eCommerce Strategy

The Cost of eCommerce

Mar 01, 2010   •   3 Min Read

Last month, I had the pleasure of attending Internet Retailer’s Design and Usability Conference. I met a lot of great people and reviewed a lot of websites. Between site consultations and manning the Groove booth, I didn’t get to see many of the event speakers. I did however make it to Lynette Montgomery’s talk. Montgomery, who is the VP of Direct Marketing at Performance Bicycle, gave a talk titled, Performance Bicycle: An End-to-End Redesign Shifts Its Website into High Gear.

There were many great things in Montgomery’s presentation, but there were also many things missing (which is to be expected in a 30 minute overview). But I think it’s important to address what was missing from her presentation, what is missing from many discussions about building and testing websites, and that is the cost.

What Is Said
It’s funny how no one has a problem addressing the bottom-line of an eCommerce website (conversions), or the goal of redesigning/testing an eCommerce website (increasing conversions). But when it comes to discussing the cost of a redesign, cost of testing, cost of PPC, etc. everyone’s hush-hush. And people have their reasons for glossing over these details, but I still think it is our collective duty (as in-house creators or outside collaborators) to discuss redesigns, upgrades, etc. within a certain feasible framework, rather than in a vacuum where anything is possible.

For example, Montgomery mentions the numerous things her company did to improve the website: (among them)

  • Implement Bill Me Later
  • Improve Placement for e-Newsletter sign-up
  • Improve Store Locator prominence
  • Improve on-site search placement and functionality
  • Improve cross-sell/up-sell placement
  • Improve personalization
  • Improve the checkout process
  • Improve product content
  • Improve technology & functionality on color swatches, product images, videos, live chat, social media, etc.
  • Analysis of what isn’t working on current website
  • Analysis of competitors
  • Customer research

What Is Not Said
And I assure you, Montgomery’s list was even more comprehensive than this, and it is a great list. Everything they did to improve their website, are things we recommend to our clients. My concern isn’t with their upgrades, it’s with the presentation of these upgrades. Montgomery’s primary audience was other eTailers, owners or marketers. Did they scribble down her bullet points and run to their in-house team or out-side agency and demand these changes be implemented ASAP? It's possible. Then it becomes the in-house team or out-side agency’s job to gently tell the eTailer how this is outside of the budget, scope, time line or capabilities.

And that’s my problem. Montgomery didn’t relay to the audience the budget for the upgrade, nor a time line. (Although, someone else must have been reading my mind because during the Q&A, he asked her how long this project took. Unfortunately, my memory is fuzzy, but I think she said somewhere between 6 months to a year.) All of the items Montgomery talked about need time and money to make happen. One of the difficult challenges facing an eCommerce website is making the eTailer understand the potential value of their eCommerce website. We all know the mantra: got to spend money to make money. So, why be afraid to say, we had a $500 budget to improve x, y, and z in three months. The final cost was $750. After x amount of time, we increased our profits by $5,000. No one would fault, question or undermine the decisions that led to a bottom-line increase.

It’s important to understand that improved search, improved functionality in the product images, or testing and analysis research all cost time and money, be it in custom development, third-party plug-ins and extensions, or just plain old time. No matter how simple a feature on a website is--sending the product to a friend via e-mail, allowing users to customize a product, moving the placement of the newsletter sign-up--work had to be done to get it there. And work costs money. And good work should cost even more money.

What Should Be Getting Said
But this is where a good eCommerce company outshines a mediocre one. A good company will explain to the eTailer that what they want is exactly what they should want. All of their suggestions most definitely will improve their website and bottom line. Then, the company should let them know what each improvement would cost. The eTailer is probably going to feel sticker shock, because he had no idea and no one ever told him how much these changes cost nor why. The benefit of discussing a website’s cost is that it helps set realistic expectations and goals. On the other hand, giving a roomful of eTailers a bullet list of ways to improve their website with no context to support them, sets no expectations.

After the sticker shock subsides, the company needs to explain that the eTailer has options (something else the Montgomery presentation didn’t elaborate on.) The company could tear the whole house apart and rebuild starting from scratch, or they could set up a plan to do renovations in increments—improve the search, then work on the products page, then trying testing pages, etc. The final results should be the same whether they overhaul everything at once or in pieces, the only difference is that breaking down the work into mini-projects mean you’ll see incremental changes to your bottom-line, but it also means incremental (and more manageable) costs to the eTailer.

To sum up my bottom-line: The eCommerce industry needs to discuss building, maintaining and upgrading a website in a context that isn’t void of budget and time constrictions and in a way that educates eTailers as to the work behind each piece of the project. This will help eTailers better understand their wants and possibilities, and help eCommerce agencies fulfill those wants.

Mentioned in this post:
Performance Bicycle Website :: Performance Bicycle
Internet Retailer Website :: Internet Retailer

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