With the constant development of technology, new business ideas enter the market every day. Factors such as globalization, constant technological change, the internet and digitalization have changed the structures of many companies.
To adapt to new technological, environmental or market challenges, companies must innovate their business models. Advances in communication and technology have produced new ways of creating and delivering value, increasing the opportunities to add value. One example is the development and rapid expansion of the internet and the falling costs of doing business online. For more than a decade, companies and organizations doing business online have used business model innovation to successfully create new value propositions, such as eCommerce.
Why are we talking about scalability?
Sustaining a company’s success is often seen as part of growth, and this is tied to a business’s scalability, which is achieved when revenue grows quickly while fixed costs stay low, so the profit margin is always positive. Scalable business models have specific characteristics, and several factors can influence scalability, as we’ll see below.
One of the trends in digitalization and disruptive change in traditional industries is eCommerce. In general, the eCommerce sector, like all online businesses, is highly scalable.
Over the last decade, the online market has tripled, and more and more stores are choosing to unify the experience across their online and offline channels through omnichannel retailing. Global eCommerce sales are expected to double by 2021, showing that eCommerce will keep growing in the coming years.
According to Ernst & Young (EY), the consumer products and retail industry is going through several changes. In its recent study M&A in the retail and consumer products industry: 2018 edition, EY stated: “for companies in the Consumer Products and Retail sector to succeed and keep pace with changing consumer behavior and the impact of digital disruption, they will need to address long-term structural changes while achieving balanced, profitable growth”.
Is your eCommerce a scalable business?
Among several factors, these four (innovation, strategy, financing and technology) play a key role in the scalability of an online business:
1. Product innovation
Product innovation defines the value a company wants to offer its customers. eBusinesses have established new ways to create and deliver value, for example through personalization or cost savings through intermediation. It’s very important for an eCommerce to stand out from the competition by offering a Unique Selling Proposition focused on its target audience. Online selling brought new opportunities that allowed small businesses to open up to new geographic regions and offer their products to more customers.
2. Strategy
To grow your eCommerce and create a Unique Selling Proposition on your website, you need a good strategy to build Brand Awareness. Other important areas to focus on are increasing website traffic, customer engagement and the use of pre-selling, upselling and after-selling techniques. Communicating well with customers plays a key role and is essential for the brand.
Besides being agile and flexible, the strategy must be customer-centric. By applying the right technology and digital marketing strategies, an eCommerce can gather information and insights about its customers and even use them to develop successful products and campaigns.
Using techniques such as viral marketing correctly to reach more users can help a company scale quickly. At TLG Commerce we have an eMarketing team that can help you define the best strategy for your business.
3. Financial aspects
From a financial perspective, one indicator of scalability is the tendency to increase revenue while keeping fixed costs low, especially in the early stages of the business. If a business needs to increase costs by hiring more staff or moving to larger premises to earn more, the extra sales may not pay off. So it’s not just about selling more, but also about controlling costs, which shouldn’t grow in proportion to profits.
To keep growing and improve business development and innovation, companies usually need external financing, and therefore investors and partners. Investors prefer to invest in businesses that show scalability at an early stage. An eCommerce can work with different partners depending on its needs, such as marketing or distribution partners.
4. Technology
Technology is a truly important factor that can influence a company’s scalability. For an online store, choosing a good eCommerce platform is crucial. Adapting to users and providing content that matches their needs is key to delivering a personalized shopping experience.
An important technology-related factor is the scalability of the software itself. An eCommerce must be technically ready for business growth to be truly scalable. That’s why the eCommerce platform and server structure need to be scalable to avoid system overloads. Together with AWS (Amazon Web Services), TLG Commerce provides clients with reliable infrastructure offering elastic eCommerce hosting, a fast, secure and scalable hosting architecture for your eCommerce. We offer advanced technology and can help you create an innovative online store that’s easy to manage.
Is your eCommerce a scalable business? Not sure what the right strategy is for your online business? Looking for a scalable eCommerce platform? Don’t worry, TLG Commerce can help!
Don’t hesitate to contact us, we’ll be happy to help 🙂
