If you’ve made it this far in the How to Start an eCommerce Business series, congratulations! Now it’s time to fully understand and set up your eCommerce operations. The process of properly creating your own eCommerce business is tedious and can take serious time before the actual launch. However, I promise that the legwork I am explaining will make the future growth of your eCommerce business that much simpler and less hectic.
If you are just joining us on this eCommerce journey, please make sure to refer back to steps 1-7. They will walk you through the key steps that you should be taking before you reach this aspect of fully understanding and setting up the operations of your new online store. While this column will add value without the knowledge of the pat 7, it can become even more powerful when combined with everything else that I have already taught.
Step 1: Choose a Product Niche
Step 2: Choose a Fulfillment Strategy
Step 3: Build Supplier Relationships
Step 4: Choose a Store Building Platform or Online Marketplace
Step 5: Build an Online Store with WooCommerce
Step 6: Create Pricing Formulas and List Products
Step 7: Create Customer Service Policies
In this column, I will be introducing the core operations of an eCommerce business and diving into each so that you can understand how they will impact your new online store. Following a walk through of each department, I’ll offer advice on how you should become an expert at the operations of your business so that you can eventually teach it to someone else who will free up your time to focus on more projects surrounding growth of the store.
I encourage you to take each operation of your new eCommerce business seriously. I started learning about eCommerce business operations 7 years ago and was slowly introduced to each aspect moving through each team practicing, making mistakes, and finding areas of improvement. If you don’t take the time to fully understand the operations of your eCommerce business, you will not succeed in the long run. There are many tedious tasks and factors that go into running an eCommerce business that cannot be overlooked.
The Core Operations of an eCommerce Business
Product management and listing
Product management is the process of first listing new products onto your online store and then optimizing them for sales. As we talked about in step 6, you need to make sure that you are listing products with all of the key information that customers want to see when they arrive at your online store, and specifically, your product pages.
Once you have the core information in your product listings, there is an ongoing process that should be practiced to make sure that your listings are performing and converting as high as they possibly can. The tasks that go into this system of optimization are SEO work to improve appearance in search results, changing the content on the product listing to further enhance the value added to the customer, adding more images, adjusting prices based off competition and past sales, properly categorizing and tagging each product, and much more.
At the beginner level, product management entails simply making sure that the content and images on the product listing are clear and tell the customer what they will be purchasing. At a very high level, product management is the process of A/B testing particular content to see what customers click more often. It is setting up a system to receive more feedback from customers so that future customers can see the positive experience and have trust in your online store.
Inventory management is the process by which you and your team are making sure that the products available in your online store are available and in stock in your warehouse or in your supplier’s warehouse — this depends on the business model that you are using, wholesale vs. drop ship.
The actual process is usually managed by a piece of software that holds all of your product listings with a connection to the inventory levels in your warehouse or in your supplier’s warehouse. If a product is sold, the inventory count should go down 1. If the inventory count eventually reaches 0, the product should be pulled down from the site so that other customers cannot buy it. At this point, you need to place a new order with the supplier so that new stock is sent to you and you can relist the product on your store.
When dealing with a drop ship eCommerce business, the need for inventory management becomes even more important. Let’s say that you have 10 different drop ship suppliers that are storing and shipping the products for you. This means that you need to make sure they always have stock of the products that you are listing. In order to do this, you need someone on your team that is receiving daily to weekly inventory reports from your suppliers and uploading them to your inventory management system to make sure that you are properly representing the products on your site.
Without proper inventory management, your eCommerce business can quickly tank. Customers hate hearing that a product they ordered is not in stock because of an error made internally. It’s just not acceptable anymore to customers who have hundreds of options of places to order from online.
Once you’ve started to receive orders from your customers, you need a system and set of processes to properly submit the order for fulfillment. Again, this greatly differs depending on your business model.
In a wholesale business model where you are storing the products in your own warehouse, you need someone that is initially processing the order and communicating it to the warehouse. In the warehouse, you need someone that is picking (finding the product), packing (packaging the product for shipping), and shipping the product using one of your preferred carriers (usually UPS, USPS, or Fedex in the United States). That entire chain of tasks needs to be a well oiled machine so that orders are shipped quickly and customers are receiving the right product that they ordered.
In a drop ship business model, order fulfillment becomes a bit different. You still need someone that is initially processing the order, but now they are communicating it to the correct supplier so that they can pick, pack, and ship it out to the customer. At one point in my first eCommerce business, we were working with over 1,000 suppliers and selling over 1 million products on our store. We had to have an organized system to make sure that the hundreds of orders that were coming in each day were being sent to the correct supplier.
Customer service –> tracking, returns, exchanges, cancellations, refunds
Now that you’ve shipped the product out to the customer, it is your responsibility to have a system that organizes all of the potential customer service inquiries that would come next. The first process is making sure that you are sending tracking information to all of your customers as soon as it becomes available from the shipping carrier. Do not make the mistake of not sending tracking information…customers will email you and they will be less accepting to any issues if you’ve stalled in providing tracking.
Once the customer has actually received the product, there are a number of requests that they may have. You need a process for each one of them. A customer may ask to return their product for a variety of reasons. A customer may ask to exchange their product for a different color or size. Some customers may even ask to cancel their order because it has taken too long to arrive. Based off of these three common customer service inquiries, you will also need a process to properly submit refunds to the customer depending on their situation.
A lot of these customer service operations come back to creating your store’s customer service policies that I talked about in step 7. If you create your policies before starting with your operations, you will have a much better understanding of how to create the processes of customer service.
Digital marketing and Advertising–> social media, advertising, relationship building
Finally, you need to have a system and set of processes that drives new customers to your online store. I’m sure that you have heard the myth of the saying, “Build it and they will come.” Let me tell you that this is not the truth. You can build an online store of the same caliber of other multi-million dollar eCommerce companies, but if you do not properly market your store to your target market and offer them opportunities to shop through your products, customers will not come.
We’ll be diving deeper into digital marketing tactics over the next couple of steps, but you need to make sure that you have someone on your team that specializes in this type of work. You need a system and set of processes for managing and growing a social media presence. This involves weekly posting to your own channels as well as finding creating ways to interact with other, larger social media communities where your customers may be interacting.
Once you are ready, you should also create a system for running targeting advertising through social media channels (Facebook and Instagram), search engines (Google Adwords, Google remarketing), and popular content sites where your target market lives. Of course, managing this system comes with managing your ad budget as well. Most eCommerce businesses don’t have an unlimited ad budget to start out so you must be careful with how you are spending and make sure that you are performing lots of tests to find the right equation for your new eCommerce business.
Build Processes to Handle the Operations
As you’ve heard me say throughout this entire series, it is key that you are not only learning about running your eCommerce business, but also creating processes for others to eventually step into as your online store grows. If you don’t take the time to create systems and processes upfront, it is going to be much more difficult to take them off your plate when the time comes.
In one of the final columns of this series, we’ll talk more about utilizing remote workers to free up your time so that you can continue to focus on the growth of your eCommerce business. This has been a strategy that my co-founders and I have been tapping into for the past 5 years and it is an absolute game changer when it comes to running your online store. I’m not sure how we would have reached such heights without the help of our team of online experts and assistants.
Become an Expert at Operations
In conclusion, take the time to become an absolute expert in the operations of your eCommerce business. As the founder and owner, you should be able to answer any question when it comes to the operations of your store. You should know our products inside and out and you should be the voice of the entire business to the customer, to your suppliers, and to your eventual employees.
Strap in because this is going to take a little bit of time. The role of starting and owning an eCommerce business is not simple. You’re dealing with many moving parts and you have to make sure that all systems are working together like a well oiled machine. From listing the product to making sure that customer is happy once they have received it, it is your job to make sure that everything happens smoothly. If there is even one mistake, it can cause the entire pipeline to suffer and customers will not be happy.
If you have any questions, feel free to leave them in the comments or shoot me an email at Connor@ConnorGillivan.com. It’s been real!