An e-commerce site can drive business, but don’t approach it in the same way as stores

E-commerce is a growing part of the retail landscape and serious retailers know it is vital to their future. Yet many companies have spent a fortune building up their e-commerce capabilities without understanding how to measure online success, frequently setting overly simplistic or unrealistic goals.

For every company that has succeeded in e-tail, many have failed to reach their potential. The result is often underperforming web sites and targets missed at significant cost.
The e-commerce puzzle is complicated. Ask 10 experts what the most important part of the puzzle is and you will get 10 different answers. One might say it’s all about product, another will focus on technology and a third will say it’s customer support.

They are all right. The bottom line is that you need to do a lot of things very well. But one of the industry’s key omissions has been the lack of a holistic framework to hang e-commerce on – a shared industry view of what it takes to succeed. By following a programme, retailers can ensure that all elements of the e-commerce puzzle are thought through and a coherent strategy is developed.

First and foremost is having a clear plan. This may seem obvious but, time and time again, unrealistic online goals have led to overinvestment and disappointed investors. Businesses must decide what they want from their site – will it represent their largest store or is it a means of dominating their category? Is the goal to build the brand or drive sales?

Next comes the consumer proposition, with the right mix of product, price, availability and experience to deliver the plan. Competitors are only a click away.

Equally important is the place: the online store, which must bring the proposition to life. Sites must be functional, easy to use and engaging. And the online shop is merely the tip of the iceberg; long-term success requires an integrated technology eco-system, including product management, image management, web analytics and fraud prevention.

Marketing budgets need special consideration and must be variable. This is critical – you do not set a fixed budget for credit card charges and nor should you for online marketing, whether you are driving sales with a target based on customer acquisition cost or driving profitability with a focus on transaction acquisition cost.

Getting the right people and processes is harder than it sounds. There is a dearth of e-commerce talent and day-to-day e-commerce processes often end up in employees’ heads, rather than built into the business.

Last but not least is performance. Again, businesses need to rethink how to measure success. An e-tailer’s profit and loss is very different from that of a traditional retailer, whose sales growth and margin structure is dominated by store roll-out. Online, it’s more about attracting and retaining customers.

Run an e-commerce site like a traditional retail business and you run the risk of being outmanoeuvred by more sophisticated competitors.

Michael Ross is co-founder of and director of