Choosing the right e-commerce platform for your online shop can be a complicated task: the sheer quantity of options alone make finding the perfect solution sometimes seem like an insurmountable task. First and foremost, the business situation and personal preferences are the main factors that determine which e-commerce platforms are right for you. We’ve laid out which options are available and...
Your online channels are up and running, your system is fully stocked, you’ve promoted yourself diligently, and gained your first few customers. Finally, the arduous task of setting up your online shop is almost over. Now only one part of the planning process remains: distributing your goods. Along with updating offers, improving your search engine ranking, and maintaining user-friendliness and customer relationships, ensuring your products are up to standard is one of the most important long-term tasks for optimising your store. The planning and actions required for this part of the process fall within the area of sales organisation. So what options are there in the world of e-commerce? And what are some of the important factors to look out for when organising sales distributions?
Set your sales goals
Before you start with the real planning, it’s important to first analyse some of your different options. This is why you should define the strengths and weaknesses of your online business as well as the potential opportunities and risks. Set these against the current market situation to obtain a realistic indication of your potential sales goals. Also remember to keep in mind the requirements of the customers and any partner companies. Depending on your starting point, the following objectives should be considered:
- Economic objectives: using your existing resources in an economic and labour-efficient way is particularly important when setting up your e-commerce project. This not only secures your price range, but also increases lighter sales volumes and keeps distribution and logistics expenses down.
- Ecologically orientated objectives: in certain circumstances, it could be particularly relevant to consider the environmental impact of your storage and delivery methods. Here, energy efficiency, minimising emissions, and a responsible waste disposal system all play an important role. However, these factors are generally costly and time-consuming.
- Logistic objectives: if you’re aiming for particularly quick growth, logistical objectives are a top priority. This involves, for example, increasing the level of distribution of your products (i.e. their distribution on the market), creating shorter delivery times, and optimising the reliability and availability of shipment options.
- Competition-orientated objectives: you can use your sales concept to get a one-up on your competition or perhaps even suppress their market share. You should, however, ensure that this goal is not too much at odds with your other objectives.
In order to find the best possible solution for your business, your sales plan should take both your starting business position as well as potential alternative approaches into account. You can also take advantage of the overlaps that exist between the individual strategies. For example, a particularly environmentally conscious sales plan could lend an advantage against the competition if the intended customer base places a particularly high value on this factor.
Choosing the perfect distribution system
Once you’ve included budgeting in your strategy, there’s one decisive question to consider: should you take on the distribution yourself or enlist the help of an external retail/wholesale agent? This decision depends entirely on your personal objectives.
In opting for direct distribution, you are choosing to sell directly to the customer. This involves accepting the full responsibility for all the trading functions, regarding both the storage of stock as well as processing orders and dispatching goods. The main prerequisite for this system is that you have adequate storage facilities that you are able to maintain and keep organised. For store owners in particular, it’s recommended to use a merchandise management system in order to keep up with the logistical demands. Here are three options to consider when it comes to dispatching goods:
- You can take it upon yourself to manage the transportation of goods, which are stored centrally in a large warehouse (or several smaller, local warehouses). To do this, you need to be able to use your own workforce and means of transport.
- Alternatively, you can use a delivery service such as DHL, UPS, or FedEx. Central storage sites are options, sparing you from using your own transportation and lightening your staff’s workload. On the other hand, in passing on the responsibility to a courier, the timely and efficient delivery of products are no longer within your control.
- Another option is linking your online shop with local retail outlets where customers can go to pick up their ordered goods. The products are either stored on site or in a central warehouse. Transportation is either organised by internal staff or an external courier service, such as those mentioned above.
Advantages: businesses retain their own profit margins; direct sales connection to the end consumer.
Disadvantages: requires a lot of capital; all returns are the business’ responsibility; often lower level of distributions.
Unlike direct sales, indirect sales involves working with independent, non-corporate intermediaries. This means you can choose between retailers and wholesalers who take on the work the moment an order has been made. A contract signed by all parties should outline what share of the profit you and your business partners receive. This is known as drop shipping, and it allows another option where you have no point of contact with the distribution: as intermediaries, you accept customers’ orders and transfer them to the manufacturer.
Advantages: High distributions rate; high flexibility; little capital necessary; returns are not your responsibility.
Disadvantages: Dependence on intermediaries; low profit margins, lack of control over the distribution of products and the reliability of the delivery.
The next steps
Once you have settled on a sales strategy, it is important to take the appropriate steps to execute it properly. Conduct negotiations with retailers and wholesalers to convince them that your company is one worth investing time and money in. If you want to act as a distributor, it’s worth looking out for potential business partners who are willing to collaborate and offer promising products. If you want to get the upper hand over your competitors, you need to rent a suitable storage space and have access to the necessary means of transport for delivery or enter into a contract with a shipping service.
At each step, it is important that you don’t lose sight of your objectives. In taking a regular view of your progress, you can ascertain that your goals are being achieved and that your chosen system is working for you. A well-organised sales strategy plays a decisive role in e-commerce. Customers visiting your online shop are looking to be able to order their desired product at any time and receive it as quickly as possible. Being able to cater to these significant demands ultimately leads to increased sales.