When you ask an ecommerce business owner, what’s the least favorite part of their job — most will say ‘accounting.’
(If you are that rare gem who loves accounting, virtual high-five to you!)
And yet 41% of small business owners handle their books without any help.
But here’s the deal: as your ecommerce business grows, your finances will get more complicated. Sales, returns, supplier payments, banking fees — all of the in-and-out money movements will need to be properly categorized, analyzed, and then reported to the tax authorities.
Without proper accounting systems in place, you can quickly get overwhelmed with all the financial data you are up against.
Also, compound this with the fact that:
19% of those who perceived themselves as having high financial literacy are financially literate.
We don’t mean to discourage you from doing your own accounting with that data.
But we really want to get your full attention. Because accounting is important. But learning to love it is hard. In this guide, we explain everything you need to know about ecommerce accounting without any dread.
Ecommerce Accounting vs Bookkeeping: What’s the Difference?
Let’s start with the basics and recap who is who in the accounting field.
Bookkeeping is the baseline accounting practice of maintaining a neat record of financial documents and transactions. The purpose of this practice is to describe and organize the state of your finances.
Key bookkeeping tasks include:
- Transaction categorization.
- Account reconciliation.
- Balance sheets preparation.
- Payroll management.
- Account payables and receivables management.
Accounting is a practice of analyzing all the financial records, produced by the bookkeeper, to create financial reports, models, and forecasts. So that you could understand the current level of your finances and plan for the future.
The main accounting tasks include:
- Preparation of adjusted entries.
- Financial information audits.
- Tax planning and reporting.
- Financial forecasting and risk analysis.
- Preparation of financial statements, reports, and models.
The purpose of accounting is to equip you with financial knowledge to make smarter business decisions.
The 2 Types of Accounting for Your Ecommerce Business
Systemization is essential in accounting. To keep your ecommerce financials organized, you can use either of the two types of popular accounting systems.
1. Cash basis accounting.
When using the cash method of accounting, you add a new record whenever the cash lands in your bank account or leaves it as an expense. This way your books mirror all the transactional information, stored across your payment methods and bank accounts.
Here’s a quick example of cash basis accounting record:
+$555 (T-shirt sales)
-$75 (shipping costs)
+$200 (Hoodie sales)
-$65 (packaging fees)
Biweekly income: $615
Cash basis accounting is a ‘starter’ choice for most small ecommerce businesses. Because it’s a simple system to maintain — you just report on all money movements as they happen. Plus, you always know how much cash you have at your disposal right now.
Another boon of cash basis accounting is this: when reporting your business taxes at the end of the year, you won’t need to pay income taxes on the payments you haven’t received yet. So your tax bill can be smaller.
Cash basis accounting works for:
However, this accounting method isn’t the best choice for larger ecommerce operations since it does not recognize future account receivables and accounts payables.
Due to that, avoid cash-based accounting if you:
- Run an ecommerce business with high stock levels and multiple suppliers.
- Plan to apply for financing or secure a loan for your business.
- Want to bring auditors on-board and get audited financial statements.
2. Accrual method.
Accrual accounting, on the contrary, prompts you to record each sale or expense once it takes place, regardless of when the money reaches (or leaves) your bank account.
Let’s take a look at his sample record:
$2,500 (online furniture sales)
$800 (subcontractor wage, due on Nov, 1st)
$5,000 (in-store pick up, cash on delivery)
$100 (shipping costs)
Biweekly income: $6,600
The business made $2,500 in online sales. That money already landed in the bank account. But that bigger $5K check hasn’t cleared yet and is due to arrive on Week 3. Same with expenses — shipping costs were paid out immediately. But the contractor payment is due next month, meaning that $800 will be still sitting in the bank account till then.
Accrual accounting is often known as the traditional accounting method as it’s the system most financial institutions use. Think lenders, auditors, investors, tax planners, or anyone else interested in learning about the state of your company’s finances.
On the surface, accrual accounting seems more confusing than cash-basis accounting. You have to think about the money you haven’t earned yet (account receivables) and subtract costs you are yet to incur (account payables).
But once you get past that, this accounting system starts making more sense. Since it provides a more realistic representation of your business income every month. Plus it allows making more accurate financial projections as you take into account your present and future financial obligations.
The con of accrual accounting, however, is that this way of record-keeping shifts the focus from how much money you have to how much money you move. By counting in future payments/expenses, accrual accounting can make your operations look more profitable than they actually are. So you’ll need to keep closer tabs on your cash flow.
Should you switch to accrual accounting as an ecommerce entrepreneur?
The short answer is — yes. You’ll have to adopt this accounting system as your operations scale. Cash basis method for tax reporting is only permitted for companies with an average annual growth receipt of $5 million or less.
What You Need to Start Doing Accounting for Your Ecommerce Store
No matter which accounting system you go with first, you’ll need to have three things ready:
1. Business tax ID number.
If you operate as a corporation or a partnership, you’ll need to request an Employer Identification Number (EIN) from the IRS. It’s a unique 9-digit identifier of your business to use in all your tax documents. You can apply for it online and receive it immediately by email. Sole traders can use their Social Security Number (SSN) for the same purpose.
2. Business bank account.
Keeping your business and personal finances separate is the first golden rule of accounting. Open a dedicated business bank account for your ecommerce store. Set up business versions of popular payment apps (e.g. PayPal). And make sure that you don’t spend any money from your business account on your personal needs (unless these qualify as deductible business expenses).
On the other hand, you can spend money from your personal account to cover your business expenses. You can then claim them back as ‘out of pocket’ expenses. Again, this should be reasonable business spending. Or you’ll risk regulatory questioning.
3. Accounting software.
Accounting apps and online services can save you heaps of time on sales recording, expense management, report generation, and other bookkeeping tasks. That’s why 50% of small businesses use them.
Popular accounting apps for small ecommerce stores are:
5 Important Ecommerce Accounting Tasks to Start With
With all the tools lined up, let’s take a look at the key accounting tasks you’ll need to do on a weekly/monthly basis:
- Categorize all transactions.
- Maintain a business budget.
- Stay up-to-date with taxes.
- Distinguish between returns and chargebacks.
- Practice accurate recordkeeping.
Being diligent with each of them will help you understand your cash flow and prepare for the tax season.
Categorize All Your Transactions
Transaction categorization is the baseline practice of ecommerce bookkeeping. You should mark every transaction on your cash flow statement as either income or expense. Most accounting apps will auto-sort the transactions for you, so you should just review them and assign correct extra categories (e.g. salary, marketing, returns, etc).
Categorizing your transactions helps you estimate your:
- Regular and one-off expenses
- Monthly revenues
You can then use these figures to assess your online business income statement, plan for your taxes, and create a business budget.
Maintain Your Business Budget
A business budget is a tally of all your business spendings and other financial obligations, neatly summed up and stacked against your regular revenues. The total number tells you how much cash you need to break-even or make a profit.
The goal of a budget is to help you:
- Monitor your cash flow patterns.
- Stay atop of all recurring and unplanned expenses.
- Know when to splurge and when to pedal back.
- Set some income aside for the rainy day (and taxes).
- Avoid or reduce business debt.
- Stay focused on long-term financial goals.
Considering that 2020 was a tough year for small ecommerce businesses, budgeting can be a good practice to pick up and stick to. Here’s how:
1. Review your cash flow.
To budget effectively, you need to know when and where your money goes and how much comes in regularly.
Recording your spendings first since most of these will be recurring. Note how much you spend on:
- Inventory purchases.
- Supplier payments.
- Employee salaries/subcontractors.
- Packaging and handling.
- Postage and shipping.
- Payment processing fees.
- Business banking.
- Software, apps, subscriptions.
- Website hosting.
Then factor in (un)planned one-off expenses. The total number you’ll get is your budget baseline — a sum you need to break even every month.
Since ecommerce sales volumes can zig and zag due to price fluctuations, changes in demand, seasonality, and other market conditions, your revenues can fluctuate. So you may end up having negative cash flow months — that is when you earned less than you’ve spent.
That’s another reason for having a budget and setting some extra income aside.
2. Create a weekly budget calculator.
To maintain positive cash flow, especially as at early growth stages, you need to be mindful of every cent you spend.
One way to do so is by setting up separate ‘pockets of cash’ for different weekly spending categories and updating them regularly. This way you’ll know exactly how much you’ve spent and can cut down on non-essential ones during the next week.
You can keep a similar spreadsheet where you list all your expenses and weekly revenue to estimate your cash flow dynamics:
Revenue (before tax)
Stay Up-to-Date with Taxes
Ecommerce business owners have two tax categories to mind — business income taxes and sales taxes.
Navigating sales taxes can be challenging since you need to factor in both:
- State-level sales taxes (collected in 45 states and the District of Columbia).
- Local sales taxes (collected in 38 states).
Source: Tax Foundation
1. Make sure your tax rates are correct for customers.
Depending on which ecommerce platform you are using for your store, you can either add all sales taxes manually to the checkout form or have these automatically calculated, based on the customers’ shipping address. The second option is less error-prone.
2. Pay estimated quarterly business taxes.
All ecommerce businesses who may owe more than $1,000 in taxes by the end of the year are expected to make quarterly estimated tax payments. The IRS calculates your dues based on the last return and expects payment according to the calendar.
3. File sales taxes.
You need to maintain clear records that you’ve collected sales tax for every customer invoice. All of these records will have to be filled with your local tax jurisdiction according to the due date. The filling frequency varies from state-to-state, but typically it’s by mid- or end of each month.
Distinguish Between Returns and Chargebacks
Customer returns and chargebacks are two different types of expenses that need separate recording.
1. Store return.
Ecommerce stores can have one or several return policies and this should reflect in your accounting:
- Store credit: Record the original transaction as an expense and add it to the accounts payable list.
- Full refund: Once the product arrives back to you, categorize the refund transaction under “Returns and Allowances” and subtract it directly for your revenue.
2. Store chargeback.
Chargebacks happen when a customer disputes a transaction with their bank by claiming that it was fraudulent. Sadly, such ‘friendly fraud’ accounts for 40%-to-80% of all fraud losses among e-tailers.
Categorize all the chargebacks as “Returns and Allowances.” Also, if the chargeback included an extra fee, mark it as a business expense.
Practice Accurate Recordkeeping for Your Ecommerce Store
Accounting is the art of maintaining financial records that tell a complete financial story of your business (for yourself and anyone else who asks).
Since you are self-reporting your financials and taxes to the authorities, you need to maintain proof of all your claims. That means you should store the following records for your ecommerce business accounting:
- Receipts, bills, and invoices.
- Canceled and bounced checks.
- Previous tax returns.
- W2 and 1099 forms.
- Bank account, debit/credit card statements.
- Account statements from online payment wallets.
- Revenue records from your ecommerce platform such as BigCommerce.
All of these records should be kept for at least 3 years.
Seems like a lot? Well, it’s best to pay some extra for cloud storage, then face possible fines if you cannot back up your financial claims during an audit.
3 Quick Accounting Best Practices to Remember
Doing those five accounting tasks for your ecommerce store can be overwhelming, especially when you are just getting started.
Remember: you don’t need to go into financial guru mode and try to create fancy cash flow projections or use multi-step formulas to calculate your profitability index.
Keep your accounting simple and to the point:
1. Forecast for major expenses.
Keep a straight record of all regular account payables, along with a weekly budget Excel spreadsheet. This way you’ll always know your dues and can work around with the remaining income to accommodate a bigger expense — a new warehouse building, more advertising, or extra inventory.
2. Set money (and time) aside for taxes.
Tax season can be hectic if you come offhanded. One-third of small business owners spend over 80 hours (= two work weeks) per year on preparing their federal tax returns. Your commitment to maintaining neat records throughout the year will pay off massively.
As for the money, put aside 30%-40% of your business income towards end-of-year tax payments.
3. Supervise your inventory management.
The US retail sector faces $50 billion in losses per year due to the unmoving inventory. Don’t add up to those numbers as unnecessary inventory buildup impacts your liquidity and will reflect badly on all your assets and your bottom line.
The same goes for raw materials — don’t be tempted to over-buy unless you know that you can make use of all the stock. Storage costs will end up overeating any type of bulk discount you are getting.
To run lean operations, set a minimal and maximum volume of inventory that you can keep, based on your budgets and cash flow projections.
The Two Common Ecommerce Accounting Problems To Account For
To get even better in doing your accounts, don’t get lured into the following behaviors:
1. Waiting till the last minute to review financial statements.
Don’t postpone expense categorization till the end of the month, or worse — end of the reporting year. With thousands of records to sift through, you will miss something important. That can be something minor such as an unclaimed deduction. Or a major omission that may require corrections in your tax returns.
What to do instead: Block 2-3 hours each month when you sit down and review all the financial documents, organize them by category, and then do a bank account reconciliation.
2. Missing errors (due to the lack of time).
When you do your books in a hurry, mistakes will creep in. Having errors in your bookkeeping records can eschew your financial projections and result in financial losses. If those are left unattended, they can pass onto your tax fillings. Then you’ll need to file an amended tax return. Which again, isn’t the most fun thing to do.
What to do instead: Automate your accounting to prevent manual mistakes and inconsistencies. Once you have a budget, hire a chief financial officer (CFO), CPA (certified public accountant), or an in-house ecommerce accountant to help you with tax reporting.
You don’t have to be a certified accountant to stay atop of your ecommerce finances.
With the right accounting system in place, a supporting accounting app, and proper diligence you can get a good hang of your accounting, and learn to love the practice of analyzing your financials. Especially, when those insights translate to higher income!
Shopify has almost become synonymous with ecommerce. For good reason. It’s one of the most popular ecommerce platforms on the market, powering over one million businesses in more than 175 countries.
However, just because something is popular, that doesn’t mean it’s always the best solution for you. As you’re probably well aware since you’re searching for alternatives to Shopify.
Whether you’re a current Shopify customer looking for other options or just starting to research what ecommerce platforms are out there, we can help.
We’ll review the best Shopify alternatives, including the pros and cons of each ecommerce solution, and learn why some business owners have migrated away from Shopify to BigCommerce.
What is Shopify?
Shopify is ecommerce software that allows you to operate an online store. Through the platform, you can build your website, manage products, calculate shipping rates, sell across multiple channels and more.
Additionally, since Shopify is a cloud-based, hosted solution (also called a SaaS or software-as-a-service), you’re not responsible for maintaining the software.
Shopify also serves both small businesses and larger enterprises with its Shopify and Shopify Plus ecommerce plans.
- Shopify: This is for small businesses. With three pricing tiers — Basic, Shopify and Advanced — you get access to different features, depending on the plan you choose.
- Shopify Plus: This is for enterprise businesses. Based on custom pricing (a percentage of revenue with a minimum of $2,000 per month), Shopify Plus customers get access to more advanced features, designed for higher volume stores.
Additionally, while there is no free plan, Shopify does offer Shopify Lite as an option if you want to include a buy button on your existing website or blog.
4 Reasons Why You’re Probably Looking for a Shopify Alternative
Now that we’ve got the basics out of the way, let’s review why you might be interested in a different platform to run your ecommerce business.
1. Don’t want to use Shopify Payments.
One reason is the ability to choose your payment gateway without any additional fees. With Shopify, if you don’t use their proprietary payment gateway, Shopify Payments (which is powered by Stripe), you can be charged transaction fees of up to 2% of each sale.
Plus, by not using Shopify Payments you are giving up access to some features, such as the ability to transact in multiple currencies. Additionally, if you sell a higher risk product, such as vaporizers, even if you want to use Shopify Payments, you can’t.
2. Want more control over site SEO.
Search engine optimization (SEO) is a big part of the marketing features offered with an ecommerce solution. And while Shopify does a good job of handling basic SEO tasks, you might want more control over your website — especially if you rely heavily on organic search.
For example, Shopify doesn’t allow users to access and edit robot.txt files. For those unfamiliar, this is the file you use to tell Google how to index your site so that only the webpages you want show up in the search engine results.
While in the beginning this may not be a problem for you, eventually as your site grows, you’ll probably want more say in how Google crawls and indexes your website.
3. Have a large complex catalog.
Let’s say you have a clothing store and you’re making an effort to be very inclusive. So you offer:
- A range of sizes, from extra small all the way up to 6XL
- Multiple color options for every item
- Various designs, such as tank tops and long sleeves
- Options for men, women, children and babies
Your product catalog is quickly going to get very complex — and Shopify might not be able to keep up since you’re capped at 100 SKUs per product and only three options per product.
4. You’re frustrated in some form or fashion.
Maybe there’s something else you’re frustrated with that’s prompting you to research other ecommerce platforms. Perhaps you just don’t like the design of the Shopify Help Center, you’re frustrated with customer support, or maybe you’ve heard about someone else’s bad experience and you’re worried the same thing could happen to you. Whatever the reason, you’ve got other options available to you.
Features You Should Consider on Your Next Ecommerce Platform
No matter what obstacles you’re facing with Shopify, you should make sure your next platform solves those problems without creating new ones. And while every online business is different, here are some features that you might want to take into consideration.
1. Multiple payment options.
Every customer has their preferred way to pay. One person might want to use their Visa so that they can rack up points while another person may want to use PayPal because they can make a purchase without the need to manually enter in their card number.
So when you’re evaluating new platforms, make sure they have a wide variety of payment processing providers to choose from. For example, BigCommerce supports over 55 payment gateways. Plus, once you start getting bigger, you can typically get better rates, which will reduce your costs.
Even if you aren’t selling cross-border now, don’t box yourself out of international expansion later. Consider platforms that offer payment gateways that can transact and settle in multiple currencies.
2. Customization opportunities.
Your business is totally unique to you, and you want to convey that to your customers. Plus, how you manage your business is probably different than how someone else manages theirs. That’s why customization is so important for web design.
When selecting your ecommerce platform, make sure you can easily make changes that work for your business model and your specific customers. If you’re a coder itching to create unique functionality, make that your priority.
On the other hand, if you’re not an expert website designer, take into account ease of use. So exactly how much time and effort it will take for you to make changes?
For instance, if you’re building an about us page, how do you add elements that aren’t text? Can you easily re-arrange pictures and videos?
If you don’t want to spend all of your time building your website, a drag-and-drop website builder, can give you all the functionality you need to make these changes — without the additional coding requirements.
3. A catalog that can grow as you grow.
We’ve already mentioned an example where you might have a large catalog, but what if your catalog is very small? Then, Shopify might work great for you. However, don’t let where you are now dictate where you’ll be in the future.
As a business owner, you need to anticipate growth. Think about the different types of technology you’ll need to implement. And then ask yourself if your ecommerce platform can work with those technologies.
6 Great Shopify Alternatives
Once you have a better idea of the features you do want for your next ecommerce platform, it’s time to evaluate Shopify competitors.
While we didn’t include every single ecommerce solution on the market, such as Volusion, Weebly or OpenCart, this list should give you a good idea of some of the most popular ecommerce platforms on the market today.
Founded in 2009, BigCommerce is a flexible, open SaaS ecommerce platform that enables businesses of all sizes to build and scale their online stores.
While Shopify is great for getting started, if you’re looking to grow and scale your business BigCommerce is the better choice.
- Robust out-of-the-box features included with every plan.
- Support for over 55 payment gateways with no additional transaction fees.
- Page Builder, the drag-and-drop visual editor, doesn’t require any coding knowledge.
- Omni-channel selling abilities, including an in-app checkout for social media platform Instagram.
- Extensive SEO capabilities, such as fully customizable URLs.
- Support available 24/7 with over 85% of issues resolved on the first phone call.
- A large ecosystem of Agency and Technology Partners.
- While BigCommerce has a wide range of paid themes, there are only five free themes, compared to the nine that Shopify offers.
- Compared to Shopify, there’s a slight learning curve because you get so many more out-of-the-box features.
Launched in 2011, WooCommerce is an open-source plugin designed to transform WordPress websites and blogs into ecommerce websites.This makes WooCommerce a good alternative to Shopify if you’re already familiar with WordPress.
However, if you’re worried you can only use WooCommerce with your WordPress blog, don’t be. For instance, BigCommerce has an easy-to-use extension that will integrate with your existing WordPress site.
- The plugin itself is completely free to use with any WordPress site.
- It’s easy to integrate with any existing WordPress site.
- Because it’s open source, you can fully customize your store’s code.
- You have access to hundreds of free and paid extensions.
- Even though the plugin is free, you’re still responsible for the costs of domain hosting, a SSL certificate, finding an email provider and other features.
- To make the most of your ecommerce store, you’ll probably need the help of a dedicated developer or designer if you don’t know HTML or CSS.
- Adding core features to WooCommerce requires plug-ins—leading to more complexity and lower site performance.
First released in 2007, Magento is an ecommerce platform built on open source technology. Acquired by Adobe in 2018, Magento offers Magento Commerce for enterprise and Magento Open Source for small businesses.
So if you’re a big fan of Adobe’s other products and have extensive developer skills, you might prefer Magento to Shopify.
- Because it’s open source, you have access to the backend to customize everything in your store.
- Magento has a large network of over 260,000 developers worldwide creating additional functionality for the platform.
- Enterprise businesses on Magento Commerce have the option of a cloud-hosted solution as part of the package hosted on AWS or a self-hosted solution.
- You get access to a large partner ecosystem for third-party apps and add-ons.
- Magento Open Source is strictly on-premise, so you either need to host it yourself or go through a third-party web hosting provider.
- While Magento provides patches and upgrades, you are responsible for installing and managing these updates.
- No matter which version you choose or how you host your website, you’ll need a developer, in-house IT team and/or an agency to manage the build and maintenance.
- Magento has an extremely extensive setup, which leads to high costs to complete the builds.
Started in 2003, PinnacleCart is a shopping cart solution designed for small to mid-sized businesses with a strong focus on marketing.
As a Shopify alternative, it’s a great choice if you’re looking for more control over your storefront, as well as additional SEO features.
- You can either choose hosting on PinnacleCart or you can choose to manage hosting on your own.
- SEO-friendly features, such as schema.org tags and custom URLs.
- Unlimited products and categories on every plan.
- If you choose to host with PinnacleCart, there are caps on bandwidth and storage for their lowest $79.95 plan, so as you get more traffic you are going to pay extra or have to upgrade to a more expensive plan that offers unlimited bandwidth.
- Because PinnacleCart has versions, you’ll need to manage upgrades.
- There’s a very limited partner network, as it only integrates with 64 apps.
- Unlike Shopify’s wide selection of themes, PinnacleCart only has 12 themes available.
Since 1997, 3dcart has offered ecommerce software with a focus on SEO.
So if you’re an SEO junkie and you rely heavily on organic search, you might prefer 3dcart to Shopify.
- Wide variety of SEO tools, like Google AMP for products and 301 redirects.
- Built-in blogging platform included with every plan.
- For very small stores, you can get a full ecommerce platform for less than the Basic plan on Shopify.
- Over 100 online payment solutions, including international processors.
- Limited number of staff users, costing an additional $10 a month per user.
- There’s a steep learning curve, making it sometimes difficult to navigate the store builder and find the tools you need.
- The free themes all have a very similar design that’s not as modern as the themes offered by Shopify or BigCommerce.
Founded in 2006, Wix makes it easy for anyone to build a website — and offers business plans ideal for ecommerce businesses.
If you have limited experience and want an extremely simple web builder, Wix could be a better option than Shopify.
- A drag-and-drop website builder makes it easy to get your store up and running quickly.
- You get support for 6 options per product and a total of 300 variants SKUs.
- Wix has a robust, well-organized Help Center that’s easy to search.
- Each of their premium plans for ecommerce sites offers a free domain for one year.
- Unless you’re on an enterprise plan with custom storage space, you’re limited to a maximum of 50GB.
- Wix doesn’t offer Apple Pay or Amazon Payments as payment providers.
- There’s currently no support via chat, so you’ll need to call or submit a ticket.
- Searching through the app store can be challenging since Wix offers so many different website options that aren’t focused on ecommerce.
Choose BigCommerce as Your Alternative
We know you have a lot of options to choose from, but since you’re reading the BigCommerce blog, maybe you’re interested in learning more about what sets us apart from the other platforms.
And since we’ve already covered the highlights, it might be nice to hear from our Agency Partners why they would choose BigCommerce.
“After working with BigCommerce and other ecommerce platforms for more than a decade, we often find the platform offers a comparably advantageous solution for SMB merchants. BigCommerce’s native (non-app or customization dependent) featureset is one of the most complete, supporting nearly all verticals, selling models, and target audiences. Paired with a highly competitive pricing model, lack of transaction fees or significant app billings, BigCommerce defines an exceptional value. If a merchant is serious about ecommerce, and serious about a platform that provides an existing road map for growth, BigCommerce is an easy choice.” — Jordan Brannon, President at Coalition Technologies
“When compared to the other major ecommerce platforms available for SMB, BigCommerce excels with having an open templating framework which enables us to create customer experiences which drive engagement and commerce. Creating easily shoppable, brand relevant experiences is what sets SMB owned ecommerce apart from the large online marketplaces. Additionally, we often see a reduction in TOC after migrating to BigCommerce based on lower required maintenance allowing our ongoing support efforts to focus on initiatives which have a direct effect on constantly improving the business. Combining those qualities with an easy to use platform and strong customer service, makes BigCommerce a leader for helping create success for businesses of all sizes.” — Keith Karlick, Principal at Mercutio
3 Examples of Shopify Merchants Who Have Migrated to BigCommerce
To dive in a little deeper, take a look at the following brands and hear in their words why they made the switch from Shopify to BigCommerce.
1. Ideal Drape Makers.
Unlike many of their competitors, Ideal Drape Makers saw the potential of ecommerce. After launching their online store on Shopify, the small business quickly realized they were missing vital features and functionality that come out-of-the-box with BigCommerce — specifically the ability to handle faceted search and a large catalog of 60,000 products.
After making the switch to BigCommerce, Ideal Drape Makers was able to create a truly great visitor experience that increased revenue by 41%.
“I like having a single platform where you have all of the features already built in that you need and a single support point of contact.” — Nancy Vamvakas, Owner of Ideal Drape Makers.
2. Veppo Vape Shop.
In a bid to improve customer experience, Veppo Vape Shop bought into the marketing hype of Shopify Plus and switched over to them from BigCommerce. However, at the time they switched, they experienced challenges modifying orders and accurately tracking inventory, which ultimately led to a decline in customer satisfaction.
Once Veppo Vape Shop moved back to BigCommerce, they were able to increase company efficiency and customer satisfaction thanks to the built-in features, such as bulk pricing, and heavy customizations to checkout that enabled a more seamless process for subscription orders.
“Throughout our trials and tribulations, we discovered that BigCommerce has the most integrated system available and designed for an exceptional customer experience.” — Sabina King, Co-Founder & CEO at Veppocig.com
After using Shopify for a few years, Hickies grew frustrated with the numerous limitations on continuing to expand internationally, including the fact that Shopify Payments didn’t operate in many of the countries in their system. Additionally, Hickie’s wanted to easily launch Google Pay to make the checkout processes faster for their customers.
Once they made the jump to BigCommerce, the company experienced an 804% increase in total online sales month over month.
“Adding Google Pay to our storefront was super quick and seamless — it was literally flipping on a switch… The fact that it was so easy to implement and required no additional work to get it working was huge for us.” — Jonathan Segev, Hickies Director of Technology
While Shopify might be right for some people, it doesn’t work for everyone. And that’s perfectly fine. There are a lot of ecommerce platforms out there that will help you build and grow your online business.
Make sure you consider the ecommerce features that will have the biggest impact, whether that’s offering multiple payment processors, limiting transaction fees, real-time inventory management, setting up dropshipping or a user-friendly interface. And then, take some time to evaluate and test each platform. For instance with BigCommerce, you can sign up for a 15-day free trial with no credit card required.
At the end of the day, we know we’re a great option for most businesses, but the most important thing to remember is that you have to choose what’s right for you.
Have you ever dreamt of starting an online business but were confronted with a few small problems?
Having no time, little startup investment, and most importantly, no products to sell seem like major hurdles holding you back from that poolside office.
However, that didn’t stop Amazon, Wayfair, or even Etsy from becoming the ecommerce giants they are today. They all started off by selling products that they didn’t produce, and managed to scale by offering a unique value proposition with aggressive marketing strategies.
Ecommerce has seen tremendous growth since 2017 with projected sales to be 4.9 Trillion by next year alone. With online purchasing becoming a new norm, it has created a once in a lifetime opportunity for entrepreneurs like you to start an online business by dropshipping.
This is not your run-of-the-mill guide on starting a dropshipping business. With this guide, you’ll not only be fully knowledgeable on starting a dropshipping business, but you’ll know where to find products, how to pick them, and most importantly; how to be successful.
Before getting started, you might be asking yourself: What is dropshipping?
How Does a Dropshipping Business Model Work?
Dropshipping was born from the pains entrepreneurs face when wanting to start an online business. Dropshipping is a business model that removes the inventory aspect of retail. A customer’s order is sent directly to the dropship supplier to be fulfilled and delivered.
Here’s the dropshipping model in three simple steps:
- Your customer purchases a product on your store
- The order is sent directly to the supplier for processing
- The supplier ships the product to your customer
You’ll never have to worry about holding inventory and dealing with the products yourself. You’ll only have to focus on marketing your store and products, and building a customer experience unlike any other. In other words, the fun stuff.
Dropshipping Statistics: Numbers You Need to Know
Times are always changing, and staying on top of trends to making data-driven decisions are critical to staying in the game. We wanted to share five facts on what’s going on in the world of ecommerce, and give you a heads up on your research.
With these five facts, you’ll have a general idea of consumer trends, and how you can stay relevant and competitive while starting your dropshipping business.
- 61% of millenials and 55% of Gen X say that they would pay more for products that are eco-friendly.
- By the end of 2020, mobile sales are projected to be 45% of all ecommerce sales, totaling in a $284 billion segment.
- 80% of sales and marketing leaders say that they already use chatbots in customer interactions or plan to do so by the end of 2020
- 85% of millenials make a purchase after watching a video of the products
- 54% of social media users browse a brands products on their social pages
5 Reasons to Start a Dropshipping Business
So, why should you start dropshipping?
We’ll be honest with you. There is a lot of competition in the world of ecommerce. Starting a dropshipping business requires a lot of work, patience, and failing fast in order to succeed faster.
But just like other small business ideas, it’s worth it. We know that starting a small business takes a leap of faith, so we’ve outlined five reasons why you should consider starting a dropshipping business.
1. Limited capital needed.
The days of saving up to start a business are long gone. The great thing about ecommerce and dropshipping is that you don’t need to save up a lot of money to make it happen!
You can still keep your day job as you start your business, and eventually transition from side hustle to a full-time business owner when you’ve established yourself.
The initial capital you need is the subscription fees to your domain, an ecommerce platform, and any dropshipping platform you may choose to use. It may take lots of time to really build yourself up, but if you devote yourself to growth, the outcome can be financial and remote freedom. The cost of starting a dropshipping business is much less than the initial costs you would need to build an inventory of items and sell them. The inventory aspect is completely erased.
2. Scalable business model.
Scaling your business means having a business model that easily molds to increasing sales as well as customer inquiries and demands.
Dropshipping is easily scalable. You only need to worry about your inventory and supplier relationships, as well as keeping your customers happy and informed. Thanks to emerging technology trends, your customer service can be easily automated, and there are tons of options for automating different aspects of your business.
3. Low business overhead.
Before dropshipping, you would have had to scour the internet and wholesalers for products, order them in bulk, and store them in your home in hopes of selling them all. You’d have to do inventory, manage delivery for each customer, and create a system for keeping track of it all.
With dropshipping, the process is simplified, as you only manage the orders that come through, and your relationship with your supplier. You’ve eliminated the upfront cost in both time and money of storing and organizing these items, and dealing with the delivery of each product to your customers.
All you need to start is the fee you pay for your domain and your ecommerce platform, and your advertising costs to start. If you’ve got a dream and some grit, you can get started right away.
4. Can find new markets with low risk.
In December of 2019, the trend for face masks and self-care items started rising consistently.
By the beginning of March 2020, it became a fortified necessity, with face masks becoming absolutely essential to everyday life.
By dropshipping, you’re able to adjust your online store to suit the needs of your customers easily, and build a versatile product catalogue that’s relevant, unique, and high quality. Adapting is easy, and you won’t have to restructure your business to tailor to changing needs.
5. Start selling faster.
With dropshipping, you would have been able to add face masks (and other new essentials) to your product catalogue overnight, and started running ads and campaigns immediately. This would have won you thousands of new customers, and tons of leads for potential marketing and recurring customers.
Trends like these happen consistently over time, and with dropshipping, you’re able to start selling items as you see them rise in popularity. More on how to discover these trends later.
How to Start Your Dropshipping Business
The beginning of something great always starts out small. Getting started on your dropshipping store requires that you first enter a state of mind that embodies learning, entrepreneurship, and positive growth.
There will be failure, there will be fear, but there will also be an opportunity to grow because of them. Like most successful entrepreneurs, you’ll need to learn how to fail fast and use failure as the fuel to making better decisions. Be positive, be proactive, and be bold in pursuit of creating the best possible online store for your niche.
To start dropshipping, you’ll need an ecommerce platform that supports your growth, a reliable supplier and something to sell. Once you’ve ironed out the details of your business registration and sales tax ID, we’ve outlined the following five steps you need to take in order to hit the ground running.
Get your notepad ready, these 5 steps will help you build a solid foundation for a successful dropshipping business plan.
- Iron out your business operations.
- Determine your niche.
- Find the right supplier.
- Choose and build your ecommerce business.
- Promote your dropshipping business.
Iron out Your Business Operations
Build a solid foundation for how you’re going to run your dropshipping business. As a fairly new and non-traditional method of doing business, you have to be diligent and make sure your details are all ironed out.
1. Decide on your business structure.
To build, or not to build
Will you be creating your own website, or relying on an ecommerce platform?
Will you be finding and vetting dropshipping suppliers on your own or will you use a dropshipping platform?
Do your research in terms of time spent and the cost of having these services done for you. If you choose to use BigCommerce as your dropshipping business platform, you can start your business today.
On the other hand, building a converting ecommerce website from scratch requires a lot of time and technical know-how. Not to mention researching high converting tips for website design. In the end, the choice will be yours, but don’t forget that your time and energy could be spent on marketing and building a product catalogue.
Choose your dropshipping structure
In terms of dropshipping, the concept of spending time and energy applies heavily.
Finding these potential suppliers and building relationships with them is not easy, and it takes time. Vetting them for quality products and communication is another critical criteria to meet.
Platforms like Spocket seamlessly integrate with your BigCommerce store, and allow you to browse products from the US and Europe with reliable suppliers. All that leaves for you, is to find products within your niche that you’d like to sell, and from there, you’ll be one click away from a one-of-a-kind product catalogue.
2. Select and register your business name.
Your business name will be a critical part of your brand, and it’s important to spend a lot of time and thought picking something that resonates with you, your niche, and your potential customers.
The elements of a good business name are somewhat scientific, and revolve around aesthetically pleasing lettering, lengths and syllables.
Make sure to consider including an SEO keyword that makes it easy for your customers to find you. For example, if you’re selling beautiful handmade jewelry, include the word “jewel” or “jewelry” in your business name. For example: “The Rebel Jewel”
It’s not a must, but it sure helps in marketing efforts on google. In fact, it could save you a lot of money and effort in the future!
Next, make sure you pick and register your domain name as soon as you’re certain. You can do this through BigCommerce, or you can transfer an existing one you’ve already purchased. Try aiming for a .com domain, as it’s known to be more trusted and used in search. Discoverability is important for a burgeoning online store!
3. Acquire an EIN (depending on your location).
Getting an EIN is both a legal obligation and a free way to secure your business. This can be easily done through your government’s application portal that prompts you through the necessary steps.
This is also a great way to build trust with your customers, and let them know that you’re a legitimate small business and that you’re local.
4. Apply for a business license and permit (depending on where you are located).
Depending on your location, you may be required to get a business license in order to operate.
Before you can start on the fun stuff of building and running a dropshipping business, make sure your legal obligations are covered, so that you can sail smoothly into a successful small business.
This not only protects you, it gives your small business legitimacy and fortifies your stance as a small business in your country. Make sure to mention these on your website, so potential customers are aware that you’re legitimate and completely safe.
Determine Your Product Niche
We’re not trying to be corny when we say to choose something you love. Choosing a niche you love means that you’re already a part of this audience, and that you’re passionate and experienced in what people like yourself want.
This gives you an edge over everyone else, and a jump start into choosing the right products and the right marketing strategies.
Let’s say you’re a new mom. Motherhood is an exciting time that can always do with products that make raising curious little people easier. From hip seats to potty training tools, you’ll always find new moms looking to simplify life with kids.
For the new dog owners, you can build a store on gadgets and tutorials on training and “puppy-proofing” your home. No one likes to see their shoes chewed to shreds, and that’s where you come in with amazingly durable dog toys!
1. Look at google trends.
Google trends is a free tool that gives you a leg up on market research and insight into what people are looking for. Naturally, when we want answers or solutions, we turn to Google.
This tool will be one of the first things you turn to when looking for popular niches, trends and products. Simply plug in a keyword someone in your niche might be looking for, and see the results for yourself. This keyword can be anything related to your niche.
For example: “dog collars” for the pet niche or “bath bombs” for the self-care niche.
As an example, let’s take a look at “Dog Collar” for the pet niche:
There are a few important questions you should ask when looking at the results.
- Is the search demand steady? Search demand should always be steady for your niche of choice. In the example above, it’s evident that people love their pets, and they will always love their pets. It’s never going out of style, and it’s not a temporary fad. Great news for the pet niche!
- Are searches increasing or decreasing? Important to note if the searches for products in your niche are increasing or steadily decreasing. This gives you insight into the future of your niche, and the stability of your customers and revenue. Choose products and a niche that have a steady search volume, or even better, an increasing one.
- Who’s searching for this? When starting a dropshipping business, the hardest part of marketing is pinpointing the perfect target market segment. Some of them convert into sales, and others don’t. With Google Trends, you can see who searches the most for these items and you can target them specifically. West Virginia seems to have the most searches, so why not direct your social campaigns to people from that area?
All in all, keep in mind that trends and times are always changing. Keep your eye on the news and on what’s happening in the world of your customers. With the help of google trends and social media, you can make data-driven decisions about what to sell, and who to sell it to.
2. See what is selling online.
Use ecommerce giants like Amazon, Etsy, Pinterest and eBay to see what people are buying the most. In the case of Amazon, you can check out their “Most Wished For in Pet Supplies” to get an idea of what people want, and how you can carve out a place for yourself there.
As for Etsy, you can filter by “Top Customer Reviews” and discover products customers love, and most importantly, why. Take a look at the top sellers for “dog collar” and make sure to look at what people are saying about why they love these products.
You’ll gain insight into why these products are successful, and how you can leverage this for your own store.
This is by no means a one-time task. You have to constantly check what’s selling to stay competitive and relevant in your respective niche. If you can’t do it every day, do it once a week at least. This way, you’re always in the loop on best sellers.
3. Conduct a competitor analysis.
Conducting a competitor analysis is critical for a small business that hasn’t established itself yet. Think about it, no one has heard of you yet, and you’re trying to break into an industry that already has some key players taking the market share. Ask yourself:
- How will you compete?
- What will be your value proposition?
- How can you be better than your competitors?
Start off by conducting a SWOT analysis and identifying what your strengths, weaknesses, opportunities and threats are. For this part, you’ll need to focus on your weaknesses.
From there, you’re one Google and Facebook search away from finding your competitors. Or better yet, them finding you.
Look up “dog collars” and see the vast amounts of online stores competing for your attention. Pick the top 10, and make sure you keep a tidy spreadsheet of their names, links, top products, and sales propositions along with their ad campaigns.
Then, move your search to Facebook.
Look up your competitors on Facebook and then look up dog collars in Facebook Marketplace. You won’t have to do much work, as shortly after, you’ll notice Facebook is displaying ads of your competitors to you. Make sure to note them all and keep track of their offerings and marketing strategies.
This way, you’ll always have the advantage of knowing exactly what you’re up against and how you can compete. This step needs constant work, and should be an integral part of your marketing strategy. As Don Corleone said: keep your friends close, but your enemies closer.
Pro Tip: When conducting competitor research, look up the reviews for their store and specific products, and look for the worst ratings. Take a look at what people are complaining about, and make your store stronger in those aspects. This way, you’ll be directly offering what your competitors can’t.
Find the Right Dropshipping Product Supplier
Finding the perfect dropshipping suppliers is a do or die part of running your business. Even if you get every aspect of running your dropshipping business right, you need the right product supplier in order to succeed.
Your dropshipping suppliers must be reliable, communicative, and have high-quality products with decent shipping costs and fast delivery time. Make sure to test order a product before deciding on a supplier, you need to know the process from start to finish to understand your customer journey better.
1. Places to find suppliers.
You can find dropshipping suppliers by searching for wholesale suppliers of your specific niche. You can use directories such as Wholesale Central to find suppliers and start your process of weeding out the ones you want to work with. It’s a long and time-consuming process, but it’s in your best interest to find suppliers that are worth working with. Otherwise, you could set yourself up for disappointed customers, bad reviews, and a suffering business.
You can also bypass the process and sign up for a dropshipping platform that has already done all of the work for you. For a subscription feel, you’ll instantly be able to push products to your store, and discover new products and suppliers without any effort.
2. Evaluate suppliers.
Once you have a healthy list of wholesale suppliers, it’s time to test order products, and document your journey from start to finish in terms of communication, tracking number, shipping time and quality of the delivery and product. Rate them based on the following criteria:
- Product Selection
- Shipping time
- Wholesale Prices
Order their products and test their entire process. This way, you’ll know what expectations to set and you’ll be able to work with this supplier from one order, to thousands. Make sure to keep an eye out for the wholesale prices as well.
Ideally, you’d like to make a 30% profit margin on each product and still be able to offer affordable pricing for your target market.
Choose and Build Your Ecommerce Site
1. Ecommerce marketplaces.
Using the dropshipping model for your ecommerce store can save you time, effort and a lot of upfront costs when starting your business.
But what would dropshipping look like in an ecommerce marketplace? If you’ve ever looked at Amazon and eBay, the products are listed in an uninspiring, and simple grid that makes them easy to find. There are no marketing tactics and no value proposition. The items are similar, with few ways to differentiate which one to buy other than customer review filters.
There’s no denying that ecommerce marketplaces like Amazon or ebay are great for getting your product out there. But if your product isn’t one of a kind and incredibly unique, how will you appear as a suggested product to your customers? You become another brick in the wall, and have very little opportunity to build a brand, share a story, and really differentiate yourself. To top it off, you have to compete for similarly (or cheaper) priced competitors from Alibaba on a daily basis.
This approach can work if you have a one of a kind product with an incredible value proposition, but keep in mind – your marketplace competitors are working night and day to outperform you and build a product that will trump yours in both price and function.
2. Ecommerce platforms.
Ecommerce platforms were built to help small business owners like yourself jumpstart their online business and create an incredible brand with your own unique story.
With built-in high converting website templates and an already secure payment portal, your customers won’t be hesitant to easily pay with their credit card and sign up for your offers. The benefits of using an ecommerce platform include:
- You can build your own brand.
- You can offer unique value propositions.
- Your payment portal is already secure.
- Website templates are already available to you.
- You can easily adapt to changing times and trends.
- You don’t have to be dependent on an ecommerce marketplace.
BigCommerce boasts a comprehensive suite of tools from marketing to analytics, high caliber design options, and plenty of support from the pros. You can always use free website builders such as WordPress, but you’d be putting yourself through the school of design for high converting features.
If you don’t have the time or expertise, choosing an ecommerce platform is an easy and quick way to save time and money in the long run.
Promote Your Dropshipping Business
Now that you’ve built a beautiful website, added incredible products and solidified the small details of your dropshipping business, it’s time for people to see it. Promoting your dropshipping business is one of the most important aspects of running a successful online store.
You’ll need to use all of the information you learned from your competitors and build a marketing strategy that excels. You can start off with these four critical steps:
1. Send emails.
You’ll want to start off your email marketing by getting a solid email list from the people that visit your website. Capturing emails from the people that visit your online store is critical to developing leads – and sales. An amazing way to do this, is by offering a one time “40%” off banner or pop-up if they sign up for your email promotions. Another great tidbit is offering a free t-shirt with every first time purchase. This is a great way to have people do the marketing for you.
This way, your visitors will not only be enticed to make a purchase, but they’re giving you their email, so you can continue nurturing the relationship. This means creating an amazing email campaign that uses their information to personalize the content.
For example, if someone purchased baby clothes for a newborn, why not email them a few months later with clothes for a 6-month-old? Same goes with purchases of clothing. If a customer bought a sweater dress in the winter, why not email them with spring picks and promotions a few weeks later? Personalization matters.
2. Create social posts.
If you haven’t noticed, social shopping is now a full-blown trend on all social media platforms. In fact, 87% of ecommerce shoppers believe social media helps them make a shopping decision.
Facebook, Instagram and Pinterest all have the capability to create a “Shop” with products in-app. This means you have a breadth of opportunity to create incredible content, and build your own brand through these platforms. You can start making sales right on your social profile!
But before the excitement can begin, you need to create a content marketing strategy and social posts that really draw your viewers’ attention.
- Choose a brand color palette: Make all of your images and aesthetic uniform. You can do this by either always using the same filter, or by making sure the images you take have that same simplicity and color palette. Don’t be afraid to use photoshop otherwise!
- Create a lifestyle: Share the lifestyle your store and niche embodies. Are you selling minimalistic clothing? Create a story with your images around the simplicity of life. Show customers how clothing can bring clarity and peace. Show them how you can change their lives.
- Use hashtags, location and tags: Once you’ve created some beautiful posts, you need to make sure that people can see them. You can run ads, and you can also make sure you add appropriate hashtags and tag lifestyle accounts to your page.
You can use this opportunity to also announce promotions, sales, as well as a discount if they sign up for your email newsletter.
3. Advertise on Facebook and Google.
It may sound like a no brainer, but advertising on Facebook and Google is tricky, and requires a lot of adjusting and retargeting.
Be patient, and keep running ads until you have a good idea of who your exact audience is. Don’t be discouraged when you don’t make a sale right away, it takes time to collect enough data from your segment to actually target a high-converting group of people.
Don’t make the mistake of cutting Facebook ads short because you aren’t seeing many conversions. When making changes and retargeting, it can take your dropshipping business 14 to 30 days before you start seeing conversion rates changes.
Realistically, your ads need to make 4+ impressions on a single viewer before they are convinced to buy something from your online store. Make sure your ad copy and images are appealing.
4. Optimize your ecommerce store.
We’ve said it before and we’ll say it again: Search Engine Optimization.
From your landing pages to your product descriptions, you need to think about using search engine friendly terminology when it comes to any form of writing on your website.
If you sell jewelry, make sure the language you use to title and describe your products and categories are a direct reflection of your SEO research. You can use Google Keyword Planner to find these keywords and incorporate them.
Lastly, make sure that you create a FAQ page so that your visitors know that you’re legitimate, and you avoid the same redundant questions that your customers ask. It’s a simple way to build trust and make your life easier when managing customer support inquiries.
So there you have it! A complete step by step guide on starting a dropshipping business, and taking life by the horns on your journey to entrepreneurial freedom.
With the resources available through BigCommerce and our integration with Spocket, you’ll be able to start dropshipping in a few hours, and build an online store that you can be proud of. We’re here to support you every step of the way, and provide you with the right tools to be successful. Ecommerce shows no signs of slowing down, so it’s time to hit the ground running and build a business that services your niche and community.
We’ve all heard the 2020 “un” words: unprecedented, unexpected, unpredictable. But as we approach this year’s holiday season, we can still be sure about a few things. Online gift shopping will continue to grow, probably even more than we’ve seen in past peak seasons. Last year, US shoppers said they made 58% of holiday purchases online, and our latest research suggests that almost 75% more plan to shop online for the holidays than previous years – both for buying and browsing for ideas.
Doing your holiday shopping from home, in your pajamas? You’re not alone.
The full story goes deeper. We expect to see various related trends this year:
- First, the shopping season has started earlier than ever. Supply chain disruptions from the spring have left a lasting impact on perceptions, and we’ve heard that 70% intend to shop early to avoid both crowds and items being out of stock.
- Second, consumers will be even more focused on value. COVID-19 has in many ways reset expectations for what people need or want to buy. We’re used to seeing searches for deals, coupons, and best prices. But this year, there’s been a rapid uptick in those looking for value in quality and price.
- Finally, customers are consolidating their shopping, spending less time browsing in-store, limiting their touching of products. We’ve noticed a striking increase in searches for actions happening before the store visit. The term “available near me” has doubled in popularity since last year, and 67% of shoppers said they plan to confirm online that an item is in stock before going to buy it. This all suggests that by the time they come into your store, more shoppers have already decided what they’re buying.
More than ever before, it’s important that your company’s online shopping experience is up to scratch so it can be easily discovered.
Why Advertise on Google During the Holidays?
Consider the last time you bought a gift online. Did you start your hunt on Google? If so, you’re not alone. 49% of surveyed shoppers said they use Google to find new items or products, making Google Ads an ideal way to reach shoppers at just the right moment, when they’re actively searching for products and ideas.
And remember that Google is not just a search engine. The tech company has at least eight properties with over a billion users, including YouTube, Gmail and Maps. That means that a single advertising solution lets you connect with a potential customer throughout their journey. You could introduce them to your brand with their initial search, and also get the chance to give them nudges and reminders when they next watch a video or check their mail.
With Ads, not only can you reach people across all of these platforms, but you’ll only be charged when you get results, in the form of measurable success like clicks to your website.
3 Google Ads Strategies to Explore this Holiday Season
With the end of this strange and challenging year fast approaching, it’s vital to bring your brand online to capture holiday demand. So what’s the best way to take advantage of Google Ads?
The following campaign types are just a few of the strategies Google Ads offers that make it easier for potential customers to find your products and business details in their exact moments of need or inspiration – or let them complete their purchase with you right on Google. You can run all three (and more) at the same time, or just focus on one, in which case we recommend starting with Shopping ads.
1. Find your next customer with Shopping ads.
75% of shoppers surveyed say that in the last week they’ve used a Google product in the past week to help with their shopping. Google Shopping ads help merchants to reach these shoppers across YouTube, Gmail, Search and the Google Display Network. Shopping ads feature an image of your product, plus a name, price, brand, and more. More descriptive ads give buyers a strong sense of your products and produce better sales leads.
Your business might also qualify for free listings on Google, which give your products additional exposure at no extra cost. According to internal Google data, both ads and free listings on the Shopping tab have produced a 50+ percent increase in clicks and a 100+ percent increase in impressions on average, with small- to medium-sized merchants seeing the largest share of these increases.
Before you create Shopping ads, you’ll need to assemble a product feed in Google Merchant Center: that’s a list of products to advertise, with relevant info and images for each one. BigCommerce’s Google Shopping by Sales and Orders lets you sync your feed automatically. Once the feed is approved, free listings will be enabled for eligible users and you can start building your ad campaign.
A useful variation on this is the Smart Shopping campaign. This kind of campaign combines your existing product feed with Google’s machine learning, letting the system test different combinations of the image and text you provide until it finds the most successful variations. To help you get the best value from each ad, Google also automates ad placement and adjustments to reach your best customers and get the best results.
You can create and manage Smart Shopping campaigns directly within BigCommerce using Google Shopping by Sales and Orders.
2. Get discovered with Search campaigns.
With Google Search campaigns, your ads show up alongside search results when people are looking for the products or services you offer. Running ads can supplement your normal listings on the search results page and boost your visibility.
Search campaigns are targeted to the actions you’d like customers to take, whether that’s clicking a link or making a purchase, and aimed at specific marketing goals. This goal should reflect whatever you’re trying to achieve – leads, sales, web traffic and so on. In addition, each campaign has settings options like location, devices, and language, which let you filter your intended audience. You’ll also need to set your budget and a bid strategy. (More on this below.)
After choosing your settings, you can create ad groups. These are bundles of keywords, related to important search terms, as well as the ads that they will trigger. For example, you might choose keywords like T-shirt, sweatshirt, hoodie as one ad group for your clothing company, while shoes, sneakers, boots could be another. Once you’ve established your keyword groupings, you can build tailored ads that reflect the theme of each ad group.
You can streamline your Search campaign setup and management using Google Ads Keyword Genius on BigCommerce.
3. Introduce your brand during normal daily activities.
Most shoppers are constantly on the lookout for new ideas or discoveries. And they tend to act fast when they find one. In fact, when they encounter a product that meets their needs, 85% of online consumers will take action on it within 24 hours.
But where do these discoveries happen? Often in a customer’s everyday environment, especially on their favorite feeds like YouTube watch lists, the Gmail promotions tab, and Google Discover itself, a news and information service used by millions. Ads in such locations can tap into a customer’s purchase intentions without the need for a deliberate search query, so they work great alongside Search and Shopping campaigns, helping to inspire new audiences to find your products.
Discovery campaigns have similar settings to Search and Shopping ads, including a primary marketing goal and your target audiences. You can let Google help you build strong campaigns by providing creative assets that it transforms into native ads.
Always use your highest quality images – for example, those that have already performed well on social media – and if you can, provide a good range of pictures, descriptions, and headlines to cover all your bases. Once again, machine learning is your friend: the system will experiment with different combinations to find the ads that get the best outcome.
To learn more about Discovery campaigns, visit the Google Ads Help Center.
5 Tips to Make the Most of Your Ad Campaigns
Regardless of the campaign types you’re using, here are a few ideas to supercharge your ad performance this holiday season.
1. Give your website a health check.
There’s nothing more frustrating than finding the perfect gift online, only to get a broken landing page. As consumers spend more time online, they have higher expectations from their websites and apps. For retailers, improving your site load time by just 0.1 seconds can boost conversion rates by 8%. And remember, last year, 61% of online holiday purchases in the US were made on a smartphone.
Before increasing traffic to your site, be sure to confirm that your landing pages load quickly, both on desktop and mobile, and that they include relevant product information, tailored to your users’ needs. To find areas for improvement, Grow My Store provides a free, personalized report on your ecommerce website’s performance.
2. Highlight unique offers and promotions.
Don’t forget to engage deal-seekers looking for end-of-year sales. Your ad copy is a good place to do this, and so are ad extensions. Extensions are free components that provide extra functions to your ad, like links or a call button, making your ads larger and more helpful to searchers. Google’s machine learning decides when they appear, and it’s recommended to add at least four extensions as potential options.
Countdown timers are a particularly effective way to boost your text ads for offers and deals. Another great choice to make your Shopping ads stand out are sale price annotations, highlighting special price cuts and promotions.
3. Leverage Smart Bidding to meet your holiday goals.
There are plenty of businesses who would love to put their ads at the top of Google Search. To determine which ads actually appear and in what order, Google uses a form of very fast auction. This occurs whenever someone makes a search or even visits a site that shows ads.
These instant digital auctions are not simply a matter of bidding the most money. Your ad’s rank is decided by three principal factors:
Your bid: Your bid tells Google the maximum you’re willing to pay for a click on your ad. The amount you actually pay is often less, and you can always change your bid. In most cases, it’s best to use an automated bidding solution, like target CPA bidding. This lets Google bid strategically on your behalf, trying to win as many auctions as possible at or below a price you set.
The quality of your ads: The bidding system also factors in how relevant and useful your ad is to the person who’ll see it. Your ad will be assessed and given a Quality Score, which you can monitor and improve in your Google Ads account.
The expected impact from your ad extensions and other ad formats: There is a variety of optional extra information you can provide to enhance an ad, from phone numbers to specific webpage links. These extensions usually improve your ad’s performance and visibility, making it more interactive and encouraging engagement. In addition, extensions and formats will help your ads do better in auctions.
All of three of these factors are important at times of high traffic, when many businesses are competing for ad space and conversion rates are much better, making each click more valuable. This applies to your bid especially – even the highest quality ad with the most extensions will do poorly in auctions if it lacks funding – so you should check regularly to make sure your budget is adjusted for any uptick in holiday activity.
Smart Bidding, Google’s automated version, can be particularly beneficial in the holiday season to help with this. It can handle rapid developments in real time, monitoring signals from across Google. Smart Bidding strategies learn from changes in consumer behaviour and can be focused on specific marketing goals. They can also help prevent your ads being outbid, so you don’t miss out on key periods of high traffic.
4. Optimize your Shopping feed.
If you’re running Shopping campaigns, make sure to give your Shopping feed ample love and attention. This is the heart and soul of your campaign. Your feed setup will impact who sees your ads on Google and how they’re displayed.
Make sure all products available on your website are in your feed, except for any you’re not planning to sell. It’s also critical to populate all relevant attributes in your feed. The more information Google has about your products, the easier it will be to match your ads to the right searchers.
Pay special attention to the images you provide – they should be as high quality as possible, and should aim to capture the viewer’s attention, even on a smartphone. And don’t neglect your product titles – it may seem straightforward, but try to go with something compelling that resonates with your audience.
5. Check-in on your performance regularly, but not right away.
Once you get your campaign up and running, your next step is to see how it’s performing. Tracking statistics like clicks and impressions is a great way to start. It’s also important to think about what you’re trying to accomplish with your campaign, so you can focus on the statistics that can help you achieve your goals.
If you’re leveraging automation, like Smart Shopping campaigns or Smart Bidding, a little patience is helpful at the start. We recommend letting your campaigns run at least 14 days before making any major adjustments or assessments of its performance. Why? The system has to collect data, try new combinations and calibrate.
Once your campaign has been live for two weeks or more, be sure to evaluate your performance regularly, and make adjustments as needed.
2020 might be unusual and unpredictable, but it’s not unmanageable. We have a good idea what’s coming this holiday season – likely the most digital-first shopping period we’ve ever seen – and we also know the best ways to approach it with Google Ads. Don’t miss out – make sure you’re fully prepared to make the most of what’s coming.
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.