Ecommerce Strategy: More than a Matter of Efficiency!

Strategy – It is a word often thrown around in ecommerce planning. What does it really mean and how do we make it more than jargon? The challenge in defining ecommerce strategy is that many business owners approach it in terms of increased efficiency alone, without factoring in other elements that should define any strong strategic plan.

Managing a business is about combining effective short-term execution with great long-term planning. There has to be attention to detail and an eye for the big picture. And good business strategy is essentially a way of balancing such apparently disjointed goals. To put it concisely, a good strategy should:

• Enable a business to stay adaptable to react to market changes
• Set recognizable standards to target best practices
• Identify and help strengthen core competencies to ensure competitive advantage
• Establish a streamlined work environment where there is no duplication and minimal wasted effort

A big part of good strategy is the ability of a company to define itself. This should be easy, right? A company should know what makes it distinctive? However, there are nuances here and these can sometimes trip up a company. Is a business setting out to offer goods or services that are completely different from its competitors or is it planning to offer similar goods or services in a different way? Unless this becomes clearly defined, a company may well end up having a diffused strategy.

One way of establishing the core business area is to think in terms of the target market. Here are a few different familiar models:

• A company can address one main need of a broad-base of customers. An example is Zappos when they started out focusing on shoes.
• An enterprise can serve the broad needs of few customers. A tennis website can offer everything from gear to thematic accessories to tennis fans.
• A business can serve many customers with varied needs in a narrowly defined market.  Destination wedding planning sites are targeting a defined but varied clientele and offering a broad range of services.
• A unique mixture of services can help a business stand-out from its competition. A web design firm that can handle SEO and SEM and social media integration will have more to offer when competing against other web designers.

As we see, positioning can be broad or narrow. It may be a matter of finding a consumer who is over-served by other broadly defined businesses or underserved by a narrowly focused competitor.  Ecommerce enterprises have to opportunity to fine-tune their positioning as we see in the case of onekingslane.com. Their way of offering curated home décor finds is a great new angle on the traditional furniture and home décor business.

It is worth stating here that positioning does come with trade-offs. As individuals we see that any time we choose to focus on doing something, we are indirectly also choosing not to do something else. This is true of organizations also. Maytag’s corporate strategy is the subject of many corporate strategy case studies because that company chose to go with expanded product lines and acquisitions in response to increased competition in the 1990s. The end result of reduced return of sales is seen as evidence that Maytag did not factor in the trade-off in repositioning itself.

Many managers are reluctant to define strategy in terms of choices and trade-offs as these seem counter to the notion of growth. It is hard to say that I’ll focus on a narrow group of customers when the pressure of increased revenue may make it attractive to go after a broad customer group and increased sales. There is also the pressure of trying to keep pace with competitors’ strategies and this can also lead to improper implementation

The onus is on organizational leaders to emphasize a clear strategy in terms of positioning; additionally, there should be an organization culture that allows for innovation during implementation. This is the best way for an ecommerce to have focus and flexibility.

By: Shirley Tan