How much should we spend on eCommerce? How do I make a case for the cost? How do I define return-on-investment?
In my second video with tED Magazine, Scott Costa, I talk about thinking strategically about your eCommerce spend. Calculating ROI is not a one-to-one, it’s about increasing revenue, reducing margins and protecting your business from competitors.
I am pragmatic. I always want to figure out: what’s the opportunity? By putting out a site, we’ll get this much revenue, this much increase in our average order value, this much loyalty from customers. We can market products we haven’t in the past, we can up-sell, we can cross-sell…
If we’ll do all that, we’ll gain a benefit of this amount of revenue, cost-savings. I take a pragmatic approach: how much are you willing to spend to achieve those goals?
Money is part of it, return on investment is part of it, financial modeling is part of it. But your site can also protect you from the competition – local or regional competitors, from national competitors. Lots of distributors right now are spending online. And there doing it based on: this is how much we want to spend to get this benefit benefit down the road.”
Miss episode 1? See my first tED video: What Customers Want.