Thinking Strategically About Your eCommerce Spend

Thinking Strategically About Your eCommerce Spend

Thinking Strategically About Your eCommerce Spend

How much should we spend on eCommerce? How do I make a case for the cost? How do I define return-on-investment?

In my second video with  tED Magazine, Scott Costa, I talk about thinking strategically about your eCommerce spend. Calculating ROI is not a one-to-one, it’s about increasing revenue, reducing margins and protecting your business from competitors.

An excerpt:

I am pragmatic. I always want to figure out: what’s the opportunity? By putting out a site, we’ll get this much revenue, this much increase in our average order value, this much loyalty from customers. We can market products we haven’t in the past, we can up-sell, we can cross-sell…

If we’ll do all that, we’ll gain a benefit of this amount of revenue, cost-savings. I take a pragmatic approach: how much are you willing to spend to achieve those goals?

Money is part of it, return on investment is part of it, financial modeling is part of it. But your site can also protect you from the competition – local or regional competitors, from national competitors. Lots of distributors right now are spending online. And there doing it based on: this is how much we want to spend to get this benefit benefit down the road.”

Miss episode 1? See my first tED video: What Customers Want.

Full transcript:

I’m a little pragmatic when I think of a strategy or a budget.  The first thing I always want to figure out is: What’s the opportunity? If by putting up a site, we’ll gain this amount revenue, this amount of increased AOV, and this amount of loyalty.  We’ll be able to market other products that we haven’t marketed in the past.  We can upsell and cross-sell.  Things that used to be in our inside sales peoples’ heads, we can then market to our customers.  If we do all of that, we’ll gain a benefit of this amount of money, this amount of revenue, this amount of cost-savings.

I take a pragmatic approach to say: How much are you willing to spend in order to achieve those goals?  Money is part of it, ROI is part of it, financial modeling is part of it.  There are a lot of other positive things that the distributor can achieve.  They can increase loyalty.  They can protect from the competition, which is often a key driver.  They can protect against local/regional competitors and from national competitors.  But those objectives lead to: How much are we willing to spend?

Lots of distributors are spending to achieve success online.  Most of them do it based off how much they are willing to spend, to achieve the benefit down the road.