E-commerce is in a great place right now. Sure, the industry’s recent boom has been affected by the pandemic and other external factors that are being analyzed daily. But even as the world steadily returns to in-person transactions, experts still see plenty of room for e-commerce to grow in the foreseeable future. The market is expected to grow from $3.3 trillion in 2022 to $5.4 trillion by 2026.
As an e-commerce business owner, it's time to review your business plan and plan ways to grow and scale with the industry. But what does scaling mean, why should an entrepreneur care, and how can they prepare their business for it in 2023?;
Why is scalability important?;
Scaling in business refers to the process of adjusting the capabilities of a newly established business. Scaling up means improving the ability to grow and scaling down means reducing expectations and activity.
How can a business know if it needs to scale?;
If a business is making monthly sales and can cover its expenses, it is likely viable. It should start working towards scaling up to improve its situation.
It is also likely to enjoy some early success. It needs to expand immediately if it sees huge demand for its products or services and faces stockouts and overbookings.
Scaling is not only crucial to sustaining initial successes, but failure to scale can lead to worse. Customers will look for other businesses that can meet their requirements.
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4 steps to prepare for escalation.
A business that is ready to grow is one that gets things done. This includes preparing for many changes. But it’s not easy without planning. Scaling efforts can derail a business if executed poorly.
With that in mind, here are four steps that need to happen to prepare your ecommerce business for scaling.
Confirmation that every area of the business can be expanded.
To expand, it must improve its capacity and capability. It must be able to perform more work and produce higher quality results. To achieve this, every area of the business must be improved, especially all stages of the supply chain.
Let's take a look at how each sector affects scaling:
Platform.
Choosing the platform for your store is crucial to its success. You need a platform that is robust and scalable. It should allow you to create functional and aesthetic storefronts. It should also be able to integrate with various services, such as payment processors and logistics providers.
Additionally, it should be customizable to adapt to the nuances of business processes. If the platform has these capabilities, the entrepreneur will be able to improve the website experience for his customers.
The e-commerce platform can also be deployed in the cloud so there is no need to worry about scaling later. Developer support and an active user community are also beneficial, as this can help resolve issues that may arise while using the platform.
That's why it's advantageous to use something like Magento, which is a scalable e-commerce platform that enjoys ample development support. Services such as Fixit.gr They provide extensions and customization services that allow merchants to customize their Magento stores to suit their business requirements.
Suppliers
Suppliers are responsible for various stages of the supply chain. Therefore, they will be crucial to the business's scaling efforts. It will be difficult to increase sales if there is no supply to meet demand.
Suppliers must be found that can meet needs and treat the business as partners.
Logistics and execution.
Even if the platform can help an online store accept more orders, if it has ample inventory, it will still have to worry about delivering products to customers. Finally, logistics and fulfillment will have to be arranged.
An important factor here is the reliability of the courier service. The courier should be able to deliver the products quickly and safely.
Group
Employees will be instrumental in the effort to expand a business. Will they be willing to take on new roles or additional workload? Growing businesses often need people who are ready to go the extra mile.
As the business grows, specialized roles may need to be created to focus on sales, fulfillment, after-sales support, and marketing.
Cash flow assessment and obtaining financing.
Scaling requires investment, so it's best to check how healthy the business's finances are.
It should be vigilant with cash flow. It is easy to determine whether it is a viable business, simply by looking at the income and expense figures.
Improving your supply chain means acquiring additional inventory, renting larger warehouses, using more supplies, hiring new employees, and attracting more customers. All of this requires cash.
If the profit margins are so good that they can reinvest the profits into the business, then all is well. Otherwise, they may consider external financing.
Getting fresh capital has become easier these days. In recent years, e-commerce-focused financing platforms have emerged that provide quick financing without the hassles of conventional financing options, such as bank loans or investments.
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Monitoring relevant KPIs and continuous strategy updates.
Numbers don’t lie. When making decisions, it’s best to let facts and data guide them. Key performance indicators (KPIs) should be set early and tracked. While cash flow gives a general indication of the health of the business, performance indicators help identify areas of the business that need improvement. Some of the key e-commerce metrics to track include:
- Monthly sales
- traffic
- Conversion rates
- Average order value
- New vs. repeat customers
Tracking KPIs can help optimize various strategies. For example, a product strategy can be created by looking at sales per product, order values, and conversion rates.
With insights from the data, the inventory can be streamlined. It can focus on the products that deliver the most value and phase out those that don’t perform well. There’s no need to stock slow-moving and less profitable products.
Reviewing store performance can also help improve your marketing strategy. Seeing which customers are visiting your store and how they behave on the platform can help you plan better engagement.
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Expanding market reach.
When talking about acquiring new customers, one should not overlook what marketing can offer a business. Given that e-commerce is predicted to be a high-growth industry, it is likely that there are untapped markets and audiences to engage with.
Marketing should be transformed as part of the scaling effort. Conventional wisdom dictates that at least 51% of the annual budget should be allocated to marketing, especially if it involves direct consumer engagement. You don't need to set such a high budget when you're starting out, but setting aside a specific budget for it should be a start.
Fortunately, technology has also made e-commerce marketing easier and more accessible. There are many marketing and customer relationship platforms, such as MailChimp and HubSpot, available to help with prospects. Marketing can be done through email, search, social media, and even in the online marketplace itself. It’s all about knowing which channel will give you the most value given your market.
Over a quarter of digital marketers say that email and social media marketing campaigns are the best for driving website traffic. MailChimp, for example, can help with automated email marketing campaigns. For younger audiences, placing ads on TikTok or Instagram can be a good move.
Ultimately, the brand should also be built consciously.
