You’ve started an ecommerce business. Congratulations! But now what?
Surely the intention is to grow it. To scale it. To achieve more than you ever thought possible with it. But this can be daunting; where do you even begin? How do you secure that growth in the first place? And how do you make sure that your growing business doesn’t take over your life?
This article will help. We’ll explore how to grow an ecommerce business — but in a way that gives you control, rather than takes it away.
Let’s dive in, and start with some useful context on the landscape.
Understanding the ecommerce landscape
The ecommerce sector has been on a bull run. Unprecedented growth has transformed the way businesses operate — and how consumers shop. This shift has been accelerated by technology, but also by dramatic changes in consumer behavior.
The global pandemic pushed more people towards online shopping, and as of 2024, the ecommerce landscape continues to evolve, driven by emerging trends and technologies that are shaping the future of retail.
Ecommerce trends and market potential
Ecommerce is being defined by a blend of innovation and changing consumer demands. Key trends include:
- Increased use of artificial intelligence (AI) and machine learning for personalized shopping experiences.
- The rise of mobile commerce (m-commerce), and the integration of social media platforms (and especially TikTok) for direct selling, known as social commerce.
- A growing emphasis on sustainability and ethical practices in ecommerce, which resonates with a large segment of consumers.
The market potential for ecommerce is vast and still expanding. Revenue in the global ecommerce sector is projected to hit $6.4trn in 2024, and with a projected annual growth rate of 9.83%, it’s expected to exceed $8trn by 2028.
The convenience of shopping from anywhere, coupled with the wide variety of products available online, continues to attract new users. Moreover, the advancements in logistics and supply chain management are enabling faster and more efficient delivery systems, further boosting the attractiveness of ecommerce.
The importance of a strategic approach to ecommerce growth
As Morris Chang so aptly put it, “Without strategy, execution is aimless. Without execution, strategy is useless.” Ecommerce is obviously no different; a strategic approach is crucial for sustained growth, to remain competitive, and to keep operations under control throughout.
This involves understanding your target demographics, leveraging data analytics for customer insights, and continually adapting to changing consumer preferences and embracing technological advancements. What’s more, companies need to implement scalable infrastructure to ensure they can deliver when demand spikes.
A key aspect of a strategic ecommerce approach is the optimization of the customer experience — to build loyalty and gain trust. This includes ensuring website functionality, mobile responsiveness, and providing a seamless, intuitive shopping journey.
According to Danielle Anderson, Chief Digital Officer at Dunhill, “Customer experience is not something you can do overnight. I often feel that companies try to run before they walk… So it’s saying: What do we want to do? Why do we want to do it? And then going to the how.”
Another important element is the integration of omnichannel strategies. This means providing a cohesive shopping experience across various channels – online, in-store, and through other channels, such as social media. On the latter, a recent report from McKinsey explains, “Social commerce is more than just a new shopping experience. It represents a paradigm shift in how consumers interact with brands: where, when, and how they shop.” An effective omnichannel approach therefore helps in creating a consistent brand presence and enhances customer engagement.
Post-COVID changes to ecommerce and retail
The COVID-19 pandemic accelerated several changes in the ecommerce and retail landscape. The most notable shift was the rapid increase in online shopping, as lockdowns and health concerns made physical stores less accessible.
According to Kate Mortenson, Product Analyst at Linnworks, “Usually businesses follow a maturity curve, during the ecommerce boom that we saw during COVID lockdowns, many businesses jumped maturity levels because of the sheer increase in volumes.”
And this shift wasn’t temporary – it led to a lasting change in consumer behavior with a greater reliance on online platforms for a wide range of products and services. Retailers had to quickly adapt, enhancing their online presence, optimizing their supply chains for online delivery, and integrating new technologies to cater to a surge in online shopping. In this new normal, it’s perhaps more essential than ever that companies embrace sustainable growth strategies.
What should your growth strategy look like in this new normal? Let’s consider five key pillars that will enable your ecommerce business to unlock greater growth — in a manageable and scalable way.
How to grow an ecommerce business: 5 steps for scaling success
1. Utilize analytics as a driver of growth
Ecommerce analytics are essential for scaling an online business, providing a comprehensive view of digital operations and customer interactions. This analysis goes beyond tracking sales; it involves understanding the stories behind the numbers, from website traffic to customer retention rates.
These insights help identify trends, potential pitfalls, and growth opportunities, enabling businesses to measure marketing effectiveness, streamline inventory, and enhance customer experience. However, before you can dive into the weeds and start pulling the numbers, you need to make sure your thinking is sound. According to ecommerce business coach, Austin Brawner, “The data itself is secondary… The most important thing is understanding how the data actually serves the website’s purpose.”
Data visualization and reporting are also crucial aspects of ecommerce analytics. They translate complex data sets into digestible, actionable insights, allowing businesses to quickly assess and adjust their strategies. For example, visualizing stock levels can be key to avoiding stockouts and overstocks, making it clear when reorders need to happen. As your business grows, it’s important to build customizable dashboards and reports that focus on KPIs, aligning team efforts with your business objectives.
Analytics are also the gateway to data-driven decision-making, enabling you to move away from intuition, instead basing your decisions on cold, hard facts. This approach helps identify best-selling products, understand customer acquisition costs and lifetime value, and tailor offerings for a personalized shopping experience.
AI and machine learning are poised to significantly improve this, too. As Chad Rubin from Prophecy explains, “I think for a long time, ecommerce brands just sprayed and prayed with tons of data and they didn’t know what to make of it, which [creates] analysis paralysis… I’m very optimistic of how AI can leverage data to drive decisions.”
Analytics also play a vital role in effective inventory management, helping maintain the balance between demand and supply. Tools like Linnworks aggregate and integrate data from various channels, offering advanced insights for ecommerce operations.
2. Focus on profitability: Ensure a healthy bottom line
It might seem obvious, but when it comes to growing your ecommerce business, profit should be the ultimate goal. Generating sales is great, but driving greater profitability is vital. Simply increasing sales doesn’t always lead to improved profit, making it crucial to understand the various factors that influence profitability in ecommerce.
Key aspects impacting profitability include:
- Cost management: This encompasses everything from product costs and marketing expenses, to employee expenses. Effective management of these costs ensures a high ROI and sustained profitability.
- Pricing strategies: Various pricing models like cost-plus, dynamic, value-based, competitive, penetration, and skimming pricing have their advantages and disadvantages. Choosing the right pricing strategy is critical in the competitive online marketplace.
- Inventory management: Efficient inventory management is essential for optimizing cash flow, avoiding stockouts and overstocks, reducing holding costs, and enhancing customer satisfaction. Utilizing advanced inventory management software can be a strategic tool in aligning inventory with business goals.
- Customer acquisition and retention: Targeted marketing and audience segmentation are key to attracting the right customers. For retaining customers, strategies such as personalizing offerings, implementing loyalty programs, maintaining consistent communication, using analytics for customer insights, and providing excellent customer support are effective.
To scale profitability, strategies like upselling, cross-selling, and streamlining operations are recommended. This includes optimizing operations, automating processes, and investing in a robust technology stack for payment processing, CRM, customer service, and inventory management.
3. Craft a growth strategy that delivers
Predictable growth lies in developing a successful ecommerce growth strategy. Your approach should include expanding revenue, customer base, and market footprint.
To boost revenue, businesses need to understand their audience, tailor their offerings, and price products effectively. Growing your customer base is not just about reaching more people, but about reaching the right people at the right time. Expanding market reach involves exploring new territories or niches beyond current horizons.
Key elements of a thriving ecommerce growth strategy include setting SMART goals, conducting thorough market research and analysis, understanding customer segmentation and profiling, and effective marketing.
Optimizing your online presence is crucial, including a user-friendly and visually appealing website, mobile responsiveness, and a strong social media presence. SEO best practices ensure your site is discoverable and highly-ranked by search engines.
What’s more, in this process, you can’t ignore the role of brand building. According to Ben Leonard, ecommerce branding expert, author, and serial entrepreneur, “A strong brand not only differentiates you from competitors, but it also builds customer loyalty, which is key for sustainable growth.”
He continues, “Part of building your brand is understanding your audience. You’ve got to know who your customers are and what they want and how they think. And this then guides every decision you make. Does this fit through the lens of what makes sense to my customers, what they want, what they need, what problem they have to solve?”
You also need to optimize the backend of your operations. This includes maintaining clear inventory visibility, and ensuring that your stock is synced across channels and with your warehouse. Without this, your growth strategy will fall down very quickly as you will be unable to execute.
4. Assemble the right ecommerce tech stack
Crafting an effective ecommerce tech stack is essential for businesses aiming to excel in the digital marketplace. This tech stack is a collection of software applications that work together to manage various aspects of your ecommerce operation.
The goal of your tech stack is to ensure seamless operations, allowing business owners to focus on strategy and growth.
An optimized ecommerce tech stack should include a rich mixture of the following:
- Ecommerce platforms: Such as WooCommerce, Shopify, and Magneto — essentially providing your digital storefront.
- Supply chain and shipping management software: To ensure shipping and logistics are well-managed and avoid customer dissatisfaction.
- Payment processing solutions: To ensure secure and convenient transactions, building customer trust
- CRM tools: To personalize customer experiences, centralizing and analyzing data to improve relationships
- Order management software: To streamline the order fulfillment process
- Inventory management software: To maintain optimal stock levels and manage stock
- Warehouse management software: To automate and optimize warehouse operations
- ERP systems: To tie together a variety of business processes and the data flows between them. These are mainly for larger ecommerce operations.
This sounds like a lot, right? It’s worth taking this with a pinch of salt, as your tech stack needs to be tailored to your business and its stage of maturity. What’s true for all, however, is that future-proofing your ecommerce tech stack involves staying abreast of emerging technologies and trends like omnichannel shopping, personalization, and AI. Early adoption of innovative technologies can provide a competitive edge.
5.Choose infrastructure that will support you as you grow
As your ecommerce business grows, the infrastructure supporting it needs to be robust enough to scale. Investing in a solid digital foundation, the right tools, and efficient systems to ensure everything runs like a well-oiled machine is far easier now than down down the line.
First and foremost, your website needs to provide an optimized digital storefront for your scaling business. As traffic volumes increase, you need to be sure that these foundations are sturdy.
Then, there’s the toolbox – your ecommerce platform, payment gateways, CRM, and all the tech that keeps the cogs turning. Choosing platforms that integrate seamlessly not only streamlines operations but also creates a smoother journey for your customers.
But what about when things get really busy? That’s where automation becomes your best friend. Automating tasks like order processing, customer notifications, and even marketing campaigns can save you a ton of time and reduce the risk of human error.
As you expand your empire, don’t forget about customer support infrastructure. Implementing a solid system that can handle inquiries and issues swiftly will keep customer satisfaction high. Whether it’s chatbots for instant responses or a dedicated support team, make sure your customers feel valued and heard.
How to grow an ecommerce business: Simple in theory — more challenging in practice
And there we have it, folks – your whirlwind tour through the dynamic world of ecommerce growth. A lot to consider, right?
From weaving through the alleys of data and analytics, to surfing the waves of innovation, we’ve covered what your ecommerce business needs to do — not just survive, but to flourish.
Remember: standing still isn’t an option. In the trenches of ecommerce, if you fail to prepare then you should prepare to fail.
Now, go forth and conquer the digital realm. May your carts be full, your checkouts smooth, and your customers delighted. Happy selling!