How SMBs Can Enhance Their E-Commerce Platforms
New customer acquisition is often what keeps most small business owners up at night. Finding new customers can take time. Today’s customers express interest in shopping at locations recommended by friends and family members. Referrals are powerful, and a recent article in The New York Times stated that 65 percent of customers typically come from referrals. Social media often helps drive referrals, yet many SMBs either do not understand how to grow their social footprint or don’t have the time or resources to develop a social strategy.
Increasing prices can also boost the bottom line. However, a commoditized internet won’t support prices above the market and consumers are very price-conscious when shopping online. Therefore, if you sell low-margin products, have limited resources to acquire customers or lack the financial structure to withstand a risk gone bad, your options are limited.
Some SMBs have tried to build relationships with larger businesses in their local area that offer complementary services. It’s a good theory, but can require a lot of networking in order to bring in customers — and many owners are already pressed for time just to manage their existing daily operations.
These businesses are also seeking new ways to encourage customers to purchase more frequently. Loyalty programs have become a mainstay for today’s largest brands. However, smaller merchants have had difficulty instituting these programs because they often lack sufficient infrastructure to support these campaigns. Furthermore, many loyalty programs are quite complex and expensive to install and manage.
Increasing Average Order Value May Be the Key
Another option exists, but comes with logistical challenges for a SMB. Specifically, growth by increasing the average order value (AOV). Merchants see great value in “cross-selling,” but feel this is an area where they can’t compete against larger e-tailers. For example, Amazon.com has mastered cross-sales opportunities with its “Customers also bought” feature, which helps increase AOV just prior to checkout.
Cross-selling and upselling can serve as a great opportunity for small-to-midsized businesses and merchants, but the key is to find the right set of complementary products. Insurance and protection plans have proven to be a profitable, flexible option since there are so many products that can be covered.
The first key is finding offerings that act essentially as commission sales, where a provider manages the logistics and support services and all the retailer has to do is essentially take its share of the revenue. This also will typically offer the retailer the option to white-label or co-brand the offering.
The second key to a successful cross-sell or upsell is to find a provider that can easily integrate into an existing e-commerce platform. Many SMBs are thin at the IT level and can’t afford an expensive, complex or lengthy expansion of their e-commerce infrastructure. Fortunately, this is an area that has evolved over the years. There are new options that can help smaller retailers easily integrate new and complementary product lines into their web stores.
Increasing the bottom line through the integration of a commission-based e-commerce add-on can actually help business growth in a variety of ways. It can help generate more customers, elevate the frequency of purchase and increase average revenue per transaction. Your customers will appreciate your ability to help them protect the items they’ve purchased, and this elevated level of trust will lead to better word-of-mouth marketing.
Matthew Pufall is director of product for Assurant Cart Protection, a technology solution that integrates easily into online retail platforms to help SMBs offer revenue-generating products to their customers.