PreCommerce? What to Know When Launching Your Online Store

We now operate in an environment where e-commerce is no longer a buzz word. Much aligned with the digital space, we have moved quickly beyond the idea of e-commerce into the worlds of Web 3.0, social commerce and integrated commerce. This change can be partially credited to the recession, which created an atmosphere where brands no longer tolerated the negative impact to their bottom lines that occurred when retailers scooped up all of a brand’s online sales. E-commerce is now standard.

As the fashion and luxury worlds embrace technology, brands today are faced with one of two scenarios:

1. The re-launch of ecommerce to offer a better integrated, social and engaging experience that is more aligned with the brand image.
2. The first-time launch of their ecommerce platform.

However, what most businesses fail to realize in either of these cases is that an analysis of the potential revenue or a review of ecommerce solutions is not the first step. In fact, New York based digital marketing agency nylmedia has coined an entirely new stage in the process that they call “PreCommerce”, a phase most brands neglect initially and pay the price for later.

So what exactly is PreCommerce?

PreCommerce is what is needed to prepare your brand and your audience for e-commerce in a way that positions the brand for success and maximizes both revenue and engagement.

The genesis of PreCommerce is based on a desire for the brand to sell direct to the customer, but often brands don’t have the actual databases or analytics to know exactly who the customer is, as this information is owned by the retailer. However, for a brand to go from selling successfully through retailers to selling successfully directly to the customer, several factors must be considered.

Many brands believe that a monthly user base of 5,000 – 10,000 uniques will support a healthy ecommerce business…not so, say Ross Anderson and Gregg Berger of nylmedia. The threshold for many brands should really be set at a minimum of 30,000 – 50,000 uniques per month in order to reap the rewards and justify the costs of ecommerce.

Hence, the first step to building an audience includes determining who your actual customer is, capturing information and initiating a communication program which may include email and social media. As your customer base becomes accustomed to interacting with you, you provide them with a reason to keep checking in with the brand, and this repeat visitation and increased engagement is critical to improve ecommerce results. “Essentially, brands ‘own’ their customers and control the communications and messaging.” Anderson continues, “Once a brand has this type of access and control of their customer base, the opportunities are endless.”

Something of specific consideration here is conversion rates and how this relates to your product’s price point. We know that the higher the price point, the lower the conversion rate. Therefore, if your product is dresses, priced $500 – $4,000, the minimum threshold of traffic would certainly need to be 30,000 – 50,000 uniques, because it’s more difficult to attain the same conversion rates.

It’s also a good idea to look at each category within your brand’s product offering, and segment audiences based on who’s buying what. Handbags and shoes, for example, have lower barriers to entry compared to apparel because there are fewer barriers to purchasing online.

Building the relationship you have with your audience is key. After all, your customer is used to purchasing your product through a retailer. What’s to keep them from continuing to do so? Amongst other factors, this relationship is integral.

Search, both paid (Search Engine Marketing) and organic is the other major factor. If you are not optimizing search and practicing SEM, then what is to keep people from clicking on your site instead of clicking on the retailer that they typically purchase your product from? Add in local search, Google shopping results and other sponsored or organic results, the brand’s website can often get lost in the clutter.

A startling statistic is that of keyword searches for your brand; chances are only 10% end up clicking on your brand’s website. The reason why? Most users search for a specific product within your brand. Product may be added to your site’s inventory, but are the product keywords added to your SEM strategy on a daily or weekly basis? It’s important your website be a top result for a specific product search, otherwise you run the risk of losing the customer to a retailer.

nylmedia has determined a timeline for PreCommerce:

1. Identify people seeking, searching for and talking about your brand
2. Send messages via ads encouraging users to fan your brand on Facebook, follow your brand on Twitter and subscribe to your brand via email.
3. Leverage these ambassadors to strengthen your base through an ongoing communication plan.
4. Once the fan base has reached your minimum threshold, launch e-commerce and communicate this launch to your audience.

An important distinction that nylmedia points out is that, in the PreCommerce stage, this is not yet about new customer acquisition, which comes once your e-commerce site is properly in place. The trick is to find your audience, build a stronger relationship with them, and steer them toward retail partners while your e-commerce is being setup, at which point you steer them back toward your brand directly.

As brands take their next steps in ecommerce, consideration for a PreCommerce strategy may just be the factor that determines success.

Photo Credits: Ed Honowitz