Ultimate Guide on Scalability in eCommerce
It’s one thing to get your business up and running and reach a point of financial stability; it’s another thing to grow it to its ultimate potential. As your business grows, you’ll need to learn how to scale your business for new clients or customers and increase profits.
But scalability in eCommerce comes with its own unique pitfalls and challenges compared to scaling a traditional business.
Building Blocks explores scalability and commerce in an ultimate guide.
What is Scalability for eCommerce?
For most businesses, scaling your eCommerce business is the same as scaling a traditional or brick-and-mortar organization. Scaling means growing your business in a progressive, controlled manner so you can gradually handle increased transactions or number of users without compromising the quality of your services/products.
Through proper scalability, you can build up your business to become a million-dollar enterprise or even more. It all depends on how you scale, your resources, and what niche your organization fills.
Since eCommerce organizations have distinct features compared to brick-and-mortar enterprises, scalability is a little different compared to retail businesses:
- With eCommerce scaling, you don’t need to worry about building additional locations or even having increased storage space.
- Your storefront is all online, so expanding your website or increasing its capacity for additional visitors is much simpler and cost-effective compared to building new stores.
- That said, it's easier to over-expand and scale up too quickly with an eCommerce store relative to scaling a brick-and-mortar business. Some overenthusiastic eCommerce entrepreneurs overscale their online businesses and take on too many customers. When they can't handle the load, they end up buckling under the strain and lose customers since they can't fulfill orders or services.
Because of these dangers, it's important to know how to scale your eCommerce business strategically rather than over-enthusiastically.
The Benefits of Scaling Strategically
Scaling strategically essentially means:
- Scaling in a way you can handle logistically and financially
- Scaling gradually but progressively in a way that leaves room for future growth at each step of the scaling process
- Scaling at a rate that you can maintain for years to come
Like scaling a brick-and-mortar business, scaling an eCommerce business is a marathon rather than a sprint. You should emphasize scaling sustainably and strategically rather than rapidly.Here’s an example:
- One eCommerce business tries to scale up too quickly and takes on 100 new clients worldwide. Their personnel is overwhelmed, and they lose a lot of clients, clout, and connections in the process.
- Another eCommerce business takes on ten new clients from different locations around the world. After hiring one extra developer or staff member, the eCommerce business can keep those new clients, take the increased revenue, then take another ten new clients the next quarter.
The difference between the two approaches is success and failure, plain and simple.
How to Scale Successfully in eCommerce
With all this in mind, let's explore how you can build a scalable business model successfully without overstraining your limited resources.
Review Laws and Regulations
For starters, you’ll need to check laws and regulations for any new area you plan to scale up to. Say that you primarily serve customers in America and want to expand your offerings to European citizens.
In that case, you’ll need to make sure that your website is fully compliant with the GDPR: a holistic list of regulations and rules that all eCommerce businesses must follow to protect the personal information of EU citizens and their funds. This involves ensuring you have SSL certification on your site and more.
ECommerce business owners, in particular, must pay special attention to laws and regulations since it’s easy to overextend into new territories or countries to service customers in those areas.
Suppose you fail to review laws and regulations and guarantee compliance on your end. In that case, you could face heavy fees or even be shut down in certain countries by accidentally violating legislation like the GDPR.
Plan and Research Your Expansions
To that end, it’s a good idea to heavily research any expansions before starting them, especially if you want to expand into new market areas or demographics.
Many brick-and-mortar businesses have failed spectacularly due to a lack of infrastructure and research on the part of executives. This fate doesn't have to be you.
But lots of eCommerce entrepreneurs don't think that they need to plan as heavily. After all, eCommerce businesses are often easier to grow (in terms of clientele or customers) than businesses that rely on local traffic.
Research is still important. Specifically, you should research:
- The average value or revenue you’ll get from new customers in the new demographic or geographic area you plan to set up in.
- Your current budgetary constraints.
- And whether it is worth it to expand as planned or if you should save up some money beforehand.
Upgrade Your Tech Stack
Your tech stack can broadly be understood as the collection of technology or hardware that your business needs to succeed, like database software or hosting platforms. Some tech stack solutions can scale easier than others, so ensure that your tech solutions have the capability to handle the load of increased customers or clients.
Some specific tech solutions you should check for scalability include:
- Your CMS or customer management system
- Your WordPress or another website
- Your hosting service and provider – some hosting servers are only good for a limited amount of traffic
- Your data storage and antivirus solutions
Ensure You Have Enough Resources
Naturally, you’ll need to ensure your eCommerce venture has enough resources to handle increased customer traffic and orders. Say that you produce physical products that you then ship to your customers around the world.
Can your manufacturing and shipping teams handle an increase of 10, 20, or 100 new orders per day or week? If not, you may need to scale more slowly or gradually than you planned.
Failing to account for resource constraints after an initial expansion or scale up into a new market can lead you to fail customer orders and suffer damage to your brand’s reputation.
Competitor Presence
Just because you have dominated your local market or niche competitors doesn’t mean you’ll automatically be as successful in new markets.
As you scale your business, be sure to research competitor presence in those areas. That will affect how you market to your target audience, what pricing points you need to set for your products or services, and much more.
By researching your competitors, you can ensure that your brand is a competitive option for the limited customer base you and any other competitors are trying to attract.
One famous example is McDonald's' failure in Iceland — after an initial expansion and scaling experiment, the fast-food giant decided to leave the Nordic country in 2009, giving up because of high competition and other market factors.
Redouble Marketing Efforts
As you plan to scale into new markets or countries, your eCommerce company will need to redouble its marketing efforts. You should think of any expansion into a new market as a fresh marketing opportunity that requires its launch campaign materials, marketing pushes, brand awareness elements, and more.
Do not rely on your marketing success in your current market or at your current level of popularity to carry you through as you scale your business up. You’ll need to devote new resources to scale your business and make it a more successful, dominating force in your industry or niche.
Language and Cultural Concerns
Lastly, be aware of any language or cultural concerns that may affect your eCommerce business in new countries or locales. For example, if you plan to sell things to customers who speak a language other than English, you’ll need to make sure you can translate your sales and marketing messages into the native tongue.
Similarly, different cultures have reference sensitivities or restrictions. When you engage in cross-border commerce as an eCommerce brand, you’ll need to be aware of these to avoid incurring heavy fines, turning off your target audience, or even drawing sanctions from local governments.
Summary
In the end, scaling your eCommerce business is a worthwhile goal, and you should certainly pursue it at your earliest opportunity. That said, be sure that you scale your eCommerce business carefully and strategically to avoid overextending yourself or spending too much money too quickly.
Fortunately, you can learn more about growing your brand in the eCommerce sphere using Building Blocks: a masterclass in eCommerce brand creation and marketing.