Every company requires an infrastructure to support its buyers and operations. This includes facilities, equipment, and processes to support all the functional areas of your business. Choosing the correct infrastructure to match your companies strategy enables your operations to run powerfully. Conversely, if an element of your infrastructure is out of sync with your business model, you will likely feel the pain in every aspect of your business.
Here’s an example. If your business model is to provide the highest level of customer service for premium products, then your infrastructure should include processes to deliver quick and responsive service. This may include communications channels such as: customer service telephone line, live chat, self-service web portal tools, and a quick turnaround on questions and orders.
If your business model is to provide the lowest prices every day, then your infrastructure should be focused on being the low-cost provider. You can accomplish this in multiple ways. But, you need to ensure that your cost of goods sold and overhead expenses, which include infrastructure costs, are as low as possible.
Here are seven important infrastructure decisions that eCommerce businesses face.
A key competitive advantage that eCommerce businesses have over brick-and-mortar stores is the lower investment in their physical offices and warehouses. In many cases, you can host your business out of a home office and your basement or garage. If you drop ship or outsource fulfillment, you may be able to do that for a long period of time. Even when you grow to have many employees, you can set up your offices in class B or C space, as you have no need for a fancy store in the right location.
Tip: Keep your options flexible. Try to find an office park that has a wide variety of spaces in different sizes. You may be able to start in a smaller space and move up to a larger one without penalty, as you needs change.
Choosing the right eCommerce solution is one of the most important decisions you will make in your business. Do you want to build and host your own system, outsource the development and then manage the system going forward, or use a hosted, software-as-a-service platform that is more turnkey and externally managed?
Choosing to outsource the development and hosting will reduce your staffing costs, but you will incur higher costs for any future enhancements or changes to your websites. With ShopFactory you can build and manage your website and online store on your own computer. Manage payments, orders, customers, shipping, and marketing in the cloud. ShopFactory includes all the features you need to create and run your own independent online sales machine.
Many small-business owners avoid the human resources to keep costs low. Recruiting, setting up compensation, maintaining compliance and other HR activities are costly, specialized and time-consuming. You may choose to bring the resources in-house to manage those activities. As an alternative you can consider outsourcing or hiring sub-contractors, and only hire temporary help when needed. There are many individuals and agencies well equipped to take on your HR activities.
There are many choices today for delivering high-quality customer service. You can manage those activities in-house or outsource them to a third party. Basic customer service for sales and post-sales activities can be handled using email, and by providing an 800 number for more extensive phone support. A customer-management system will make those activities easier. But, for smaller companies, it is not a requirement.
Tip: Live chat will impact your operations as someone needs to be available during specified hours of operation. Be sure to gauge the impact of that with-in your organization, if you decide to handle those activities in house.
Another key decision is whether you will manage your own inventory or outsource those activities to a fulfillment house or through drop shipping arrangements with your suppliers. Managing your own inventory will provide you with a high level of control. You will tie up your cash in inventory, warehouse space, and your own fulfillment staff though. In some industries managing your own inventory is the most logical choice. For example, if you have no alternative for drop shipping, and most items are purchased in bulk and are very small - keeping inventory in house makes sense. Other things to consider are if you can not trust preparation and fulfillment to an outside service, then in-house inventory control is a must.
Tip: Select the best fulfillment option to meet your needs. Be sure to understand the costs involved and analyze the other options before moving forward.
As with other business operations you will need to decide if you want to manage your finance and administration activities in-house, outsource, or a hybrid of the two. ShopFactory is integrated with numerous accounting systems, you may have very little need for an in-house bookkeeper. If you use separate systems for your website, order management, and accounting - you may need more help for data entry and making sure that the information is properly managed
Many eCommerce companies use outside services for supplier payments, payroll, and other basic accounting activities. This gives them the advantage of focusing on sales, marketing, and customer service. This also allows them to maintain a focus on growing their businesses, instead of paying an internal accountant — or doing that work themselves as the business owner.
On the administration side, you need a leadership team and provide direction to them. Good communication is important, whether you have 3 or 50 employees. Whether you choose to be more authoritative or democratic in your management style is up to you. But choose a style and stay consistent. Be sure that everyone understands their roles, as well as the overall business strategies. You may need to adjust your approach as your business evolves.
Tip : Did you know you can connect your ShopFactory Cloud and order management to third party accounting solutions? Using our App Store - Zapier Connect, you can integrate with hundreds of third party solutions, including accounting solutions.
Of all the infrastructure elements, marketing may be the most important. To succeed, your ShopFactory online shop must be found. Once visitors are on your site, you need to keep them there find ways of compelling them to buy from you. That’s the job of your marketing team. Whether it is shop design, social media, search marketing, merchandising, email, or other forms of advertising - it's all about marketing. To effectively manage marketing activities in-house is very challenging. Most small eCommerce businesses outsource some element of marketing.
Most eCommerce businesses are small, with fewer than 15 employees. If you look at all the functional areas of the business that must be managed on a daily basis, it will be hard to find and afford an in house staff with all the skills required to be successful. When deciding on your business infrastructure and operations, be sure to evaluate what your core strengths are. Know what you do well and know what you do not do well. They are equally important. Look to outsource part-time activities or ones that require high levels of skill or specialization. A key infrastructure decision is whether to outsource or manage operations in house.
Since 1995 we have been developing ShopFactory as the ideal Do-It-Yourself eCommerce solution for small and medium businesses who want to sell their products and services online. ShopFactory's visual editor lets you see at all times what you do. Manage your website, pages, categories, products, and shopping cart with point and click ease.
It includes all the features you need to create and run your own independent online store.