One characteristic of the recent economy is that it seems to be an equal-opportunity recession, meaning that it has hit businesses of all sizes and in all industries. Since there are no grand strategic options that would shift a companys business mix into thriving areas, responses have to be more tactical than strategic. Some key e-commerce development decisions can help with this.

These days, the tactics many companies are turning to instinctively involve cost-cutting. This is understandable. Sales are down, and something must be done to keep corporate earnings in the black. However, it is important to cut the right costs. Cost-cutting moves that result in further reductions in sales only exacerbate the problem.

Here are some e-commerce development tactics that can cut existing costs while being neutral--or even additive--to a companys sales presence and capacity.

1. Substituting e-commerce presence for physical presence: Every day, more reports of retail companies closing locations roll in. This is understandable. Each physical location entails expenses of real estate, utilities, personnel, supervision, and shipping, not to mention the duplicative accounting and inventory tasks necessary for businesses with multiple locations. By definition, closing retail outlets reduces sales capacity. However, if just some of the savings can be poured back into beefing up e-commerce Web site presence and promotion, sales capacity can be maintained or even increased while cutting costs
2. Creating self-service tools on the companys e-commerce Web site: Building Web site tools that allow customers to place orders, schedule appointments, or troubleshoot problems can cut customer service costs, while being positioned as an added service and convenience to customers.
3. Using e-commerce advertising to better target customers: Traditional advertising (print, radio, television, etc.) is expensive and often thought of as a scatter-shot approach. Companies have to throw a high volume of it at the marketplace, because they can only hope that some of it reaches the right eyes and ears. In contrast, e-commerce advertising can be much better targeted because it can be concentrated on Web sites or linked to searches that are directly relevant to the companys product or service. Better yet, results can be measured more accurately, and in many cases, the cost can be directly based on those results
4. Giving incentives for repeat customers to do business via the e-commerce Web site: If a company has kept track of who its customers are, it can reach out to them personally and provide incentives to do business via the e-commerce Web site rather than in person. This saves some of the costs of a physical presence, and customers appreciate the cost-saving opportunity and the convenience
5. Outsourcing e-commerce Web site design and development: One option for executing these e-commerce tactics is to outsource Web site design and development. When the ongoing IT infrastructure and support costs are factored in, a company may find it can increase its e-commerce presence while actually reducing costs.

Too often, companies worsen the impact of an economic cycle by blindly adding capacity during an expansion and indiscriminately cutting it during a recession. A more tactical approach, including the use of the above e-commerce development techniques, can help smooth the otherwise bumpy road.

Sources

New York Times

Standard and Poors