I still find myself in the awkward situations that make me think about how even the highest advisor and executives think that the key to everything is always and only the Business Plan.  Is this also true in the digital?

Some time ago I had a discussion with an advisor who insistently asked me how I was going to create an eCommerce Business Plan for a brick-and-mortar company that produces luxury products.  The company had never done anything digital before and suddenly decided to sell online.

With patience, I tried to make him understand that before worrying about the eCommerce Business Plan, he probably had to ask other questions and figure out what was missing in his company before taking that path, to give priority to other aspects preparatory to the eCommerce Business Plan.  His response was:  “I do not care about digital; I have to create an ecommerce that become a successful ‘long tail’ business”.

But, let’s take this step-by-step

1. Take a sheet; let’s sketch an eCommerce business case:

  • Executive summary is your value proposition, a simple way to explain your business and the strength points to a potential investor
  • Company description is a high level overview of your company: products or services, types of consumers, and competitive advantages
  • Market analysis: Do you have time?  If yes, please spend several hours researching the market, focusing on how much the industry is growing, why and what is your customers’ target.  You can explore several ways to get market information such as competition analysis, google keyword planner & trends, official and unofficial industry reports as well as the network with manufacturers, buyers, competitors, universities and everything to fit your industry business.
  • Marketing & sales: Do you think you have a potential customer?  No?  Why are you arranging a business plan? 🙂  If yes, you need to know everything about him/her.  You can have preliminary interviews.  You can use surveys.  You can present your product and ask for feedback.  There are numerous techniques to help you understand your prospects.  Consequently, it is important to understand the channel useful to reach your customers (paid versus organic marketing) and how much should you spend to acquire a new customer (LTV formula).
  • Organization & management: If your objective is to represent the 10-15% of your total business through the online channel, maybe you need to sort out a solid and experienced eCommerce team consisting of:  an eCommerce manager, a marketing manager, a category manager, an operational manager, a creative manager, and last but not least a project manager.  And, of primary importance, is how your eCommerce team is positioned inside the whole organization…
  • Financial projections: This is where you really figure out how much your business will make over the next five years:  break-even analysis, projected P&L (the revenues, costs and expenses incurred during a specific period of time), and cash flow.A simple formula to start is
    Expected business volume = Average Order * (traffic/conversion rate %)

2. Are you happy about your new eCommerce Plan? Good!  Take that sketch you just drew and throw it in the trash.

An eCommerce business case is perfectly useless if:

  • You have not taken steps to increase the level of digital culture of the company (Digital academy, training, full immersion, etc.). Sales, trading, marketing and IT must support the eCommerce team and talk the same language.  Otherwise each business area will try to impose its own characteristics that are linked to the traditional market and not to the online one.  Risks are too big to be taken in spite of a solid business case.
  • You have not digitized internal processes of the company, focusing on those core processes that usually make big cost-saving (offering great pleasure for the CFO) to reinvest perhaps even in e-commerce.
  • You have not redesigned processes to facilitate close interaction of the various corporate offices so that they are able to talk to each other with speed and agility to guarantee the right Time To Market which is what the online channel requires, which is much faster than the traditional.
  • You have not transmitted the data analysis culture to executives. An eCommerce manager alone will never be able to make a precise analysis of the conversion rate.  For example, an order taken could correspond to a return.  And, only with an end to end vision and with the help of the operating manager you can recognize and determine that it’s not an order closed successfully.
  • You have not given the need that an eCommerce team must have its own steering (perhaps every two weeks, and not as a tradition once every three months); it must respond to the CIO directly (if it’s a serious business strategic eCommerce)

Your company does not become digital only because it takes an eCommerce project.  The digital transformation involves a company at 360 degrees, first of all in the way of thinking and seeing the world.  So next time someone tells us:  “I do not care about digital; I have to create an ecommerce that become a successful long tail business”.  We might respond.  “I also want to be Hulk Hogan, but I don’t know how to wrestle.”

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