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The Ecommerce Business Plan

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The Ecommerce Business Plan daily-golden-nugget-1561-22
No one ever wants to write a business plan for their new business or new business venture. Most people feel that a business plan is especially needed when you want to raise startup capital, which while true, a business plan helps you create focus.

Many business owners have great ideas that they feel they can accomplish without writing the ideas down on paper. I started my first business in 1994 with just vague ideas and didn't write my first plan until 2 years later after suffering several slow starts.

Why Bother With A Business Plan?


Generally, a business plan explains what you want your business to accomplish and how you will ultimately accomplish it. Typical components of a plan include analyzing your target market, figuring out how you will fill the needs for your market, and how you will operate your business to do all that.

There's a lot more to it, and I'm oversimplifying the 40+ business plan writing process so I can get to the main point about plan writing, which is that it helps you better understand who your customers are, how to target them, and helps you work out a real time table for accomplishing your goals.

Well-established businesses usually don't bother keeping their business plan updated because they've learned how to grow and change slowly through the years as customer needs have changed. However, those same established businesses often forget to return to their roots when they consider expanding into new business approaches, like ecommerce.

Preparing For Ecommerce


It's my opinion that all retail businesses should launch some sort of ecommerce approach. There are many approaches to ecommerce, including, but not limited to these:
  • Selling through marketplace websites like Amazon
  • Using email to initiate a sale process and asking people to call you to finalize the sale
  • Posting photos to social networks and asking people to direct message you to finalize the sale
  • Setting up a Facebook ecommerce store


Although those 4 methods are pretty popular right now, I prefer using your own website for ecommerce because there's a lot more opportunity for customer tracking and relationship building.

Before you start your attempted ecommerce journey, and regardless which method you decide to use, you should consider writing a new ecommerce business plan.

As it turns out, a plan for your ecommerce approach will be very similar to the overall business plan you write for your company. The following is a quick outline of the different sections I would include in an ecommerce plan and how to think about them.

Components of a Good Ecommerce Business Plan


This is a suggested outline for an ecommerce business plan. By detailing your ideas for each section, you can better see how everything fits together while also uncovering what you might not have thought of yet.

I know a lot of my readers have existing businesses so I've written these brief explanations for that point of view.

Executive Summary - This is cohesive summary of the rest of the plan. Even though you might know what to write here, wait until all the other sections are completed before writing this one out. This is the summary you'll be able to tell people who ask why you are setting up ecommerce or what you hope to accomplish with it.

Company Overview - This section usually details your formation date, legal structure, locations, key partnerships, key customers, key employees, and other things that make your business unique. Don't just spew out your vision of the business--be honest with yourself and write down the true state of affairs as they are today, because that's what you need to use to make your ecommerce plan work.

Industry Analysis - You'll have to pay for some research for this section. You need to find out what the total online sales are for your industry and how many players there are worldwide. Remember that ecommerce will open you up to a worldwide audience so you should know whether or not there's even a need for you to have an ecommerce site for direct online sales.

Customer Analysis - Even though you already know who your local customers are, you might find that online buyers include people from different demographics than you are used to. Additionally, the design of your website and the price point of the product you promote will affect who comes to your site.

Competitive Analysis - If you thought competitive analysis of the stores in your neighborhood was tough, then wait until you start working though this section. You'll either need to hire an analyst to help you with this section or you'll need some paid tools. The goal here is to analyze the online activity of who your perceived competitors are, and to help you discover who your real competitors will be. This process will include analysis of your competitor's products, price points, website design, SEO, SEM, social activity, and a lot more.

Merchandising Plan - This section is uniquely my idea, and something I help my own customers figure out. Based on the results from the Competitive, Customer, and Industry Analysis sections mentioned above, you need to decide what line of product you'll have on your website. You'll have to figure out what your customers are willing to spend online without seeing the item in person. You'll also have to figure out how many of those items you need to sell online to cover all your ecommerce costs and make a little profit out of it.

Marketing Plan - No one will visit your website if you do not have a solid marketing plan to support it. You can't simply tack your website onto all your ads and tell people to order online; you have to maintain a separate marketing plan that focuses on promoting your website. How you implement this part of the plan all depends on who your target customers will be and the margins for the product you listed on your site. You have to choose your online marketing wisely too, because you don't want to spend $8 or more for a pay-per-click ad if you are selling items at $60 or less with low margins. You should break out your marketing by different product groups and create micro campaigns for each.

Operations Plan - This part of the plan must include details of how you will handle the new workload that you're creating. Here of some of the tasks that you need to account for:
  • Monitoring your online sales
  • Training employees to handle phone calls
  • Having someone qualified to handle email and online purchase tech support
  • Management of online inventory
  • The fulfillment and shipping process

Your current staff can probably take on these jobs initially, but you'll have to hire more people as soon as your website starts to generate more than a few sales per week.

Management Team - You might include yourself as part of the management team, but it's probably better to hire a new employee that knows a lot more about the internet than you will ever know, and give them full control of everything. Give them the budget they ask for and in return ask them to outline a long term plan for you. It's their responsibility to stick to the plan and show you results. Your ecommerce team will eventually need a few more new employees who have experience with the internet.

Financial Plan - This section of every business plan is usually based on perfect growth conditions to make everything look good for potential investors. Don't take that approach. Instead, you should consider that it will take several years for your online revenue to reach 25% of your total yearly revenue. Initial growth will be very slow while you learn what works best with your online marketing and the cost of setting up the website and hiring employees and outside agencies to help. Every ecommerce website is different, but even the smallest projects I'm worked on have carried a cost of more than $75,000 in the first year when you account for employee payroll, website, and marketing expenses. Your existing business must be able to support that cost until your ecommerce efforts can support themselves.

Final Thoughts


Although you can launch your ecommerce efforts without a plan, you'll probably make fewer mistakes and have faster success if you spend some time creating a plan like I've outlined above. If writing this plan seems like too much, then give me a call and my team and I can help you with the different sections that need analysis.




AT: 06/16/2017 11:08:15 AM   LINK TO THIS GOLD NUGGET
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