So You Want an E-commerce Portal? Part 1

ecommerce

It’s probably poor form to lead into an editorial with sarcasm, but if you hadn’t noticed things have changed this year. And they’ve changed a lot. And we’ve all had to adapt, rather quickly, to those changes. Observing my dealers adapt to change, adjusting their operational procedures to accommodate new safety requirements has been inspiring. It’s heartening to see the speed with which organizations have been able to adjust, do what has to be done, and carry on.

But, as the saying goes, every solution has two problems. The mandates imposed for public safety have other consequences. For my dealer partners who are retailers, store occupancy limits effectively cap the total number of transactions they can perform in a day, which limits their revenue. And for my installing dealers, the distancing requirements reduce the speed at which tasks on the job site can be completed. In all cases, cleaning and sanitizing tasks further cut into the time available to deliver on productivity targets.

All of that affects revenue, and affects additional overhead on PPE and cleaning products impact gross margins. So, in the context where everyone is feeling the same double pinch of limited revenue and decreased gross profit, they’re all asking the same question: what can we do to make more money?

One possibility that almost everyone identifies with is developing and running an e-commerce portal. It’s a sound idea, and a seductive one. The business news media has been full of stories about how even as in-person retail business has declined this year, online sales are booming. While the biggest winners have been the e-comm giants like Amazon and Walmart, unsurprisingly, other, smaller and often niche businesses have found ways to thrive as well.

Since I work for a company that is a full-service distributor, and we have a turnkey white label e-commerce solution available to our dealers, I’ve spent a lot of time this year offering advice and counsel to them on how to make it work. I don’t doubt that some rAVe readers are in the same boat, and are either considering or already beginning to execute e-comm strategies this seems like a good time to share my thoughts.

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In fact, I think it’s prudent to start with the bad news, and enumerate them.

For a start, opening and running an e-comm portal is not going to become your primary business and eclipse your existing operations for revenue and profit. You aren’t Amazon, and you never will be. That, first and foremost should be at the top of your brainstorming whiteboard, and inform and shape your strategy from there.

Next, and related to the previous point, unless you have the capital to burn to pay for search engine optimization to put you on the front page of Google results, you’re not going to reach zillions of new buyers in the consumer marketplace. Honestly, if you had the capital to do that you’d be better off spending it on something else anyway, but I digress.

Further, I’ll tell you that you don’t really want to slug it out in the trenches of mass market e-commerce, where the margins on commodified products are squeezed thin by web-crawling pricing algorithms.

And finally, the brands that you either have relationships with now, or might want to partner with whose products aren’t beaten to death online have rigorous minimum advertised price policies that will prohibit you from using their brand as ammunition for fighting in those trenches to begin with.

I called all of that the bad news, but once I expand on my thoughts you’ll see that as good news. I know I’m leaving you hanging; now that I’ve given you the bad news, I’ll outline the strategies you can employ to make it work for you in the next installment.