A few short years ago, very few owner-managed businesses were selling online (direct to consumer). That was for the likes of Amazon. Recently, there's been an explosion of smaller entrepreneurial companies putting up eCommerce sites, and in some cases more than doubling their revenue in a short period of time. What a great opportunity! But at the same time, this success presents a whole new set of problems. Many of these companies were previously "just" a wholesaler/distributor, others were "just" brick and mortar retailers. Now with the eCommerce site, the distributor has effectively become a retailer on the front end - and the bricks & mortar retailer has also become a distributor (on the back-end). These new business activities, and the need for systems and processes to successfully execute them, are the root of many of the "new" problems.
Over the next few months we'll examine some of those problems, and ways to solve them, one at a time. Let's start with a simple question: would you rather be able to generate a big increase in sales online, but not be able to fulfill the extra orders; or would you prefer to build the capacity to sell more, but not generate the sales volume? I suspect most will answer "neither".
Now let's ask the same question another way: should you mainly focus on your e-commerce site, or should you focus on your inventory management/purchasing/accounting back-end (your ERP software system)? Here I suspect many would choose the eCommerce site. But the correct answer here is again "neither", or more accurately, "both". Because like any other plan designed for long term business growth, this should be approached strategically in advance, asking questions like:
- How can we grow sales rapidly?
- How can we keep customers happy so they keep buying?
- How can we fulfill sales quickly and efficiently, allowing for growth, while maximizing profitability?
A good strategy will avoid asking which comes first, the chicken or the egg, and instead focus on accommodating both efficiently. So look out for some specifics, with some real life e-commerce examples, on this topic over the next several months.
