E-commerce has grown exponentially over the last few years, and the COVID-19 pandemic dramatically expedited its adoption across the retail spectrum. As many brick-and-mortar businesses were shuttered, companies scrambled to launch an e-commerce presence or expand their capabilities to service an influx of online shoppers. In North America alone, the top 500 retailers saw their online sales balloon 45.3% year-over-year, according to a 2021 study by Digital Commerce 360. In this highly competitive marketplace, the demand for e-commerce product managers has followed suit, as has the business imperative to build a strong e-commerce product strategy.
E-commerce businesses can be divided into four categories: traditional brick-and-mortar stores, brands, virtual services and products, and marketplaces.
Distinctions exist among these categories, but important considerations are relevant to all four. When planning your product strategy, consider the following points to drastically increase your chances of success in the e-commerce arena:
1. Know Your Customer and the Problem You Are Solving
From the outset of product strategy planning, you need to be extremely clear on who your user persona is and how you are serving them. Without that clarity, you run the risk of an unsuccessful product launch.
Consider Juicero, a $400 Wi-Fi-connected juicer created by a company with $120 million in venture capital: The machine applies four tons of force to dispense a beverage from juice bags (sold separately via subscription), but the public quickly discovered that the juice bags could be easily squeezed by hand. The company ceased operations in 2017 after three years of trading. Juicero created a product with little demand because it addressed a problem where, in fact, none existed.
When evaluating products, I find it helpful to remind myself that I usually do not represent the target customer. The US population is approximately 332 million people, the average income is around $36,000, and 66.9% of the population age 25 and older does not have a college degree. As product teams may not reflect this demographic, it is critical to interview and collect feedback from customers regularly throughout the product development process. With the need to quickly innovate and iterate offerings based on competition and consumer needs, e-commerce, more so than other marketing channels, requires a hyperacute awareness of the user.
2. Move Beyond the Monolith
For companies in the e-commerce space, a platform is essential to facilitate transactions. A company can choose to build a platform in-house, buy an off-the-shelf solution, or opt for a combination of both, integrating products and services from third-party vendors.
Monolithic architecture—a self-contained, independent structure with one code base—is the traditional model for software applications. While monolithic architecture has its advantages, an increasing number of companies are now moving away from this model and are embracing a modular approach known as MACH (microservices-based, API-first, cloud-native SaaS, and headless) when building their tech stacks.
Instead of creating a custom content management system (CMS), you may elect to use an off-the-shelf solution. In this scenario, your internal stakeholders would get access to a feature-rich CMS with continual updates and support much more quickly than if they had to wait for a development team to build it in-house. The benefits of using these types of solutions include scalability, security, and faster time to market.
At companies I have worked with recently, the engineering teams had already embraced a non-monolithic architecture or were rapidly moving toward one. Using the MACH approach, Dawn Foods was able to build and launch its B2B platform in just six months. It’s one of the most refined e-commerce platforms I’ve ever worked on. PepsiCo eCommerce also used the MACH approach to launch an MVP in just one month, securing critical funding to continue building out its e-commerce platform.
It is worth noting that your choice to build in-house, buy off-the-shelf, or adopt a hybrid approach will depend on factors such as the resources, funding, timeline, and goals of your product and organization.
3. Embrace Experimentation and Testing
When launching a new product or releasing new features, a failed rollout can be very costly for both your organization and external partners. It can irreparably damage your e-commerce brand image and push your customers, both existing and new, to competitors. You might face lawsuits due to breached service-level agreements or negligence.
The cause of a failed rollout can range from a buggy user experience to a value proposition that does not resonate with your users. To avoid a failed rollout, you could spend more time testing code or conducting user research, but you’ll never outsmart the project management triple constraint—the need to balance time, scope, and cost. Product-driven organizations know that in order to minimize risk, it’s best to fail fast and experiment relentlessly.
In an e-commerce context, consider the work my team and I did to launch a new checkout experience on the Gatorade website: With thousands of orders per week, we knew that any hiccup with the launch of new features could be catastrophic, so our team took steps to mitigate risks. We launched the new features on a low-traffic experimental site where 50% of the customers were internal employees. We monitored the site health for a couple of weeks until we were able to validate the stability and quality of the release. That gave us the confidence to push the new checkout experience to the Gatorade webpage as planned. The resulting launch was a huge success.
4. Focus on Customer Retention
If you’ve signed up for a new service or product, like food or grocery delivery, you’ll recall the multitude of promotions and deals you were offered. Your first instinct was probably to go with the best deal at the time of ordering. But what happened when those deals dried up? You likely went back to the business with the best user experience or the value proposition that most resonates with you.
In most situations, throwing money into marketing will net new customers. However, your competitors are vying for the same sales. With the proliferation of retailers going online and the e-commerce space becoming increasingly competitive, focusing on retention is more important than ever.
Here are the actions that I’ve found to be most successful in retaining e-commerce customers:
Build trust through site security. With data breaches increasingly requiring enhanced cybersecurity provisions, prioritize your customers’ peace of mind by ensuring that their personal information is protected through security features and upgrades. You can showcase these with UI indicators such as security badges.
Leverage social proof. Positive reviews and other customer-generated coverage will not only help you win new customers, but these social proofs will also garner retention. When your customers see other customers buying and enjoying the same products, it affirms their choices and motivates them to purchase again.
Build omnichannel experiences. In 2020, mobile devices accounted for 68% of web traffic, yet only 56% of customers placed their orders on mobile, with 44% finishing their journey on desktop. A shopping experience that seamlessly transitions among multiple devices and channels is essential to retaining digital shoppers.
5. Take Seasonality Into Account
At a high level, seasonality is the predictable calendar of spikes and slumps in sales throughout the year, with the spikes known as “on-season” and the troughs between these periods known as “off-season.” The on- and off-seasons vary from product to product, led by factors such as target customer and region. By understanding your market’s seasonality, you can make it work for your team and product roadmap.
In the retail and services sectors, some examples of on-season include Black Friday and Cyber Monday, Christmas, Valentine’s Day, Diwali, and Singles Day in China. On-season encompasses these dates as well as the periods leading up to them. The following considerations will help you and your team create an achievable roadmap and reduce employee burnout from working overtime to meet deadlines:
- Leverage the high traffic to conduct A/B testing and hit statistical significance more quickly.
- Provide extra maintenance and support to prevent downtime and/or slow site performance due to increased traffic.
- Recognize that more team members may take vacation time, so adjust your roadmap and staff for support and maintenance accordingly.
- Work on complex initiatives, as there will be fewer deadlines and your team can dedicate more time to long-term planning and goal setting.
Set Your Strategy Apart
While there is no silver bullet for creating the perfect e-commerce strategy, you can make dramatic improvements by paying special attention to your user problem, platform architecture, testing processes, customer retention, and seasonality. These tips, learned in practice, can set yours apart from the competition, bring success to your organization, and help you excel in your career as an e-commerce product manager.
Special thanks to Christine Wang (PepsiCo eCommerce) and Mike Callahan (Dawn Foods) for sharing their expertise.
Further Reading on the Toptal Product Blog:
Understanding the basics
An e-commerce strategy is a development plan for a product or products where the customer interaction or transaction takes place on a digital platform.
The key components to consider when developing your e-commerce strategy are: the customer and the problem you are aiming to solve, platform structure, experimentation and testing, customer retention, and seasonality.
Use the above components to develop your e-commerce strategy, ensuring you create products that customers will value and which can be purchased via a fully optimized and seamless digital platform.