How e-commerce Businesses Scale Their Operations

If you are an e-commerce business owner, you’ve likely considered expanding your operation(s) at some point. Whether that comes sooner or later in your journey of running your business, it is essential for you to plan, from the beginning, ways to help prepare for any ups or downs you may encounter, such as sudden and considerable increases in volume or unexpected setbacks.

Learning the proper way to scale your business may not be your top priority at the moment, but it should be part of all brands’ strategies if they want to remain relevant in their market.

In this article, we will explain the meaning of scalability as it relates to e-commerce, and how having a strong plan in place could prove to be an excellent strategy for your online company’s growth.

Common Questions about Scaling e-commerce Operations

Below are some of the central questions about scaling e-commerce operations. If you prefer, use the summary to improve the navigation.

1 – What does it mean to scale e-commerce operations?

For companies with an online presence, scalability refers to the ability to expand your e-commerce platform to accommodate your business’s growing online needs. Generally, the first large change in the scale of operations for many e-commerce brands is when they can no longer sustain running their business from their homes, garages, or apartments. At this point, many e-commerce brands have two options:

1. 1. Purchase a warehouse for your own inventory.
2. 2. Outsource warehouse storage via a 3PL provider to handle inventory, picking and packing, and shipping for you.

A scalable hosting solution will allow your business to grow. To do it, you’ll need to avoid downtime, preserve the customer experience, and ensure at all costs that your deliveries are on time.

2 – Why is scalability important for e-commerce?

Scaling your business will allow your company to grow and generate returns without replacing its initial structure.

In practice:

• If your business grows rapidly, you must ensure that all current processes will continue to work or should have the ability to adapt to a larger operation. Your business should thrive without compromising your advances from the past.

At this point, it is also important to point out that:

Costs must always increase with the business, and profits must follow the same growth.

This evolution will translate into a significant increase in the number of potential customers interacting with your company and, consequently, sales.

READ MORE: E-Commerce Business Best Practices

3 – What are the common challenges when scaling an e-commerce business?

Scaling a business is not an easy task, and companies that go through the process of scaline will inevitably face several challenges such as:

A – Dealing with increased competition

Starting an online business can turn into an incredible adventure, with endless opportunities for growth and success. However, without a good strategy in place, your efforts may prove fruitless as you will be competing with other businesses offering the same products or services.

There are many examples of e-commerce companies that have gone viral because they have implemented effective content and growth strategies. By establishing a more recognizable brand and scaling your operations, the greater the number of sales you can achieve.

READ MORE: Starting an E-Commerce Business

B – Learning new ways to manage your business

As e-commerce businesses scale their operations, they often encounter pain points that can hinder their growth. To overcome these challenges, businesses can look for new ways to manage their operations.

One approach is to focus on improving processes, such as streamlining logistics, automating tasks, and optimizing inventory management.

Another approach is to invest in technology that can help businesses better manage their operations and enhance the customer experience. For example, businesses can use data analytics tools to gain insights into customer behavior, which can inform product development and marketing strategies.

Businesses may also consider leveraging social media and other digital platforms to expand their reach and engage with customers in new ways. By embracing these and other strategies, e-commerce businesses can overcome pain points and continue to grow their operations.

READ MORE: 4 fantastic examples of excellent customer service

C – Dealing with limited resources

As your business grows, the possibility of having problems with your suppliers will likely increase. As orders grow in volume, you may have to deal with issues that you haven’t dealt with directly up until now, such as the inability of your suppliers to manage their inventory.

Along with building strong relationships with your suppliers, one way to mitigate the risk of inventory shortages is by diversifying your supplier base. By using multiple suppliers, you can ensure a steady supply of products and materials needed to fulfill orders, even if one of your suppliers falls short.

READ MORE: Returns, Exchanges and Reverse Logistics made simple

D – Maintaining customer satisfaction

With the increase in the flow of sales and work in general, another strategy to scale your e-commerce business is exploring better ways to serve your customers.

Improved customer service can take your business to the next level and stay ahead of the competition. An excellent way to increase your consumer base could be to create a loyalty program that encourages your old customers to remain loyal to the brand while encouraging new customer interactions with your company.

If you get to this point in your business, investing in software that allows you to respond quickly across all channels encourages better management of customer requests. Optimizing all the responses of your channels and achieving a quick response to all your requests ensures that you have the ability to increase customer loyalty and drive sales.

Customer satisfaction is key to a successful e-commerce business

A significant increase in sales volume can also lead to complaints. Planning a strategy to help deal with this before it happens could be part of your overall e-commerce business plan. You’ll need to get to the front of customer service before you’re full of complaints.

If you’re reading this, it’s likely because you are looking for effective solutions to scale your business, or you only want to get information about strategies that could, in the long term, help your business grow without creating other problems with its evaluation. The following section will present a crucial plan to make your business easily scalable in the long term.

4 – Strategies for scaling e-commerce operations

Below are some strategies to improve your business and take it to the next level.

A – Implement a 3PL with an Omnichannel Management System

As you scale your business, consider expanding your product listings to new selling channels. This can be a powerful strategy to grow even further. By leveraging additional sales channels, you can significantly increase your reach to a broader audience, boosting the odds of a considerable increase in sales volume.

However, before betting on any strategy, you should analyze the platforms on the market and choose the one that can best help you achieve your goals.

With Shipedge WMS:

• You can manage your orders, warehouse, and shipments in one easy platform that will scale with you as your organization grows in size and sophistication.

B – Outsource fulfillment and shipping

As e-commerce sales continue to rise, business owners often seek to keep their operations as streamlined as possible. However, it’s important to remember that there are limits to how much you can scale your business at once. As the saying goes:

You have to spend money to make money

In this sense, one of the strategies that e-commerce businesses could implement is to use the resources of outsourced logistics and sales and delivery solutions, thus leading to the concentration of product development and marketing efforts for the company.

When considering outsourcing your e-commerce business’s logistics, a 3PL or fulfillment services can handle your order processing, picking and packing, and shipping. Hiring a fulfillment service could be a great way to expand your e-commerce business without the need to hire additional staff or become overburdened. 3PLs that are using software with cartonization & best shipping rate features may also help save some money on delivery costs and packaging for your orders.

C – Analyse all your data and reports

It’s crucial to track, assess, and modify your e-commerce business after you’ve done all of the hard work to scale it. In other words, evaluate your plan for business scaling by assessing your progress.

Try to answer the following questions:

• Has it been successful? How do you measure success?
• Are you getting the outcomes you were hoping for promptly?
• What has proven effective?
• What failed to work for you?
• What changes can you make to your strategy to improve it?

To ensure the effectiveness of your e-commerce business, track the evolution of your revenue over time to evaluate whether there is a corresponding increase that justifies your investment in expansion. Additionally, improving your customer acquisition and retention should be a top priority as a part of your scaling strategies.

D – Expanding into new markets (new selling channels or new countries even)

The power of the internet and social networks can lead you to sell anywhere in the world without significant difficulties. Stores like Amazon are constantly seeing an increase in net e-commerce sales. Consumers are more comfortable shopping at home than ever, especially after the impact of COVID-19 caused many physical storefronts to close.

To ensure the successful expansion of your business to new service channels or even new countries, it is essential to establish agreements or partnerships with companies that specialize in controlling, storing, and transporting the products you are selling. By doing so early on, you can anticipate and prevent future failures and ensure satisfaction for your customers.

READ MORE: Maximize your e-commerce success with real-time inventory management

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Shipedge WMS – Start Scaling Your Business

Now that you know the main advantages of scaling your business and the strategies to achieve it, it’s time to put these ideas into practice. If you need help finding the best solution for your company, consider reaching out to Shipedge. We offer free consultations to help identify and address your business’s unique challenges and opportunities for growth.