Here’s an illustration. If your value proposition is to offer the maximum level of customer support for superior products, your infrastructure must include procedures to provide quick and responsive company, such as live chat, self-service tools, and fast turnaround on orders and questions. I addressed plans for value propositions before, in”What is the Value Proposition of Your Ecommerce Company? .”
Choosing the right infrastructure to meet your business plans enables your operations to operate efficiently.
If your value proposition is to deliver the lowest prices daily, your infrastructure must reflect that objective. You can accomplish this in a variety of ways. But the cost of products sold and overhead costs — which include infrastructure things — should be as low as possible.
Typically, ecommerce businesses attempt to keep a high level of flexibility in their infrastructure to keep fixed costs low, to respond quickly to market fluctuations or competitive pressures. An integral infrastructure choice is whether to outsource or manage operations in-house.
Most ecommerce companies are small, with fewer than 25 workers. When you look at all of the functional areas of the business that should be handled on a daily basis, it’ll be tough to discover and manage an in-house personnel with all the skills needed to be successful. When deciding on your business infrastructure and operations, make certain to assess what your core strengths are. Know what you do well and understand exactly what you don’t do well. They’re equally important. Look to outsource part-time tasks or ones that need high levels of specialty or skill.
Here are seven major infrastructure choices that ecommerce companies face.
7 Crucial Ecommerce Infrastructure Decisions
1. Marketing. Of all of the infrastructure components, marketing might be the most significant. To succeed, your site has to be found. Once visitors are on your website, you will need to keep them and compel them to purchase from you. That is the job of your marketing team. Whether it’s website design, social networking, search marketing, merchandising, email, or other types of advertising, it is all about marketing.
Managing marketing activities in house is quite challenging. Most small ecommerce companies outsource at least part of it.
2. Facilities. A key competitive advantage that ecommerce companies have over brick-and-mortar shops isn’t needing to invest in physical facilities. Oftentimes, you can run your company from a home office, basement, or garage. If you drop ship or outsource satisfaction, you might be able to do this for a long time period. In spite of many employees, you can set up your offices in class B or C distance, as you have no need for a fancy shop in a high-traffic site.
A word of advice is to keep your options flexible. Look for an office park with many different spaces of different sizes. You may have the ability to begin at a smaller area and move up to a bigger one (without penalty), as your needs change.
A key competitive advantage that ecommerce companies have over brick-and-mortar shops isn’t needing to invest in physical facilities.
3. Customer service. There are lots of choices today for delivering high quality customer support. It is possible to handle those tasks in-house or outsource to a third party. Standard customer support for sales and post-sales activities can be managed using email and, for more extensive needs, phone assistance. A customer-management system will make those tasks easier, but for smaller companies, it’s not a requirement.
Live chat will affect your operations — someone has to be available during specified hours of operation. Make certain to gauge the effect of that on your own organization, should you decide to deal with those activities in-house.
4. Information technology. Selecting an ecommerce platform is among the most important decisions you’ll make in your company. Do you wish to develop and host your own system, outsource the development and manage the system going forward, or use a hosted, software-as-a-service platform that’s turn-key and managed?
Should you build and host your own system, you might need more money upfront and skilled administrators and programmers on your staff. By utilizing a SaaS platform, you won’t have to host or manage the system in house, but you might still need web developers on staff. Opting to outsource the hosting and development will lower your staffing costs, however you’ll incur greater costs for any future improvements or adjustments to your websites.
There are pros and cons to any approach. Consider the impacts on your staffing, money flow, and bottom line before you proceed.
5. Fulfillment. Another important decision is whether you’ll manage your own stock or outsource those tasks to a fulfillment house or via drop shipping arrangements with your providers.
Managing your inventory will offer a high degree of control, however you’ll tie up money in store space and fulfillment staff. In some industries — like the jewelry supply industry my prior business was in — handling your inventory was the most logical option. We had no choice for drop shipping, and most things were bought in bulk and were very little. We didn’t trust preparation and gratification to an external service.
Pick the best fulfillment choice to meet your requirements. Make certain to know the costs involved and examine the other options before going ahead.
6. Finance and administration. You can manage your finance and management activities in-house, outsource themuse a hybrid of both. If your ecommerce platform is tightly integrated into your accounting system, you might have very little need for an in-house bookkeeper. If you use different systems for your website, order management, and accounting, you might need more help for data entry and making certain the information is correctly managed.
Many ecommerce businesses use external services for vendor payments, payroll, and other standard accounting activities. They opt to concentrate on the sales, marketing, and customer support. This enables them to maintain a focus on growing their businesses, rather than paying an inner accountant — or doing this work yourself as the company owner.
On the other hand, you require a leadership team. Superior communication is vital, whether you have three or 100 employees. Be authoritative or democratic on your management style — it’s all up to you. But select a style and keep consistent. Make certain everyone knows their roles, in addition to the general business strategies. You might want to change your approach as your company evolves.
Superior communication is vital, whether you have three or 100 employees.
7. Human Resources. Many small-business owners avert the human resources function. Recruiting, establishing compensation, maintaining compliance, and other HR tasks are time-consuming and specialized. You may decide to bring the resources in-house. However, should you outsource, there are lots of people and agencies nicely equipped to do the job.
When planning any portion of your organization’s infrastructure, then reflect on your target audience and the value proposition you’ve defined. Be sure each element of your infrastructure supports your value proposition. Be careful not to overcommit either human resources or financial capital in 1 area. It’s easy to overspend on, say, people or rent, only to discover that additional forces affect your growth and gain .