According to an MSA survey, nearly 7.5 Million small businesses are at risk of permanently shuttering their doors due to the impact of COVID-19. The pandemic has caused a temporary closure of many local shops, severely affecting thousands of communities across the United States. Stimulus funding and other government relief may have offered a short-term solution, but small businesses need to focus on a long-term strategy to drive demand for their products or services. The most appealing option for most small business owners is to transition towards online selling, or e-commerce, as it can help build sustainability for lasting growth, despite the currently shifting business landscape.
Weighing the Opportunities and Risks of E-Commerce
Right now, there’s a lot of potential in e-commerce, but it’s challenging to transition an entire company online without weighing the pros and cons and considering what’s best for the longevity of your business. To cover a few top advantages:
- Operating an e-commerce shop allows you to interact with customers on a global scale, which means you won’t have to limit yourself to the U.S. market.
- Most e-commerce platforms charge less than $100 to get started ($1-$15 per year for the domain, an average of $30 per month for hosting, $0-$1000 for inventory, and 2-3% of revenue for payment processing), according to Sumo, leaving plenty of room in your budget to develop new products or services, team growth, and more.
- E-commerce platforms typically place cookies on site visitors’ computers, and you can collect information from your shop’s top fans. Using this data, you can create specific and personalized messaging to make it easier for users to find their favorite product or take advantage of exclusive sales.
Unfortunately, e-commerce isn’t perfect. There are a few reasons why you might not want to transform your business digitally:
- When a customer orders a product from your physical store location, they’ll walk out the door with their purchase; e-commerce is a little different. After an order is placed, customers typically have to wait 3-5 business days for their new product to arrive, which can be damaged during transport, leaving your consumers vulnerable to a poor experience.
- Customers usually have to fork over a lot of data to make their purchase, such as their name, address, email, phone number, and banking info. Although most sites keep these personal credentials encrypted, it can leave your consumers second-guessing shopping on your website, even more so if your e-commerce platform has faced a data breach.
- Not every place of business can make the shift to e-commerce. If you sell food and drinks or offer an exclusive service, you’ll find it challenging to digitalize your company.
The Best E-Commerce Platforms for Small Businesses
Announced by Facebook in March, Facebook Shops is a new feature that small businesses can take advantage of, as long as they have an active Facebook business page, sell physical products, and have a valid U.S. bank account. Using FB Shops, small business owners can directly promote products on Instagram and FB Marketplace, completely customize their online inventory, and easily communicate with customers and gather insights on their company’s e-commerce trends. Currently, there is no cost to get a FB Shop up and running, but there are processing fees.
Heinz, The Economist, and Hasbro are just a few companies that use the popular e-commerce platform, Shopify. Compared to FB Shops and Etsy, Shopify offers a wide range of options for products/services small businesses can sell, such as digital and physical products, memberships, ticketed experiences, and more, making it a much more diverse platform to suit the needs of any business. To get started under Shopify’s three-month free trial, all you need to provide is your name, email address, shop name, and payment information. Although Shopify isn’t free, Shopify Basic only costs $30 month and offers the most “basic” features, the standard Shopify membership costs $80 month, and Advanced Shopify costs $299/month; here are all the inclusions for each plan.
Etsy is a niche e-commerce platform for SMBs looking to sell handmade, custom, vintage products online. The platform allows shop owners to categorize their products, run promotional offers, and view shop analytics to improve their business, including powerful SEO features. Etsy is an incredibly affordable e-commerce platform; opening an account is entirely free, $0.20 to list an item, and a 3.5% transaction fee, not including the cost of shipping.
Building an E-Commerce Strategy for Sustainability
Conduct a Situational Analysis
Are you wondering where your business currently stands? Conduct a situational analysis to identify how you’re positioning your products/services, your company’s current pricing model, your distribution process and the channels you’re using, your present financial status, what your competitors are up to, and external factors like economic and regulatory impacts that can (and might currently be) affecting your business. This is a lot of information to gather, but it will give you a substantial hand identifying what’s best to eliminate from your company and any opportunities you’ll be able to take advantage of.
Identify Multiple Promotion Channels
Transitioning to an online marketplace means you’ll need to introduce a comprehensive digital marketing strategy. List all the possible ways for your business to promote itself online using SEO, PPC, social media, and blogs, to name a few. When choosing which promotional channels you’ll use in your e-commerce strategy, make sure you consider the monetary cost and time your business will need to put in. For example, SEO and blogging can help with brand awareness and online visibility, but SEO consultants can cost upwards of $750/month, and blogging can be time-consuming if you plan on tackling this work on your own.
Develop a Conversion Strategy
Getting your target audience to your e-commerce shop is a huge step, but you also have to figure out how to turn them into happy, paying customers. Depending on the platform you’re using to host your online business, you can adjust your store’s appearance and implement new features to make shopping easier. This never-ending process is called conversion optimization, and in the end, it can help your business grow within its industry and turn one-time shoppers into loyal brand enthusiasts. You can start by segmenting your shoppers and identify new ways to get them in your store more often and increase their order spend.
Plan on New Ways to Increase Demand
There are many different methods you can use to increase the revenue you receive from your customers. You can try implementing a loyalty program, starting a subscription service, setting free shipping thresholds, offering exclusive product releases, having flash sales, or offering discounts and coupon codes. No matter what you decide to do, be sure to do your research ahead of time to determine how much the program will cost and its estimated impact on growth.
Set Short- and Long-Term Financial Goals
One of the most important things you can do to secure the success of your ecommerce venture is to set realistic financial goals. Create a summary of all of your expenses, including their estimated growth rates and timelines. Though these projections may not be 100 percent accurate, they can help provide some guidance for your marketing efforts and your short- and long-term business goals. Throughout the year, be sure to track your actual spending and the successes and failures of your efforts so you can compare the numbers with your expectations. With smart planning and a bit of good luck, you should meet and exceed all of your financial goals.
E-commerce is an excellent option for many struggling small businesses, not only to survive the changing landscape of retail but for long-term growth and sustainability. Taking your business online can seem like a burdensome task, but identifying the opportunities and risks, identifying the best e-commerce platforms your business, and layout out an e-commerce strategy is integral for long-term success within your industry. Remember, keep an eye out for how your competitors are handling the hardships COVID is bringing and stay adaptable to keep your business thriving.