So, you’ve successfully created an online store and built a loyal customer base of consumers who like your products and appreciate your customer service. They may even be willing to recommend you to their friends and leave positive reviews. Great. So far, so good.
Perhaps you’ve also increased your potential customer-base by selling through marketplaces like Amazon and eBay or through curated sites like Not on the High Street. Another smart business move, especially if you’re able to manage everything with integrated software that allows you to coordinate purchasing, stock management and fulfilment efficiently and in real time.
But where to next?
Just like traditional businesses, eCommerce companies need to diversify in order to continue to drive growth and capitalise on market opportunities. But where do you start and will diversification really pay off for your company?
Where there’s a Niche, There’s an extended Niche
Finding a niche and exploiting it is a strategy that sits at the root of many online retailers’ success; often driven by an entrepreneur’s realisation that if they struggled to find a product on the high street, others would too.
It remains a great approach to building a business online but it’s important to note that consumers don’t just shop for hard-to-find products online anymore…they shop for everything online.
As a result, sticking to a very specific niche is no longer a savvy approach to being a ’specialist’, it’s an opportunity lost. We’re not saying that niche providers should suddenly start selling something completely different and off-brand. However, if you consider your customer demographic and the products they currently buy from you, it’s not difficult to see what products you could offer them to complement your existing range. By diversifying in this way, you can offer something new to customers, enhance your appeal and, potentially, increase the value of every sale.
Review and Refine
Diversifying your product range is a bit like refreshing your wardrobe: you might think you’ll wear those trousers sitting at the back of your wardrobe with the tags still on one day, but will you? Really?
You don’t necessarily have to upscale the number of SKUs you list – unless you want to – but you do need to implement a constant process of reviewing and refining your range based on what products yield the largest sales volume and biggest profit.
Integrated stock management and fulfilment software can help with this as it enables you to track sales volumes and transaction values in real time. Analysing this data will enable you to see which products are no longer as popular or profitable, giving you a commercially-driven steer as to where you can de-list existing products to make way for new ones.
Conversely, if you do want to increase the number of SKUs you list, this data can also provide insights into what’s selling well so that you can select new lines based on known market demand or higher-spending demographics.
Don’t under-estimate the Power of New
Depending on the nature of your product, you may have a solid customer-base that repeat purchases core lines and provides a robust turnover. The question is, will that help you achieve your goals for revenue growth?
Just because your customers like the products they already buy, don’t assume they wouldn’t also like to shop for new things from you too. New is always exciting and it communicates that you are a dynamic business, responding to consumer trends and bringing customers fresh experiences.
Keep Ahead of the Curve
Trends come and go, some more quickly than others, but one thing is for sure – the retailer that’s ahead of the curve in stocking must have items will profit from them most.
In this regard, eCommerce businesses are no different from traditional retailers, because spotting a trend ahead of time is all about knowing your customer demographic and keeping up to date with that marketplace.
The advantage for online retailers is that you are already working in a digital environment - social media and online news sites are the best places to spot what’s hotting up.
Exploit Your Agile Business Model
One of the key advantages that online retailers have over their bricks and mortar rivals is the agility of eCommerce business models. Yes, you have to purchase and manage stock levels, often building in extended lead times if items are being imported from overseas, but you also have the flexibility to add new lines quickly in response to market forces, which may include trends, seasonality or legislative change.
This is particularly true for companies that work with outsourced fulfilment partners because the ability to add new SKUs is not limited by the space in your in-house warehouse unit. Unlike traditional shops where retailers have to find space for new lines on shelf, you simply need to add the listing to your website and secure additional space in your fulfilment partner’s warehouse.
Achieve Your Goals
Whether your aim is to build a virtual high street brand, increase the size of your business or maximise the profit potential from your chosen niche market, diversification is critical to avoiding stagnation and offering customers something new and exciting.
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