Online retail has grown exponentially over the past five years and the trend shows little sign of waning.
In the near future, the boundaries between ‘traditional’ (bricks-and-mortar) commerce and their online counterparts will become even more blurred as more businesses move all or part of their operations online, and evolve to be truly omni-channel operations.
Retailers who have not adapted to the changing retail landscape risk being left behind and losing valuable customers to more savvy and forward-thinking competitors.
Ecommerce spans many areas of an organisation; business, technical and the needs of users themselves. In order to build a successful strategy, ecommerce merchants must consider the demands of multiple stakeholders.
Ultimately, the desired customer experience drives the business focus, the technologies used, and the security measures implemented to build trust, loyalty, repeat business, and referrals.
The key is ensuring that the strategy is appropriate to the unique business needs. Although there is no one-size-fits-all ecommerce approach, here are four key steps every merchant should take in order to build a solid ecommerce strategy:
Step One: Compliance & Security Considerations
If sensitive consumer information is transmitted, stored and/or processed through your ecommerce system, compliance should be a key tenet of your strategy.
If cardholder information – specifically the primary account number – is involved, you must comply with the Payment Card Industry Data Security Standards (PCI DSS) specifically.
Ecommerce sites have three ways to meet the PCI DSS requirements. Merchants can either:
- Use a payment gateway which involves integration with an Application Program Interface (API) to facilitate the transmission of the Primary Account Number with or without the storage of this information;
- Transmit and store the Primary Account Number internally; or
- Choose to outsource the transmission, storage and/or processing of payment data.
Businesses that utilise online transactions must first identify potential risks both to the consumer and to the business itself. They should then consider how well existing resources can meet those needs and mitigate risks, and consider new solutions if necessary.
PCI DSS is based on best practices for the protection of sensitive cardholder information.
There is little to no guidance on how to scale an ecommerce environment while maintaining compliance and performance, nor does it provide guidance on how to manage elements of an ecommerce strategy outside of PCI compliance.
Additionally, the systems (server, storage system, etc) that support ecommerce transactions are not always in the scope of PCI DSS. This is an area where hybrid cloud solutions, which allow merchants to combine cloud and dedicated or on-premises gear, is growing, with merchants maintaining compliant systems where needed and outsourcing others to the cloud.
Step Two: Addressing Performance, Availability, and Scalability
The risk mitigation portion of an ecommerce strategy includes the assessment of threats associated with availability, performance, and scalability.
This can range from a single merchant hosting their own ecommerce site, to a hosting provider for ecommerce merchants, to a company that makes shopping cart software, or someone considering public or hybrid cloud offerings as an ecommerce solution.
Stable and reliable performance is a critical factor for any ecommerce environment. If a site does not respond in a timely fashion or reacts erratically, customers will abandon the site.
The only real way to know an environment’s scaling capacity is to test all aspects of the site and view the results from an end user’s perspective.
Performance must be monitored in real time and over a period of time to determine if resources are overtaxed from both a hardware perspective and a response perspective. Without this measurement, there is a very real risk that you may be losing customers without even realising it.
The effort needed to execute a sound ecommerce strategy will be determined largely by the platform you choose to run your store. Each operator needs to review their options against their strategy to choose the right combination. Options include:
- Cloud: Takes advantage of massively scalable infrastructure and pre-configured or highly customisable environments to reduce hardware and management burdens. Choose a public cloud for low cost or private cloud for workloads subject to stringent security or compliance mandates.
- On-premises: Puts the burden of hardware, security, performance, and scale on your IT team and your budget giving you ultimate control with all the headaches that accompany being responsible for the entire ecommerce infrastructure.
- Hybrid: Combines on-premises or dedicated hardware with cloud resources to achieve cloud efficiencies while meeting certain application performance or compliance needs. In a hybrid environment, a retailer can opt to move certain workloads, like email or content delivery to the cloud while maintaining control over other systems that best run on dedicated hardware.
Step Three: Mapping Site Flow and Processes
Sit in the role of the consumer and follow the steps they need to take to purchase on your site.
Though it sounds simple, taking the time to carefully connect all the dots between the inventory line items, back-end processes, and customer experience to find and fix gaps is critical to future success.
The customer and their end experience should be at the forefront of all your thinking in order to ensure ultimate success.
Furnished with a clear understanding of how your site needs to operate and the processes required to support user experience, you’re ready to create an inventory.
Step Four: The Inventory
To put it in simple terms, an inventory defines all of the parts required for an ecommerce site to operate.
An ecommerce site’s inventory may include visual content, payment gateway, web applications, website analytics, domain names, database services, internet connection, target market, acquiring bank, shopping cart, product line, web services and payment processor.
The average site visitor never considers most items in the inventory, but the inventory must capture as much information – high-level and granular details – to formulate a solid site strategy for a seamless experience. What customers will notice is the site’s ease of use, its accessibility, its performance and its availability, none of which are listed on the inventory.
The educated consumer might also pay attention to the privacy or chargeback policy, the ‘lock’ or ‘green bar’ image on the browser (Extended Validation), the available payment options, or even the ability to purchase over a mobile device (M-commerce).
A well developed inventory guides the strategy that delivers a superior user experience. It can also uncover areas for improvement and those areas no one thinks about until something goes wrong, like security or shopping cart functionality.
An increasingly important aspect of the ecommerce inventory is website analytics. Website analytics can track and analyse many different types of data (often referred to as “Big Data”).
This includes basic statistics like traffic volume and top pages to more advanced metrics that pinpoint individual site visitor activity. This can generate truly valuable insights to measure, monitor and improve your ecommerce site’s performance and to generate new business.
For example, consider if you knew not only what your customer bought on your ecommerce website but also what they “almost” bought, by tracking the time each individual spent looking at certain web pages or images.
With a simple follow (which could be automated) your business might be able to complete that extra sale for the item that the customer “almost” purchased. Web Analytics and “big data” is a powerful capability that smart ecommerce companies use to drive competitive advantage.
The creation of a rigorous inventory is tedious but the importance of it in building and executing a thorough commerce strategy cannot be discounted.
Once you’ve completed this inventory, you’ll have a better understanding of what you need to do to implement the technologies and processes needed to support your site. Ultimately, it can mean the difference between the success and failure of your ecommerce empire.
Angus Dorney is Director & General Manager for cloud provider Rackspace Australia and New Zealand. He has previously worked in a variety of multinational and regional companies and has an extensive background working in sales, marketing, strategy and operations.