gateway integration is a secure method that encrypts and transmits credit card data to your payment processor. As it’s an essential part of your ecommerce site, make sure you research and understand what you’re getting from your payment integration.
Judge ease of integration
Think about how easy it is to integrate the system on your site. Does it work with the ecommerce platform you’ve selected?
Consider customer reviews
Look at customer reviews from other websites. Is the gateway trustworthy? Does it work consistently? Have people had problems sending or receiving money?
Keep fees in mind
There are fees involved in every step of the process, including taking payments and processing refunds. Read the fine print, so you understand how much the system costs and are happy with that price.
PCI compliant and secure
PCI refers to the Payment Card Industry Data Security Standard. This ensures that credit card details are kept safe. Non-compliance can lead to fines, lawsuits, and a loss of trust from your customers, so make sure your gateway is compliant and secure.
Sort out Your Shipping Settings
Shipping is a critical component of ecommerce. Customers want products promptly, so choose your shipping settings wisely.
1. Determine your shipping policy.
Your shipping policy includes fees and carriers. Are you offering shipping for free, a flat rate, or a variable fee? Who are you shipping with? Also, consider whether you plan to ship internationally and, if not, make sure that information is readily available, so international customers aren’t frustrated at checkout.
2. Select ecommerce shipping solutions.
Decide on your shipping solution. Will you be doing the packing, or are you dropshipping? Shipping software that works seamlessly with the rest of your workflow permits you to automate that side of your business, freeing you up for other matters.
Preview and Publish Your Online Store
A successful launch relies on everything on your site working as it should. If a link doesn’t work, payments don’t process, or the site doesn’t look good on mobile devices, it can send customers away and lead to time delays while you fix mistakes. Make sure you test everything before hitting the publish button.
1. Does checkout work?
Do a test run on an order. Can you add products to the cart? Is the payment processed? Do you receive all the confirmation emails you were expecting?
2. Are the store’s functions working?
Click every button and link it on your site. Do the buttons and links work? Do filters and categories work? If a link doesn’t work, does your 404 page direct customers back to your site?
3. Does the store work on mobile?
Look at the store on a mobile device. Are the dimensions correct? Are the buttons easy to click? Are images clear on a smaller screen?
4. Test your store on different browsers.
Look at the store on as many different browsers as you can, including Chrome, Firefox, Safari, and Edge. Make sure it works on all the browsers, and if you have difficulties, ask the developers to fix it.
5. Set up the store’s settings.
The store settings include things like language, time zone, your address and contact details, tax, and measurement units. Check that these have all been set correctly before you launch.
A good ecommerce site is more than just a place to sell products. It’s where a business can create an experience that strengthens their brand, draws in new customers, and converts casual shoppers into loyal ambassadors. Choosing the right ecommerce platform and having a strategy to create a successful online store can give you a headstart in being an ecommerce success.
Once you’ve been in ecommerce for a while, you’ll know the industry’s symbiotic relationship with technology. Ecommerce only exists thanks to the rise of the internet. The global spread of smartphones then helped put online stores in everyone’s pockets.
Ask those in the know what the next trending tech is, and many will tell you it’s artificial intelligence (AI). AI is fast taking hold across niches and in a plethora of guises. The ecommerce sector is far from immune.
AI, and particularly the machine learning subset of the tech, is having a profound impact on ecommerce businesses. There are many applications of machine learning within the ecommerce industry.
Read on, and you’ll learn about a few of the most notable. What’s more, we’ll explain why you’re missing out if you’re not already leveraging the potential of AI for your brand. First, though, let’s cover the basics.
Machine Learning Has Developed Over the Years
Before we get to the nitty-gritty of machine learning and ecommerce, it’s vital to understand just what machine learning is. At a basic level, it is what it says on the tin, a process by which a machine can learn. As you may guess, though, things are a bit more complicated in practice.
Machine learning is an application of the wider tech area of artificial intelligence. It involves creating algorithms or programs that can access and learn from data. All without having to get programmed by a human.
How those algorithms ‘learn’ is primarily by pattern recognition. You train a machine learning algorithm by introducing as much data as possible. It then analyzes the information and finds the trends included within. Eventually, the algorithm is ‘intelligent’ enough to apply what it’s learned to new data sets.
Machine learning algorithms are typically categorized in one of three areas:
- Supervised – These apply what’s been learned in the past to new data using specific labeled examples. They can predict future events and compare their output to the intended results. That helps the algorithms improve themselves with ‘practice’.
- Unsupervised – These algorithms analyze unlabeled and unclassified data. There are no specific examples upon which to base predictions. Such programs, then, draw inferences and ID hidden structures or patterns within data.
- Reinforcement – Reinforcement algorithms interact with their environment to test outputs. Through trial and error, the programs discover correct behavior. They then tailor their future responses in accordance.
The premise of machine learning stretches back longer than you might think. The discipline began soon after scientists found out how neurons in the brain worked.
In 1952, Arthur Samuel created a computer program that could play checkers. Six years later, Frank Rosenblatt built the first wholly artificial neural network. That’s a machine learning algorithm based on the general structure of human neurons.
The field of machine learning continued to develop in the ensuing decades. By 1997, IBM had created a computer called Deep Blue. It successfully beat the world chess champion. It’s in the 21st century, though, that the field has accelerated in earnest.
That acceleration is primarily thanks to the invention of GPUs (Graphics Processing Units). These processors have the power to let algorithms analyze far more data in a far shorter time. As such, modern machine learning can understand more complicated data-sets. It can also make far more accurate and complex predictions.
Differences Between Machine Learning and Artificial Intelligence
You may have read this far and thought ‘hang on, aren’t you describing AI rather than machine learning?’. Well, the answer is both yes and no. Much like fingers and thumbs, all machine learning is AI, but not all AI is machine learning.
1. Machine learning.
Machine learning is a subset of artificial intelligence. Machine learning technology uses data to make predictions or perform actions. The more data the tech gets exposed to, the more accurate its outputs. That’s how algorithms in this area can get described as being able to ‘learn’.
2. Artificial intelligence.
A far broader range of tech falls under the umbrella of AI. Artificial intelligence is any technology that exhibits human behavior. That may mean learning, but could also be reasoning, sensing, or adapting.
Deep learning, too, is another subset of AI, and in many ways of machine learning. It’s where complex neural networks analyze and learn from massive data sets. We’re talking the volume of information that’s only become available in the era of big data.
Business Benefits of Ecommerce Machine Learning
Along with other tech such as augmented reality, machine learning offers many business benefits. Especially to online retailers. The ability of algorithms to make sense of vast swathes of data is invaluable.
There are now machine learning applications for almost every area of ecommerce operations. From inventory management to customer experience, ecommerce machine learning truly delivers. Let’s dig deeper into how machine learning could benefit your business.
1. Increased conversions.
Turning browsers into online shoppers is crucial for any ecommerce website. That’s why you’ll no doubt be a little obsessed with your site’s conversion rate. One reason machine learning is so useful to ecommerce is that it can help boost that rate in many ways.
We’ll cover how machine learning aids conversion rate when we look at ecommerce use cases. Typically, though, its value in this regard comes in two areas. These are how it can empower on-site search engines and product recommendations.
Machine learning algorithms can deliver smarter search results. Via natural language processing, they can understand what’s typed in the search bar. They’ll then use what they’ve learned from previous searches to show what the searcher genuinely wants to find. That’s even if they don’t type the name of a specific product or even an accurate description.
Product recommendations powered by machine learning are also smarter. Algorithms can analyze the behavior of visitors to an ecommerce site. They’ll recognize products a visitor browses or buys, and the content with which they interact.
When an individual returns, then, they get presented with similar items to those they’ve shown an interest in before. That’s how, when you visit Amazon, you’ll see swathes of things related to those you’ve recently bought or looked at.
2. Run more relevant marketing campaigns.
Ecommerce marketing shares many similarities with sales prospecting. The best campaigns are highly relevant to their target audience. Machine learning can help an ecommerce company maintain that level of relevance.
In the era of big data, ecommerce stores have access to more information than ever before. Machine learning can help them make sense of customer data to better tailor marketing campaigns.
The patterns IDed by machine learning algorithms are vital. They show what interests different customers or visitors to your website. That allows for more accurate customer segmentation. You can split your prospects based on their interests. That lets you target them with far more relevant marketing material.
Retargeting is another area where machine learning is invaluable. Algorithms can understand customer behavior to suggest highly relevant retargeting campaigns. For instance, say a would-be customer visited the Bliss website.
That visitor might have browsed the brand’s skincare products for dry skin. They may even have added items from that range to their cart. In the end, though, they didn’t buy. What they did do, though, is provide an email address.
Via machine learning, Bliss will see the visitor is a prime target for a retargeting campaign. The firm can then send an email selling precisely the dry skin products it knows the lead is interested in.
3. Improve in-house operational efficiencies.
Not all benefits of ecommerce machine learning regard customer-facing processes. Algorithms can also deliver real-time insights to help you make your other operations more efficient.
Take managing your stock levels and accounting for your inventory as an example. Many brands struggle with the age-old FIFO vs LIFO decision. The best way to choose which method is best for you is by analyzing customer data.
Machine learning makes such an analysis swifter and more accurate. A program can crunch the numbers on ecommerce sales, warehousing costs, tax implications, and more. It can also help predict future demand. Thus, you have all the info you need to adopt the most efficient possible processes.
4. More informed decisions.
Following on from the previous point, machine learning is an excellent tool for improved decision-making. You might need to decide whether dropshipping is right for you. You may be wondering whether there’s consumer interest in a new product line. Whatever the choice that faces you, machine learning can help.
How machine learning helps in this area is by allowing all your decisions to be backed by data. Algorithms or programs process and make sense of high volumes of information swiftly. That delivers actionable insights you can use to inform your choices.
Use Cases for Ecommerce Machine Learning
We’ve looked at the business advantages of machine learning in general terms. Now it’s time to get more specific about the tech’s impact on the online shopping experience. The following are six use cases for ecommerce machine learning.
Today’s consumers don’t want to get treated as one of many customers. They prefer a highly personalized customer experience.
It’s that kind of personalization that keeps a customer loyal to your brand. If you can’t provide it, they’ll find a competitor who can.
Why should you use machine learning for personalization?
AI, and specifically, machine learning, is the only way to deliver high-level personalization online. Algorithms analyze customer data and behavior to tailor the user experience to each site visitor.
Your site can show each user product recommendations based on their known preferences. Such a recommendation engine is an excellent way to deliver personalized customer experiences. It’s also the tech utilized by hugely successful brands like Amazon and Netflix.
2. Site search.
Anyone who’s used Google lately can tell you that online search has come a long way. Far too often, though, site searches on ecommerce stores don’t measure up. Unless you know precisely what to type, it can be maddeningly tough to find the products you want.
There’s no excuse for that in the age of big data and machine learning. Intelligent algorithms – leveraged correctly – make smart searches a cinch to deliver.
Why should you use machine learning for site search?
Many visitors to your online store will have an idea of what they need. What they might not know is the name of a specific product. Or even which item would meet their needs. Your site search, then, must be intelligent enough to present the right solution. That’s no matter what gets typed in the search bar.
Say, for instance, someone visits Camelbak’s website. They might need something to help stay hydrated more easily while hiking. They may simply type ‘Hiking’ in the site’s search bar.
Fortunately, a smart search powered by machine learning can handle that. As you can see above, that exact search delivers highly-relevant results. The products returned are all packs and reservoirs designed for hiking.
3. Managing supply and demand.
When you get down to it, ecommerce, like many areas of business, is about supply and demand. As an online retailer, you must ensure you have the right stock in the correct amounts to satisfy consumer’s needs.
Those needs change over time. As such, the more proactive your inventory and supply chain management, the better. That’s why demand forecasting is so crucial to online stores. Being able to predict fluctuating customer needs keeps you ahead of the competition. Machine learning helps you make those real-time, accurate predictions.
Why should you use machine learning for supply and demand management?
Managing your supply chain is essential to success in the ecommerce sector. Balancing consumer demand with expenses like landed costs and logistics is how to get ahead. Via machine learning, you can crunch all the relevant numbers with ease.
By using an AI-powered algorithm, you can perform quantitative forecasting. That means making predictions based on cold, hard evidence. It’s the best way to ensure the forecasts you produce are as accurate as possible. As a result, the inventory and supply chain changes you make in response are more likely to pay off.
4. Churn prediction.
Customer churn is often discussed in the B2B niche. It’s the rate at which customers abandon a brand – potentially to patronize another instead. It’s worth considering as an ecommerce company, too.
It’s quite simply more straightforward to sell to an existing customer. That’s why retention marketing is so valuable to online retailers. But what if you could improve that part of your marketing strategy by predicting the customers most likely to churn? That’s the opportunity afforded by machine learning.
Why should you use machine learning for churn prediction?
Churn prediction is about using data on existing and prior customers to find patterns. What behaviors, for instance, do customers do when they are about to churn? These are the insights machine learning algorithms can deliver.
With that knowledge on hand, you can pinpoint the people who may be about to leave you. Then, you can tailor marketing campaigns, by email, social media, or other channels, specifically to keep them on board.
5. Fraud detection.
In this age of cybersecurity awareness, you may think ecommerce fraud is a thing of the past. Unfortunately, you’d be mistaken. The value lost by online retailers to fraud continues to grow steadily.
Fraud detection and fraud protection, then, are essential processes for all online stores. Machine learning technology can beef up these processes and make them more efficient.
Why should you use machine learning for fraud detection?
It’s the sheer volume of data machine learning algorithms can process that helps with fraud detection, too. They’re able to analyze customer data when it comes to genuine transactions.
That means they can pinpoint the hallmarks of an actual purchase. What’s more, they’ll immediately notice a transaction that diverges from the norm. If something about a supposed purchase is off, it’ll get flagged up as potentially fraudulent. That may be if the payment comes from an unusual location, happens on an unverified device, or occurs at a strange time.
6. Improved customer service.
All ecommerce businesses understand the importance of customer service. Just what is world class customer service, however? In today’s competitive retail world, it’s characterized by delivering customer support both how and when each customer needs it.
One way to offer such 24/7, omni-channel support is by taking on a raft of additional staff. Even for the largest brands, though, that’s often not viable. Instead, companies typically seek to boost customer satisfaction via AI and machine learning.
Why should you use machine learning for improved customer service?
Chatbots are amongst the most accessible examples of machine learning in ecommerce. Lots of sites feature a chatbot offering you assistance. For online stores, the tools help with common queries and direct visitors to specific products.
Where machine learning comes in is when it comes to improving the responses of chatbots. An AI-enabled bot can use the interactions it has to learn and tweak its future replies. The more a chatbot gets used, then, the more human it seems, and the better the information it provides.
Steps for Adopting Machine Learning in Your Ecommerce Business
You should now have a handle on how machine learning can apply to ecommerce. You may even have some ideas for your own online store. That’s great, but how can you get started adopting the tech? The following are six straightforward steps to get you started.
1. Get familiar with everything machine learning.
Before you can leverage machine learning effectively, you must fully understand its capabilities. That means putting in the time researching the present state of the technology. Look into the AI-enabled solutions around and what processes can get bolstered by machine learning.
2. Leverage third-party expertise.
If you can’t find all the answers yourself, look to existing experts in the field who can help. You might simply reach out to a pro to give you some general advice. If you’re going to go deep with the tech, you could hire a machine learning engineer. They’ll be able to manage adoption across your organization.
3. Identify problems you want machine learning to improve.
Before adopting any tech solutions, you must define what you want to achieve. The same goes for machine learning. It’s not enough merely to say you want to streamline your ecommerce store. You must draw up some identifiable goals.
For instance, you may find your home page has a high bounce rate. Your aim could then be to reduce that bounce rate with improved personalization. That’s a specific goal that a machine learning-driven solution can help you to address.
4. Acknowledge your technology and capability gap.
This step is best taken in concert with the previous one. When defining your machine learning goals, take your organization’s capabilities into account. Don’t dream bigger than your staffing or tech resources allow.
Many machine learning solutions have comparatively low barriers to adoption. That’s not always the case, however. Full-blown machine learning implementations, moreover, aren’t something to take on lightly.
5. Create a team dedicated to implementing machine learning technology.
With clear and achievable aims in mind, you can start the process of adopting machine learning. Creating a team devoted to the process will help keep things on track. It avoids putting extra work on your existing staff’s plate. It also ensures implementation gets the attention it deserves.
Some of the tasks this team must handle will include:
- Collecting and collating data.
- Setting up systems to centralize future data collection.
- Choosing existing machine learning tools or coding unique solutions.
- Implementing pilot programs of solutions.
6. Measure and scale.
Any adoption of a new machine learning solution should start on a small scale. Use a new tool or program to analyze a small and specific data-set first. That way, you can test the insights, predictions, or results that arrive.
If you’re pleased with the performance of your new application of machine learning, then you can scale up. What’s more, by proving its efficacy at a smaller scale, you’ll get more buy-in from key stakeholders. That will make it more straightforward to get their support for expanding the adoption.
Once upon a time, machines that can learn independent of human input were the realm of science fiction. Now, it’s very much a part of everyday life. Machine learning and other AI-driven processes are ubiquitous. And their influence is only growing.
If you’re an ecommerce business and you’re not on board with machine learning, you’re getting left behind. The benefits of the tech to your sector, after all, are numerous. From customer experience to inventory management, machine learning can make you more efficient.
Leveraging solutions in the area is easier than you may think, too. You’ve taken the first step by learning more about the basics of ecommerce machine learning. Now all that’s left is to ID what you want the tech to do for you and set about working toward that goal.