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Tim Peter

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March 4, 2008

What is e-commerce anyway? (Guide to Small Business E-commerce Strategy)

March 4, 2008 | By | No Comments

Defining E-commerce

The last several weeks, I’ve been discussing e-commerce – mostly from the standpoint of small business. But, I think I use that term somewhat idiosyncratically. That is, my career has been built around using the web to drive action, whether that action was to learn skills, reserve hotel rooms, research stocks or report revenues. While I’ve generated over $1 billion in revenue for my companies over the last 5 years, I’ve also delivered training, sales literature and customer service. Each has helped my companies succeed. To that end, e-commerce is any action that uses the web to generate revenues or grow the bottom line You need to look at the web’s value holistically. How do you know what’s appropriate for your e-commerce group to pursue? Like this:

  • E-commerce drives a purchase action. Ideally, for most companies, this involves revenue. But, getting people to download a white paper or refer to an FAQ can be an effective method of lead generation and customer service at a lower cost. That’s a Good Thing. And it works like just like an e-commerce transaction. Just evaluate the costs of each activity relative to its benefit and its customer value to prioritize your activities .
  • E-commerce allows for precise measurement. Or mostly precise. Or some kind of precise, dammit. Just don’t tell me it can’t be measured. And don’t confuse precision with accuracy. Yes, unique phone numbers and coupons have any number of flaws. They’re not completely accurate. Bummer. They’re more measurable than not using unique phone numbers or coupons. And for those of you in my past life (you know who you are): my objection to coupons was specific to that implementation, not to the concept in general. If you can’t measure it, you can’t manage it. So don’t bother doing something you’re not bothering to measure.
  • E-commerce depends on marketing actions. Yes, email, print and search generally fall outside the scope of typical “e-commerce”. But the most successful campaigns I’ve ever run or been involved with were textbook examples of integrated marketing. Customers choose to interact with your brand in the way that meets their needs, not the way you want them to. That is, unless you ensure you want them to interact with your brand in the way that meets their needs. Failing to integrate your marketing and e-commerce activities (it happens, sadly) makes no sense. Or dollars.
  • E-commerce transactions can occur through any channel. “What?!? E-commerce only transacts on the web!” Nonsense. Foolish, really. So long as the cost of the sale through a channel is less than the revenues generated by that sale, all sales channels are useful channels. Assuming you can track that it worked, of course, and that your intent was to drive it through those channels. Sure, some channels are better than others. You can introduce friction into the process to route customers to your preferred channels. But, don’t disregard the value of using the web to drive sales in other channels, too.

So, that if that sounds a lot like marketing to you, I’d agree. But there’s one crucial part of marketing where e-commerce plays a limited role:

  • E-commerce is not the product. Well, maybe it is for Amazon. But for most companies, e-commerce is a process to get people to the product (and vice-versa). The deepest, most meaningful brand experience a customer can have is when using your product. Unless your product is the content and forms on your website, then e-commerce is only three of the four P’s of marketing (Place, Price, Promotion). Product is altogether different. The job of e-commerce strategy is to convey the benefits of that product and collect the cash. You definitely want your customers’ experience to be integrated between product and its delivery channels. But focus on your product first. Lipstick on a pig can only do so much on its own.

As we continue to look at e-commerce in these terms, I’ll be referencing items in this post as well as point you to useful resources to help with each step in the process.

Does this definition of e-commerce work for you? Let me know in the comments.

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Comments

  1. I found your site on google blog search and read a few of your other posts. Keep up the good work. Just added your RSS feed to my feed reader. Look forward to reading more from you.

    – Randy Nichols.

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