Developing a business plan before venturing into Ecommerce will give you a smooth and financially secure transition to the digital market. This will serve as the map that tells you how to turn your business idea into reality. That is if you know what your Ecommerce business plan should cover.
Vital Components of a Business Plan for Ecommerce
An Ecommerce business plan covers five significant components that branch out to more equally essential elements. You can download our checklist for a winning Ecommerce business plan.Download our Business Plan Checklist
1. Research and Due Diligence
Every business plan must start with research. This can include looking for a problem to target or finding the customers you want to target.Additionally, you must also know about the due diligence that encompasses your business idea. This may include an investigation of legal, financial, or workforce requirements to run your business smoothly. Your research and due diligence process must cover the following:
a. Market Research
Market research helps you understand your target customers, including demographics, behavior, and other factors that can influence their buying decisions. It answers the following questions:
- Who do you want to sell to?
- How large is your customer base?
- What are their pain points?
- Why do they purchase?
- What will make them buy your product or service?
- How much are they willing to pay?
To begin your market research, find out where your potential customers are lurking. Social media is one of the major tools you can use to gather information. You can also look for statistical data about your target market.
b. Competitive Analysis
A competitive analysis will help you know who you will be going against. This will tell you the strengths and weaknesses of your competitors, and how you can adjust your strategy to surpass them.Your competitive analysis must cover the following:
- Who are your biggest competitors?
- What do your competitors offer?
- How do they sell their products or services?
- How much do they charge?
- What are their marketing strategies and level of engagement?
- What are their content assets?
- How and where do they distribute their content?
- What are their strengths, weaknesses, opportunities, and threats? (SWOT analysis)
Use competitor analysis tools to make your research easier. Some of the tools we use for our clients include Ahrefs, Alexa, Moz, and the ever-reliable social media.
c. Technology Research
Technology research determines the software or online programs you need to build, run, and grow your online business. This can range from specialized Ecommerce platforms like Shopify and Magento, website builders, to Content Management Systems.Essentially, Ecommerce businesses need a web server, web tools, and database system. However, you may also need specific marketing tools, Google services, POS systems, and other technologies that improve how you communicate, store, and process data about your customers such as a CRM.
d. Resources and Requirements
The resources and business requirements you need will depend on what you want to accomplish and sell. This may or may not include the people you need in your workforce, your order fulfillment process, legal requirements, and other due diligence.Some of the legal requirements for Ecommerce businesses in the US may include:
- Taxes
- Payment gateways
- Privacy and security policies
- Trademarks, patents, or copyrights as per the US Patent and Trademark Office
- Shipping restrictions
- Age restrictions as per the Children’s Online Privacy Protection Act
- Business insurance
- FDA approval for certain products
- PCI compliance
- ADA compliance
- FTC compliance
- CAN-SPAM Act for email marketing efforts
e. Products and Services
Products and services research will cover the changes you need to make to stand out from your competitors. One big question you can ask is, “are there product features or additional services I can include to make my brand different?”This should include due diligence or government-mandated requirements that surround the product or service you want to offer. This can help you decide whether or not your product or service is worth the effort and money.If you’re planning to sell products, you need to research manufacturing, supply chain, and dropshipping. All of these factors will affect the quality of your products and overall customer experience.
f. Finance and Accounting, Budget, Taxes
Probably the most essential part of your research process is your financial plan. You need to know where you will be getting the funds for your initial capital, your projected expenses, tax considerations, risk management, and long-term investments.Adding a financial plan into your Ecommerce business plan will determine whether or not your business is feasible. This may also be a requirement if you want to win approval from an investor or to secure a loan.Take the time to find cost-effective solutions that will cut your expenses without sacrificing the quality of your business.Having an outsourcing company to help, for example, can reduce labor and operational costs by up to 60%. Consider outsourcing companies that have Ecommerce expertise, because they have all the support you need to run your business, including:
- Customer Support
- Digital Marketing
- Graphic Design
- Product Information Management
- Ecommerce Web Development
2. Develop a Business Overview
Your Ecommerce business plan must have a brief overview of what your business is about. This will help you with two things: (1) providing a short, clear perspective about your online business, and (2) attracting people to invest in your idea.
a. Business name, Domain Name, Business Registration
Your business name doesn’t just define the identity of your online store. It can also affect how customers and investors perceive your business and whether or not they want to buy from you.A study published in the Personality and Social Psychology Review found that stock names that are easy to pronounce had 11% more investments than those with difficult pronunciation. Therefore, the simpler, the better.You can use Shopify’s business name generator to give you some ideas.In terms of registration, there aren’t specific licenses that you need to have to run an online business in the US. However, you have to comply with regulations as per the requirements we mentioned previously.
b. Target Market and Budget
After conducting research, you must formally define who you want to target. Moving forward, this will serve as your guide whenever you want to strategize in targeting your ideal consumers.Of course, this comes with your total budget and its breakdown. If you want to look for investors, defining the details of your target budget will help them decide whether your business is worth their risk.
c. Platform and Technology
Every Ecommerce business must choose which platform to use, and include all the necessary technology needed to run the business. Knowing the platform and technology you will use is essential because it will define the capabilities and limitations of your Ecommerce website.Some of the most popular Ecommerce platforms include:
- Shopify
- Magento
- WooCommerce
- Squarespace
- Wix
d. Order or Service Fulfillment
Your order fulfillment must define how you will process the orders of your customers, from inquiry up to delivery. You may hire a third-party service for order fulfillment if you don’t have your own warehouse, and you want to manage the effort you put into refunds and returns.On the other hand, if you want to sell services, determining your service fulfillment will define your customer satisfaction rates. Your service fulfillment must set standards for adequate service, value for money, and customer relationship management.
e. Marketing and Sales
Finally, your business plan must have a quick overview of your marketing and sales strategies or campaigns.It doesn’t have to be a full-blown marketing and sales campaign yet. However, if you’re presenting your idea to an investor or potential business partner, they will want to know how you plan on selling your product or service.We will expand more on marketing and sales further into the article.
3. Website Design and Development
Website design and development will define the physical aspects and functionality of your website. You may choose to hire an outsourcing company to handle this part for you. However, the following are some factors that you need to consider:
a. Branding and Corporate Identity
Branding and corporate identity fall into the design aspect of your Ecommerce business plan.Take note of your brand promise, goals, and vision for your business. Consistently incorporate these into your logo, tagline, color palette, imagery, and tone of voice, as this will define your corporate identity.The goal is to know the distinct design you want your business to be known for.
b. Ecommerce Platform Development
In your Ecommerce business plan, decide on what platform you want to use. After that, look for a developer to hire to handle this for you because this will take a lot of time to execute.Some Ecommerce platforms are easy enough to use that you don’t need to know how to code to build your online store. However, Ecommerce websites require specific functionalities and requirements that only professionals can successfully execute.Hiring an outsourcing company will save you the hassle of finding and hiring an independent contractor or freelancer. Not to mention, Ecommerce development expertise can be challenging to find.Find out more about our Ecommerce Website Development Services. You can also click the button below for inquiries about our development services.Help Me Develop My Website
c. Hosting and Systems Administration
Essentially, website hosting services allow your website to be accessible on the internet. It’s like buying or renting a space for your business so that customers can visit your store.In your Ecommerce business plan, decide on what website hosting provider you will use. Some of the most popular hosting providers are GoDaddy, BlueHost, and InMotion.Additionally, you will need someone to handle systems administration. This will cover the management of all software and servers, and making sure that your online store is running efficiently.
d. Website Design UX/UI
UX/UI (User Experience / User Interface) is one of the most crucial aspects of website design that focuses on usability, functionality, and aesthetics. The goal of UX/UI design is to make your website as compelling and user friendly as possible.Include this in your Ecommerce business plan as one of the things you need to look for when hiring someone to design your website.You can also outsource UX/UI design to a graphic design service provider. Through an outsourcing company, you don’t have to worry about looking for someone and the quality of their work.
e. Website and Service Quality Assurance
This is an important part of designing and developing your website because you can’t have a live site with a lot of bugs and errors. Otherwise, your customers will think your website is broken, which may leave a bad impression and cost you money in lost sales.Define how you will conduct website quality assurance in your Ecommerce business plan. This will determine your QA process in ensuring that your website is ready for launching.
4. Marketing and Sales
The next thing that needs to be in your Ecommerce business plan is your Marketing and Sales plan. Pinpoint the strategies that you will use to market your business and your sales process.
Here are some of the most reliable marketing and sales strategies that you can use:
a. SEO and SEM
Ecommerce has grown to become one of the fastest-growing industries ever since the coronavirus widespread. This means that you will have a lot of competitors fighting for the top 1 of Google SERPs (Search Engine Results Pages).SEO (Search Engine Optimization) and SEM (Search Engine Marketing) work hand-in-hand in making your Ecommerce website known by your customers by making your website rank higher.If you don’t focus on SEO and SEM, you risk getting pushed to the lower ranks of Google SERPs, where your potential customers wouldn’t even bother looking.
b. PPC Marketing
PPC (Pay Per Click) is essentially a marketing strategy where you pay for every click your ads get. It’s a way for you to get website visitors without relying on organic traffic.There are a lot of PPC forms you can use for your online business. One of the most popular PPC strategies is SERPs, where you will “bid” on a particular keyword or set of keywords to rank higher on Google.Another form of PPC is through social media, where the platforms target your audience based on their recent searches or activity and feed them with relevant advertisements.PPC Marketing may or may not be an expensive investment. The prices of the bids are directly proportional to the level of competition. However, the main benefit of PPC is that the people who click on your ads are actually searching for businesses, products, or services like you.
c. Social Media Marketing
Social Media Marketing uses social media platforms that your target customers use to build brand awareness, engage with customers, sell products or services, and drive traffic to your website.It basically involves distributing content across social media to build engagement, analyze data, and run advertising campaigns.What makes Social Media Marketing great is that it’s cost-effective, with the possibility of being totally free. However, without paid boosts, growing an audience through a social media page can be extremely difficult and time-consuming.
d. Affiliate Marketing
This type of marketing involves giving incentives or commissions to affiliates for every successful customer they brought using their marketing efforts.It’s like having a group of sales representatives to sell your products using whatever marketing and sales techniques they want to use.
e. Email Marketing
Email marketing remains the most effective and cost-efficient marketing method for online businesses.You can use this to distribute advertisements, business updates, bonuses, and other relevant content to your send list. However, the most difficult part of email marketing is growing a big enough send list to produce significant sales.Some of the most popular email marketing tools include MailChimp, HubSpot, and GetResponse.
f. Inside Sales Team
Inside sales are one of the most dominant sales models because of its reliability and effectiveness. For online businesses, they are the “human touch” that compels your customers to proceed with a purchase since speaking with a person builds stronger trust.Unlike telemarketers, an inside sales team can handle live chat, email, voice, and omnichannel tickets for faster transactions.
5. Business Operations Support
Business operations are the workflow you need to implement to run your store. If you’re writing your Ecommerce business plan for investors, you need to get into detail with every part of your operations.
Another thing you need to figure out is whether you will be having a third-party partner for some of these business operations. Especially now with COVID-19, you’re more likely to need more remote operations support than in-house.Here are some parts of operations that you can outsource:
a. Inventory Management
If you’re planning on selling products through Ecommerce, you need to consider inventory management. It involves making sure you don’t overstock and run out of items by predicting your products’ demand.This can be time-consuming because it involves a lot of data analysis, inventory monitoring, and management. For this reason, most Ecommerce companies prefer to outsource inventory management.Inventory management outsourcing companies have the tools and expertise to do the heavy lifting for you. Their services may or may not include:
- Accurate predictions of inventory reordering
- Analyze data to discover trends
- Inventory management software
- Product grouping
- Providing strategic inventory locations
- Real-time inventory count
Like other outsourcing companies, you have the freedom to choose which part of inventory management you want to outsource. So, you don’t have to worry about relinquishing control over your products.
b. Product Information Management
Product Information Management (PIM) involves data concerning your products, including product description writing and data entry. Therefore, this is another crucial aspect of product or retail Ecommerce.If you’re planning on selling a lot of products on multiple platforms aside from your website (e.g., Amazon, Home Depot), you’re going to need a strong workforce to distribute the data. Otherwise, PIM can be extremely time-consuming.You’ll need to make sure that all information is accurate, and that the data follows specific guidelines according to the platform you’re going to upload it to.Learn more about our PIM Services here, or click the button below and let’s talk about what you need.Help Me With Product Information Management
c. Production Processes
In the production process, decide if you want to be the one to wholesale, manufacture, or drop ship your products. If so, how long will it take to make your products? Can you handle the high-volume orders if your demand increases?To outsource your production, you can either have your partner manufacture the entire product (or products) or let them handle a part of the production process.Both of these options are more cost-effective than handling everything on your own since they already have the experience, equipment, and other assets ready.Hence, it will come down to who you choose as an outsourcing partner. Some of the questions you can ask are:
- How do you ensure the quality of the output?
- How do you manage errors in production?
- Do you have experience in manufacturing a similar product?
- Can you handle my production workload?
- Where are your assembly locations?
d. Customer Support
Customer support in Ecommerce can have various channels, like email and chat. Decide on the channel you will use for customer inquiries and determine your capabilities in terms of workforce.Regarding workforce capability, customer support is one of the most outsourced business operations in almost every industry. Therefore, looking for people wouldn’t be difficult. It then comes down to choosing an outsourcing company based on the following:
- Location of operations
- Workforce capacity
- Operating hours
- Language barriers
Another option you can do is building a customer support team overseas. The Philippines is one of the best countries to build remote staff because of their English communication skills. Plus, almost all outsourcing companies in the country are 24/7 capable so that they can work during your hours.Offshore Staffing is one of our expertise here at KDCI Outsourcing. We can handle recruitment, operations, and employee management for the job roles you want to build.For our capabilities in customer support staffing, you can check out how we reduced Wireless Emporium’s labor cost by 70%.
e. Website Development and Maintenance
Previously, we focused more on the building process of website development. This time, for business operations, website development covers any need for improvement in your website’s capabilities and functionality.This will also include maintenance, which must be done regularly. Otherwise, your website can be at risk of hacking, bugs, and other errors that can interrupt your operations.
Create a Growth-driven Ecommerce Business Plan
Your business plan is to serve as your guide to identifying and calculating your steps in starting and growing your online store. Creating a growth-driven Ecommerce business plan will serve as your roadmap for starting a new business idea or growing your existing business.If you need help with creating and executing your Ecommerce business plan, KDCI Outsourcing has the experience and expertise to assist you.Feel free to check out our Design and Marketing Services, Ecommerce Outsourcing Services, and Offshore Staffing Services for more information. If you have any questions, we’d be happy to help! All you have to do is contact us. After all, it’s free!Contact Us
