Do you know how to scale your ecommerce business? Or when the best time to scale is?
Scaling a business is a major step for any ecommerce business. We’ve recruited several experienced business owners and professionals with firsthand experience to explain the best ways to scale an ecommerce business.
When Is It Time To Scale?
Scaling a business is a huge and immensely important undertaking. It’s not something that should be attempted too early in the business lifecycle.
As Tim Parkin, President of Parkin Consulting, says, “Scaling before building a solid foundation is a common and fatal mistake. It’s extremely difficult to achieve a positive return on investment (ROI) without the ability to maximize revenue.”
The goal of scaling a business is to increase the capacity of your business without negatively affecting revenue.
More specifically, you want to grow your operations to accommodate more sales. This is largely a matter of technology, requiring upgrades to the technologies you’re using to boost the capacity of your business. Additionally, you’ll need to consider whether you need to expand your workforce.
Scale Your Technology
For ecommerce businesses, technology is crucial. It’s what business owners use to start, run, and maintain their online businesses. For this reason, technology is where you should turn your attention first as you begin scaling your business.
WooCommerce
If you’re one of many using WordPress, WooCommerce is an extremely popular ecommerce plugin for WordPress. In fact, there’s a good chance you’re already using it. WooCommerce remains so popular because it’s extremely versatile with lots of useful add-ons and extensions.
In fact, WooCommerce is ideal for scaling because it can handle heavy traffic; as your customer base grows, your online store will remain functional in spite of the increased volume of orders. Best of all, WooCommerce is optimized for search engines, meaning your store will be more visible on the web.
Third-Party Sales Channels
As you scale your business, consider making your products or services available on other platforms like the Amazon Marketplace or eBay. Think of it like taking the training wheels off your ecommerce store. By leveraging other sales channels, you extend your reach and by extension, can earn more sales.
But be smart about the platforms you choose. Rick Watson of RMW Commerce Consulting says, “Pick ecommerce [platforms] with broad support that you can stay on for a long time.” Similarly, focus on mainstream platforms instead of new or small players that could go out of business.
“Often these players are short-lived and go out of business, causing you to re-platform and stunting growth.”
Logistics and Shipping
When you accept an order from a customer, you’re making a promise to fulfill that order. Logistics is how you fulfill that promise.
Logistics is the symphony of procedures, operations, and resources that facilitate essential business processes. Or put another way, it’s how you manage the flow of products from their points of origin to the end consumer.
For most ecommerce stores, this can include order fulfillment, inventory management, essential business resources, agreements with suppliers and distributors, and even your workforce. Your fulfillment and shipping processes need to be able to accommodate an increased sales volume as you scale.
Software
Software is as essential for scaling as it is for running an ecommerce business in general. Thus, you’ll likely need to revisit the software you’re using — from customer relationship management (CRM) software to your accounting software, email marketing software, and everything in between.
Scaling is a different experience for someone who manages his or her own inventory than for someone who runs a dropshipping business. If you maintain your own inventory, a capable inventory management system will be needed to scale your business. There are a number of inventory management tools that are effective for higher-volume businesses, including Acumatica and OneWorld.
Another consideration is warehouse management. If scaling your business requires more inventory storage space, a warehouse management system like Manhattan SCALE could be necessary.
Software can also facilitate the streamlining of your shipping process. After all, scaling a business means shipping more orders. To offer the best customer experience possible, the shipping process needs to be as seamless as possible, and a platform like ShipStation can help.
ShipStation makes shipping easier for ecommerce businesses. Best of all, ShipStation offers native integration with WooCommerce and supports all the major shipping providers, including UPS, USPS, and FedEx.
There are technologies for boosting sales, too. For instance, many WooCommerce sites plugins to reduce cart abandonment. You can also use software to create a customer loyalty program which incentivizes customers to make more purchases. WordPress plugins like Beans and Gratisfaction can be used to create loyalty rewards programs for stores running on WooCommerce.
Cloud Computing
Cloud computing has huge implications for ecommerce, because it lets you offload computer-based functions to remote servers via the internet. In turn, you don’t have to manage your hardware or software because the provider continues to update and upgrade the servers over time. Meanwhile, you get continuous access to cutting-edge technology without the usual upkeep.
Justina Rimkeviciute, Marketing Director of ProForecast, considers cloud computing to be instrumental to future-proofing — in addition to scaling a business.
"Moving your business to the cloud allows you … to better prepare for future eventualities … facilitate and adapt to change… and … forecast your business financials,” Justina says. “Also, cloud-based technology allows a business to scale faster and easier compared to traditional … requirements for scalability, and often comes with minimal or no downtime.”
Fraud Management
When you’re receiving more orders, you’re inevitably going to see more fraud. This makes fraud management software essential to scaling.
Many fraud management tools rely on machine learning, geolocation, and advanced authentication methods to ensure that your incoming orders are real. Fortunately, it’s not as difficult to implement fraud management as it may sound. Simility, which is made by PayPal, is a highly intelligent fraud management system that offers biometric order authentication. It’s very simple to install and offers a user-friendly dashboard for administrators. Best of all, Simility is scalable and can accommodate a growing customer base.
Another great fraud management system is Subuno. With native support for WooCommerce, Subuno is customizable and allows you to set thresholds and rules for fraud detection.
Marketing
For virtually any online business, marketing technology is an essential part of the technology stack. It’s even more important when your goal is scaling.
Since you want to accommodate a growing customer base, you need to find ways to extend the reach of your business. For an online business owner, marketing technology tends to be the most effective way to expand your customer base.
Before you choose your marketing technology, you need to figure out what you’re trying to accomplish. The key functions of marketing technology include:
- Tracking audience behavior
- Cultivating a community on social media
- Building landing pages
- Growing your subscriber list
Streamlining and Automation
Scaling a dropshipping business is both easier and trickier than a traditional ecommerce business.
On the one hand, you’re not maintaining your own inventory, so scaling isn’t quite so resource-intensive. On the other hand, dropshipping means your business depends on the ability of suppliers and distributors to fulfill your orders.
In order to scale, you need to know those suppliers and distributors can accommodate an increased volume of orders.
Fulfillment Pipeline Consolidation
One way to scale a dropshipping business is to scale horizontally instead of vertically which you can do by adding additional partners to your fulfillment pipeline. However, whether or not you add more partners to your dropship supply chain, streamlining your business is essential if you want to scale. This means you must consolidate your processes and sales channels as much as possible.
Tools like OrderCup actually make streamlining a dropshipping business fairly simple. Typically, dropshipping businesses receive orders from numerous sales channels. However, instead of forcing business owners to maintain those separate channels, OrderCup consolidates Amazon, eBay, AliExpress, and many other online marketplaces into a single system. This consolidation gives you access to orders submitted through separate platforms in one place.
Fulfillment Automation
By nature, dropshipping is a highly automated form of ecommerce. However, there are ways to make an ecommerce business even more automated which comes in handy for scaling.
Some ecommerce marketplaces offer the ability to handle the entire fulfillment process. This allows you to incorporate sales from those channels with no need to make any major changes to your dropshipping supply chain. Amazon actually offers this service with Fulfillment by Amazon.
For ecommerce stores that don’t do dropshipping, ShipStation can be set up to automatically print labels for incoming orders. When you’re expecting a major increase in order volume, automating shipment preparation (as much as possible) is a requirement.
Expand Your Workforce
Scaling usually comes with the need for a bigger workforce. Generally, there are two ways you can do this: hire more employees or outsource the labor.
As Jonathan Prichard, Founder and CEO of MattressInsider, says, “Often when a company starts out [with] a small team, team members are juggling multiple roles. People in sales are also doing customer service, CEOs are also the head of marketing, and so on. Multiple roles split focus and [keep] people from doing what they do best.”
By splitting roles (or creating new roles), each member of your workforce can focus on what he or she is most skilled at doing. In turn, your business is more productive and can better accommodate more sales.
Customer Support
You cannot increase your order volume without increasing the need for customer support, so customer support must scale with your business. Of course, this means you’ll need more workers to help facilitate that support.
A designated team for customer support is typically recommended, especially for a dropshipping business. On the other hand, the ideal way to scale is to increase capacity as much as possible while increasing expenses as little as possible, and creating a designated customer support team can be quite a significant expense.
Fortunately, customer support can be outsourced.
Outsourcing Support
By definition, outsourcing is when you hire someone from outside of your business or company to do a job or task that would traditionally have been done in-house. This has become extremely popular across many industries which is evident by the growing number of people who make a living as freelancers and consultants, and the number of white-label maintenance and support companies out there.
If you’ve ever tried to find experienced, qualified candidates, then you know just how difficult it can be. And when you do find the right candidate, employing them is expensive.
With outsourcing, you’re often not restricted to hiring local candidates, as well. This is especially true for high-tech industries. In fact, since you’re casting a wider net, you will often find more skilled and qualified candidates than if you had to hire locally.
Outsourcing is particularly suited to scaling an online business, allowing you to meet your labor needs as they change over time, and allowing you to offload both the tasks and the management of the tasks to another. In other words, you can recruit workers if they’re needed, when they’re needed, and as they’re needed.
Track, Evaluate, Adjust
After scaling your technology and expanding your workforce, it’s time for TEA: Track, Evaluate, and Adjust. In other words, take a look at your progress and gauge your business scaling strategy.
- Has it been effective?
- Are you seeing the results you’d hoped to see in a reasonable amount of time?
- What has worked for you?
- What hasn’t worked for you?
- How can you tweak your plan to make it better?
Observe how your revenue is changing over time. Scaling is a substantial investment, so you want your revenue to be increasing commensurately. Similarly, you want to increase customer retention and acquisition which reflect the strength of your sales.
Forecasting is also important. According to Justina Rimkeviciute, “If you are anticipating growth, ensure that you have some form of forecasting available to you that will allow you to accurately predict what impact certain business decisions will have on your bottom line.”
As you assess your scaling strategy and its results, you can find ways to tweak your plan so you achieve your scaling goals.
Scale Your Ecommerce Business With WooCommerce Hosting
At Nexcess, we know how difficult it can be to build or scale an online business. In fact, that’s part of what makes our hosting plans so great for entrepreneurs and small business owners.
Fully managed WooCommerce hosting from Nexcess is chock full of cutting-edge technologies that will help you run your business. Built specifically with performance and revenue growth in mind, our hosting plans can accommodate high traffic and help you to reduce cart abandonment.
Check out our plans to get started today.
