The right and wrong ways to use key performance indicators in E-commerce. Improper ways to use KPIs. An article focused on utilizing eCommerce KPIs to their fullest potential.
Embed DTC Using This Smart Ecommerce Business Plan Guide
The ecommerce market in the United States grew 44% in 2020. Market analysis shows us that online shoppers spent around $861.12 billion. It can be tempting to open an ecommerce business immediately to access the growing online customer base.
The risk of starting an ecommerce business may seem lower than creating a physical one, but that’s not always the case. If you want your ecommerce business to be successful, you need to start with an ecommerce business plan. It’s one of the first steps you should take when starting your new venture to avoid failure.
In this guide, we’ll go over everything you need to know about creating a business plan and ecommerce tips.
We’ve gathered some of the top initial questions people have when creating an ecommerce business plan. Think of this as an executive summary for building your own plan that is specific to DTC. This information will give you a solid foundation in understanding why an ecommerce business plan is vital to the creation of your business.
What is an Ecommerce Business Plan?
Quality business plans ensure that your company stays focused on the goals you set before your business launch. They’re also necessary components when getting funding for your company. They show potential investors that you know how you will run your business and what financial milestones you want to hit.
If your new business is an online store, an ecommerce business plan serves as a roadmap. You clearly define your business, where you want to take it, and the steps needed to get there.
They can include the following items:
- Financial goals
- Potential roadblocks
- Contingency strategies
- Projected timelines
- Blueprints for growth
- Projected expenses and cash flow
- Marketing tools
Without a clear roadmap, it makes it nearly impossible for you to measure your success.
Table of Contents
Ecommerce Distinctions That Must Be Considered
There are different types of ecommerce websites. You can sell to consumers, businesses, or administration. Who your target is will define the type of ecommerce business you’ll have.
The primary business ecommerce types are either business-to-business (B2B) or business-to-consumer (B2C).
Knowing which type of ecommerce business you are in will help you categorize your company.
Our Guide Helps You Think Outside of the Box
Our guide will cover all aspects of starting an ecommerce business. We’ll address every step of the process, leaving no stone unturned. Going into detail when creating your ecommerce business plan will ensure you avoid any unexpected pitfalls.
We’ll Help You Cover All of the Ecommerce Basics
We won’t just help you figure out how to fill in an ecommerce business plan template. We’ll help you strategize your ecommerce business as a whole, including what products you want to sell and who you want to sell them to.
Why Should You Have a Business Plan When Adding DTC Ecommerce?
An effective ecommerce business plan will assist you in laying out your business’s goals and identify potential problems in advance. In the process of creating a business plan, you’ll:
- Identify what resources (physical, human, financial) you’ll need to run your business
- Obtain a more in-depth understanding of your ecommerce business
- Create a roadmap of your business’s future
- Evaluate your competitors
- Identify key opportunities
If you dive into your business without creating an ecommerce business plan, you’ll likely skip over most of the above information. Taking the time to strategize, research, and lay everything out will benefit your business in the long run.
Who Should Use Our Ecommerce Specific Guide?
Any ecommerce company or soon-to-be direct-to-consumer company will benefit from a business plan guide like this one. Even if you’re a small company, you should list out your long-term goals and resources.
Additionally, you should use our ecommerce-specific guide if:
- You’re just beginning your online business
- You’re looking for companies or individuals to invest in your business
- You want to scale your business from part to full time
Any business of any size selling products or services online may use our ecommerce guide.
How is Our Guide Different From an Ecommerce Business Plan Itself?
While we do discuss business plan templates, we don’t give you an outline to follow and expect you to figure it out from there. We go into detail on key points that are included in an ecommerce business plan. Our goal is to illustrate why each point is important and how you can take it further to expand on your goals.
Before You Start Your Business Plan
As with starting an ecommerce business, you shouldn’t sit down at your computer and expect to write your business plan immediately, either. You’ll need key information, including financial details and customer research, to correctly draft your business plan. To do that, you’ll know what you need first.
Use Our Guide to Make Filling in a Business Plan for eCommerce More Intuitive
With our guide, we’ll lay out all the information you need to know before you start filling in your ecommerce business plan. You’ll have key data points, facts, and other details at the ready. Don’t waste time searching for information.
Note That Preparing for and Building the Plan Itself Takes Time and Effort
Creating a full-scale ecommerce business plan is a complex task. It’s not something you can complete in a single afternoon. You’re laying out the entire future of your business—it takes time and effort.
The Process for Building Your Own Plan
Business plans are all different, but the basic layout and information they contain are virtually the same. You can add in additional information or topics when you write your own. Starting with this guide will ensure you’re on the correct path.
First, Review Our Guide and Make Sure You Understand It
Before you get started, thoroughly review our guide. Make sure you understand every element of it. If you have any questions, don’t hesitate to reach out for clarification.
Second, Identify How You Will Gather the Elements
There are elements of the plan that will require you to do some outside research. There’s also basic company information you should have at the ready. Determine how you will gather each piece of the plan before you get started.
Identify What You Know, What You’ll Assume, and What You’ll Find Out
Before you begin writing your ecommerce business plan, review the elements you’ll need for it. Identify which elements you know, which you’ll assume, and which you need to research. This helps you to know where to gather the information for your plan.
For example, if you already know a particular element, you’ll gather it from internal documents or requests within your company. If you make assumptions, you might gather these through facilitating brainstorming sessions with other key stakeholders in the business. And if you need to find something out, you might identify how/when/where you’ll get this intel.
Third, Create Deadlines to Gather What You Need
Setting deadlines is crucial if you’re creating a business plan with other colleagues. You want to ensure everyone is on the same page. You don’t want your ecommerce business plan creation to be delayed because there weren’t clear deadlines for when information was due.
Fourth, Find a Basic Business Plan Template You’d Like to Use
Ecommerce business plans differ from the typical business plan, but the basic layout is the same. A basic business plan template will give you a foundation of what information you’ll need to create a more comprehensive plan.
Fifth, Bring the Elements You’ve Gathered Into Your Plan Template
Once you have your template picked out and have gathered all the elements, drop them into the template. From there, you can tweak information, add further details, and expand upon sections. Go over the business plan in great detail with other key stakeholders and necessary colleagues.
Ecommerce Business Plan Guide and Elements
Now that you have a basic understanding of the importance of an ecommerce business plan and how it’ll benefit your business, we’ll go over the various elements of the plan.
Most ecommerce businesses operate under a B2C model, meaning they sell directly to consumers. If this is the model you’re following, create a target customer profile, also known as buyer personas. You can use this profile to formulate your marketing strategy for your products.
In this profile, include characteristics like:
- Income Level
- Business Size
- Purchasing preferences
You can use this profile to identify opportunities that’ll be valuable to your company. You can also understand your target customer better, making your marketing and sales strategies more effective.
Group Possible Customers and Describe Who They Are
You may have more than one target customer. If you’re a fitness company that sells dumbbells, you’ll be targeting both males and females. They could also be customers from different socio-economic backgrounds.
Group customers that are similar together and look for where their interests and other information overlaps.
Identify How the Groups Are Different in Their Needs and Behaviors
Even though there may be similar groups, they all have different behaviors and needs. By figuring out how they’re different, you can see how you should tailor your approach to each group.
Identify Likely Brand and Product Attributes They Might Value Highly
When creating your customer profiles, it’s vital to identify what types of product and brand attributes they’ll be drawn to. If your product or service doesn’t fall into any of those categories, you’re likely targeting the wrong group. Having this information ready will help maximize your time and ensure your ecommerce business plan targets the correct groups of people.
Keep in mind that even though you’re creating customer profiles for an essential element of your ecommerce business plan, it is something you should continually update. As you see marketing strategies play out, incorporate insights you’ve learned into the profiles. Monitor any developments or changes and alter your profiles as needed.
A comprehensive overview of your ecommerce business is another facet of a business plan. After reading through this section of the plan, a person should have a clear understanding of:
- What type of business you’re running
- What your plans are
- What makes your particular venture special
You’ll begin your plan with an opening statement before diving into different topics, including your specific brand.
Craft a Vision and Mission Statement
A vision and mission statement sound similar, but they address two different things. They’re defined as:
- Mission Statement: It covers why you’re in business, what your passion is, and what drives you
- Vision Statement: Explain what your business dreams are, where you want to go, and how your customers can come with you
These statements are vital for readers, potential investors, and business stakeholders to understand the purpose and meaning of your business. They illustrate the long-term goals you’re hoping to achieve with your business.
Vision statements are also helpful when connecting with potential employees. If your business’s vision statement resonates with your employees, it’s shown they’ll be more productive and be more effective spokespeople of your company.
Identify Other Brands You Love Outside of Your Target Market
Part of developing your own brand is looking at other brands within your current niche. In your research, look for brands that resonate with you. What are the things you love about their business? Is there a connection between what you admire and their brand promise?
Knowing your competitors is a vital part of being competitive in the ecommerce landscape. You shouldn’t research them blindly. Conduct a competitive analysis of each company.
The elements of a competitive analysis include:
- Mission/vision statement
- Business model
- Domain name
- Key product features
- Monthly website traffic
- Product pricing strategy
You can even go into more in-depth detail and research a specific product’s launch. Evaluate their marketing strategies and media coverage. Look into ways you can utilize similar tactics and improve upon them for your own product launches.
Describe Your Brand Distinctives
Identify why your brand is different from competitors. In an ever-saturated online retail market, you need to differentiate yourself from your competition. What does your business offer that the competition doesn’t?
When formulating your brand’s distinction, consider the following:
- What are the elements you want to be trusted to provide above all other competitors
- In what ways will you demonstrate and prove that trust is correctly placed
- Identify what you are willing to sacrifice to provide these brand distinctions
You need a customer base fast after launching your company, and figuring out these points in advance will help you grow your business. You’ll be able to build a loyal following and a strong brand.
In the ecommerce business plan, you’ll need to give a short overview of the services or products you’ll be offering at your business. If what you’re selling is very specific, add further details regarding that. Highlight the benefits and features of selling such a niche product.
Keep the information about your products short and to the point. Use bullet points to highlight specific characteristics. Include any testimonials you have from product testers.
What Will Your Products Be? If There Are Many, What Are the Main Groups?
There are many things to consider when establishing what products or services you’ll be selling. You’ll also need to determine what the main groups or categories are if you’re selling multiple products. Your product range may be more extensive so that you can write generally about each product in that instance.
If you’re selling products, you’ll also need to figure out if you’re selling physical or digital products. If you’re selling physical products, that adds another layer of detail that you’ll have to lay out.
Be clear about where customers will access your digital products if that’s what you’re selling. Are you selling a streaming service? Or can customers download music, educational videos, or software directly from your site?
You’ll also need to detail where you’re getting your products if you’re selling physical items. You may be manufacturing them in-house or sourcing them from another company.
How Will They Be Different From Competitors?
Keeping with the fitness example, if you’re selling exercise bands, what makes them different from other products on the market? Are you using a new material that is shown to have increased durability?
Identify how your products differentiate from the competition. You want to show you have an edge in the market. Examine reasons why customers would want to buy your products above others.
You have your business’s vision in place, you’ve identified your customer base, and what you plan on selling to them. Now, you need to establish how you’ll drive traffic to your website and convince customers to make a purchase. This is where you detail out your marketing plan.
Where Will You Invest in Traffic? How and When Will You Utilize the Following?
The amount companies spend on marketing has been increasing over the past few years, with it being around 11.4% of a company’s total revenue in June 2020. You shouldn’t invest your marketing budget just at launch. It needs to be spread across the following areas:
- Grow Again
You want to create a cadence of marketing efforts throughout the course of your business, often targeted around product launches or business changes. As you develop your business plan, you’ll be able to see which key points will need parts of your marketing budget.
Search engine optimization (SEO) is an opportunity to drive organic traffic to your ecommerce site over a period of time. SEO utilizes relevant phrases and keywords in your website’s content.
Search engines “crawl” websites and make an index of websites based on the keywords they include. When a potential customer types in a relevant keyword into a search engine, you want your website to appear on the first page of results. As you use more keywords on your website, your ranking will improve, and you’ll appear higher in the result listings.
Pay-per-click (PPC) refers to when a company pays for an advertisement but is only charged each time their ad is clicked. PPC is commonly used in search engine advertising. A company can place an ad for their business to show up on the “sponsored links” section of a search engine’s result page.
This is only effective if you bid on specific keywords that your customer will be searching. You want those keywords to be reflected on your website as well. Researching the most relevant keywords will help your PPC campaign be successful.
Affiliate marketing is when an affiliate can earn a commission when they market another company or person’s products. They promote the product on their social channels, websites, or other online avenues in exchange for a piece of the profit from each sale they’re responsible for. The sales are typically tracked with affiliate links.
There are three parties involved with affiliate marketing:
- The product company
- The affiliate
- The online shopper
This is an opportunity to connect with individuals who have a highly engaged audience. They’re usually seen as experts in their particular field (fitness, beauty, etc.), and their audience follows them because of their advice. You don’t want to partner with a person whose audience wouldn’t be interested in your products.
Different types of affiliates include:
- Email lists
- Paid search focused microsites
- Large consumer websites
As a business, affiliates are a great way to tap into a new consumer audience.
As was mentioned in the previous point, influencer marketing is quickly gaining in popularity. Levels of influencers are broken up into the following tiers:
- Nano: 1,000 to 10,000 followers
- Micro: 10,000 to 50,000 followers
- Mid-Tier: 50,000 to 500,000 followers
- Macro: 500,000 to one million followers
- Mega: Over one million followers
You may think that targeting macro or mega influencers to promote your product is the right idea, but that’s not always the case. Many influencers, especially those considered to be “celebrities,” often charge an additional fee to promote your products. Some influencers will talk about your product with their audience in exchange for free goods.
Smaller influencers are also more engaged with their audience. They respond to comments and messages, driving up their algorithm on social media platforms. People follow them because they’re experts and if they say they like your product, it’ll turn into sales for you.
Display advertising is an image, video, or text-based advertisement that encourages consumers to click on the advertisement and be taken to a landing page. From there, they can perform an action, like purchasing the product.
Most display advertisements follow the PPC model. They can be presented in a lot of different formats. You’re able to choose the formatting and style that will help you effectively achieve your business’s goals.
Create and launch clickable ads with social advertising. You can reach specific audiences on messaging apps, news feeds, and social media platforms. They’re designed to generate leads, make sales, and build your brand’s awareness.
Organic social refers to any activity on social media that doesn’t include a paid promotion. What’s great about this initiative is that it’s free marketing. You can develop free social media campaigns using custom hashtags, driving traffic to your account and website.
A successful social campaign for a direct-to-consumer (DTC) brand will incorporate organic and paid social strategies. Build up your community with organic social initiatives. Use your paid social ads to solidify your brand and reach additional consumers.
On-Site Content Marketing
On-site content marketing refers to valuable content that you create on your website or other social channels for your customers. This can include:
This gives you additional opportunities to implement SEO and is a cost-effective way to establish your brand as an expert in your chosen field.
This part of your ecommerce plan is where you evaluate how you’ll capture revenue from your delighted customers. It includes the ways you’ll convert them from browsers into purchasers.
Why Will Customers Buy Your Products?
Evaluate why your customers will purchase your products or services. There are a few different reasons why customers purchase something:
- They’re familiar with your brand
- Your service or product provides them with benefits they can’t find anywhere else
- Your company has a good reputation
- They receive value from your product
Identify the motivation behind why your customers would buy your product.
How Will You Increase Their Confidence to Buy?
To build a relationship between your brand and your customer base, you need to increase their confidence. You want them to feel good about purchasing your product.
You can do that by:
- Having top-notch customer service
- Keeping the relationship professional
- If there’s an issue, making sure the customer is kept up to date on everything
- Ask them for feedback
- Release products that are high-quality
Especially with an online business, it can be difficult to create a human connection between the company and the consumer. Doing everything you can to go above and beyond in the customer service realm will help increase their confidence to make purchases with you.
What is Your Plan for Customer Experience (CX)?
Customer experience is about every interaction a consumer has with a company, both before and after a sale. As an ecommerce business, you’ll need to develop an actionable strategy to deliver a meaningful and positive experience during those interactions.
You can do that by:
- Providing quality customer service training for your staff
- Figuring out your customers’ needs
- Solving problems for the customer
- Collecting feedback
Creating a positive experience during the entire buying process will ensure you gain life-long customers.
What is Your Plan for User Experience (UX)?
For your ecommerce website, you need to develop a plan and approach. This strategy helps determine the intended UX and applies it to every point where a consumer interacts with your products or services. You’ll need to ensure that your company’s vision, user needs, and technological capabilities are all in alignment.
Customer retention is equally as important to new customer acquisition. Most businesses abandon customers after they stop responding to their marketing efforts instead of taking the time to evaluate why they’re not responding. Marketing dollars are often better spent on reactivating inactive customers instead of finding new ones.
What is Your Retention Plan?
There are some strategies and tools you can implement to keep customers shopping from your business. Whether they’ve been inactive or you’re looking to secure their loyalty, it’s vital to invest time and money to keep your customers interested in your business.
Some tips include:
- Collect feedback using customer surveys and identify points where they’re dissatisfied
- Share your core values to build relationships with customers who have similar beliefs
- Effectively communicate with your customers
- Offer easy returns and fast delivery
- Use text messages to communicate with customers about current and upcoming deals
- Target specific customers with emails regarding sales and new products
- Offer coupons and freebies
Offering incentives and targeting your current customers will turn them from inactive shoppers to long-term customers.
Will You Have a Loyalty Program?
Loyalty programs are another customer retention strategy. You can give them access to certain products or sales before the general public. You can also offer them exclusive coupons that other people don’t receive.
A loyalty program needs to include specific benefits that they won’t receive unless they’re a part of it. It can be a program that customers pay a minimal fee to have access to or something they can be a part of once they’ve been a customer for a certain period of time.
Top 5 Strategic Initiatives
A strategic initiative helps guide your business toward its future goals. All the projects you undertake need to be strategically aligned with your company’s business strategy.
Examples of a Strategic Initiative
There are a few goals of strategic initiatives:
- Improving customer experience
- Build and test market research capabilities
- Expand traffic diversification
- Deliver your company’s vision
To create a well-thought-out strategic initiative, follow the below steps:
- Set your goal
- Set your objectives
- Create the strategy
- Get your plan into place
You’ll need to manage each initiative along the way to ensure its success.
When creating your strategic initiatives, don’t compile a list of them with no direction. Break the initial timeframe up into four key sections, each with your top five strategic initiatives included.
Some examples include:
- Launch a social media campaign to raise your brand’s awareness
- Launch more products or services online
- Being researching the next generation of products
- Hire key leadership team members to help support your expansion plans
- Look into ways to reduce labor costs and increase the quality
By breaking it up by timeframe, you can determine what milestones you need to hit before moving onto the next strategic initiative.
In the infancy of your ecommerce business, you should be focusing on increasing your brand’s awareness. Every strategy you implement should support that.
As your business gains traction, hone in on gaining additional customers. You can do this with organic or paid advertising.
Now that your business has a strong foothold, you can look at expanding your product base. Evaluate what’s resonating with customers and where you can grow.
Your business has made it past the two-year mark. You may be cruising along, or you might notice areas where you can pivot and grow. Your strategic initiatives during this time should support your long-term goals.
Learning and Business Process Roadmap
A business process roadmap will bring your ecommerce business plan to life. It shows the direction your company is heading. It shows:
- What needs to happen
- When it needs to happen
- Who needs to do it
It clearly illustrates how different tasks, responsibilities, and roles come together for your business to achieve its short and long-term goals. It’s an easy thing for you and your stakeholders to refer to without having to sift through the entirety of your business plan.
What Must Your Company Learn Over Time?
Over time, you’ll learn which processes are working and which need tweaking. While you can have everything planned out, you’ll encounter hurdles. It’s important to learn how to adapt and pivot your strategies when needed.
What Business Processes Must Be Refined to Fit DTC Over Time?
In your business plan, you’ll need an operations and logistics section. This goes over everything you’ll physically need to run your ecommerce business. It’ll help you realize what it takes to have a company that runs effectively and smoothly.
In this section, consider the following items:
- Product development
- Customer support
- Inventory management
- Financial reporting
If you’re seeking investors, you’ll also need to list your expense requirements and everyday capital.
Role and Staffing Roadmap
Build an ecommerce plan that identifies the key roles in-house and additional 3rd party team members that you believe will be critical to success. You don’t have to list out every single employee, but you should include key personnel.
Start with roles/functions and then move to in-house vs. out-of-house. Show how your staffing may change over time as your business grows. Illustrate the value of each key role.
KPI Benchmarks and Goals
In your ecommerce business plan, you’ll need to describe your sales goals, personal ambitions, and expansion strategies. You’ll also have to identify key performance indicators (KPIs) and company milestones.
Identify Which KPIs You’d Like to Source Benchmarks For
KPIs are a vital measurement you use to track your business’s growth. For an ecommerce site, you may want to track:
- Site visits
- Number of orders
- Social media engagement
- Shopping cart abandonment
Some metrics are better suited for checking on a weekly, bi-weekly, or monthly basis to monitor your company’s health.
Identify KPI Goals You Would Like to Project and Measure and Why
In addition to short-term KPIs, there are certain ones you can set as goals for your company. You don’t monitor those as often, but you use them to see how your business is growing over a period of time.
- Customer lifetime value
- Subscription rate
- Email click-through
Identify all the KPIs you want to monitor while drafting your ecommerce business plan.
Key P&L Projections
An effective ecommerce business plan will include a financial aspect. You’ll likely have a certain amount of capital to start, but you’ll want to evaluate where you want your profit and loss margin to be.
Keep This Simple as Cost, Revenue, and Profit to Start
When you’re in the beginning stages, it’s best to keep this part high-level. Think of what it costs to make your product, the revenue you gain off of it, and your subsequent profit.
From What Are Your Assumptions Based?
You can make educated guesses in regards to your finances. Base your assumptions off of:
- Your income statement
- Balance sheet
- Cash-flow statement
Have all this information prepared before you begin drafting your ecommerce plan.
Can You Improve the Quality of Your Assumptions?
Having up-to-date financial information will help you better estimate your profit and loss estimations for your financial projections or financial plan. You should have a clear understanding of your business expenses and sources of revenue.
While this was not comprehensive, our guide gives you a taste of the amount of work required to create the best business plan possible. Make sure your business plan addresses DTC ecommerce specifics that can set you up for success.
Drafting an ecommerce business plan can be overwhelming and intimidating. If you haven’t done this before, or you need help, get help. Many qualified companies can help you along the process.
The planning process is critical and shouldn’t take so long that it delays the launch of your business.
If you still have questions after reading through our guide, read on for additional details.
Are DTC Ecommerce Companies Profitable?
Yes, DTC ecommerce companies can be some of the most profitable. However, if set up incorrectly, they can lose a lot of money. Setting an appropriate price point for a product and managing its cost of goods sold (COGS) is less of a stressor with DTC because no middle man is pulling from the profit of your ecommerce store. Profitability also depends on product categories, your own business plan, startup costs, and other tangential factors such as your operational plan.
How Do I Write a Business Plan for Myself?
Writing a business plan can be done in a few easy steps:
- Read through this guide
- Get a template and go!
- Get help when you need it
If you follow these easy steps, you’re guaranteed to create a business plan that is a solid foundation for your business.
What Ecommerce Business Should I Start?
If you’re already in the business of selling products or services, use what you already sell. You can expand upon your product base, tailoring it to fit consumers’ needs. Additionally, you can get help identifying the best opportunities by working with an ecommerce consultant.
How Do I Start an Ecommerce Business Plan?
You’re in the right place. Start here with our comprehensive ecommerce business plan guide. If you’re still struggling, get expert help.
How Much Does It Cost to Start an Ecommerce Business?
The amount of capital you’ll need to start your business depends on the experience of your team and your existing assets and processes. This should be assessed uniquely for each team. If you are starting from scratch, start small and work your way up. An ecommerce consultant can help you plan out projections for both expenses and revenue.
Get Help With Your Ecommerce Business Plan
If you’re in the beginning stages of launching a business and need to draft an ecommerce business plan, don’t hesitate to reach out for help. This is the jumping-off point for your business and can help guarantee additional investors. It’s a vital piece in any business’s launch.
For help with creating a DTC ecommerce business plan, reach out to our team today.
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