eCommerce Management 101: How to Take Your Business to the Next Level

There is a lot happening under a simple-looking ecommerce website. There is product and inventory management; there is shipping and ordering systems; and there is customer management. Any issue with any of these parts could quickly snowball into a catastrophe for an ecommerce business. 

How can you make sure that all different parts of an ecommerce business function properly and in unison? Is there an overarching, all-inclusive science that could guarantee overall ecommerce maintenance and growth? 

Actually, yes, there is, and it’s called ecommerce management. It’s the strategy that ensures all the different parts of your ecommerce business are connected to each other and work efficiently together. Interested to know more? Check out the guide we’ve prepared for you.  

What is ecommerce management?

Ecommerce management is the overall strategy for running, optimizing, and growing an ecommerce business. An ecommerce business is a store that sells and/or buys products and goods online. It might seem easy and manageable on the surface, but there’s a lot of complexity involved in it.  

The three main areas of ecommerce are: 

1. Product, supply chain, and inventory 
2. shipping and fulfillment
3. customer acquisition and retention, 

And any of these areas have their own specific issues you should deal with such as understocking or overstocking, tracking the inventory, supply chain disruptions, demand forecasting, timely shipping, product returns, market saturation and competitiveness, marketing and advertising, reducing customer retention rates, etc. 

Ecommerce management is the overall strategy that deals with each and every one of these issues and ensures a smooth operational workflow.

Why is ecommerce management important?

Ecommerce management is a must-have strategy for any ecommerce business. Using the right ecommerce tools and a data-driven approach, an effective ecommerce management ensures that an ecommerce business runs smoothly and grows consistently. 

Some benefits of effective ecommerce management are: 

- Improving customer experience: this is the end-goal of ecommerce management. In order to ensure great customer experience, you need to take care of every step in their purchase journey, from your marketing campaigns to inventory management, secure payments, shipping, and post purchase campaigns. Having a slick ecommerce website is also extremely important. 

- Preventing inventory issues: understocking is a serious inventory issue. Customers would typically seek out-of-stock products elsewhere and would probably become repeat customers there. Effective inventory management is part of an overall ecommerce management strategy and prevents understocking and overselling. 

- Adapting to demand fluctuations: market demands change consistently. A product that is currently in vogue might be a forgotten commodity a few months later. Conversely, new expectations arise in response to different cultural and buying trends. Forecasting and predictive analytics play an important part in an effective ecommerce management strategy so that you would be immune to market demand fluctuations and grow your business consistently. 

- Growing customer base: a lot of ecommerce businesses struggle to find customers. An effective ecommerce management strategy grows your audience consistently whether through social media marketing, organic traffic, or outreaching.

- Streamlining operations: an ecommerce business is heavily dependent on digital platforms for fulfilling any kind of ecommerce operation from stocking and inventory tracking, to marketing, shipping, point of sale and payment processing, and customer relationship management. A proper ecommerce management streamlines these processes and ensures a very productive and efficient workflow. 

Challenges of eCommerce Management

The three biggest challenges of eCommerce management are:

1. Inventory management

“OUT OF STOCK” — three irritating words a customer doesn’t want to see when they shop online. If they do, you lose them to another seller who’s recently stocked a generous quantity of the same product. 

The situation worsens if you overestimate demand and overstock. It leads to excess inventory, which turns into obsolete stock that goes to waste. 

What crumbles online stores’ inventory management?

1. Tracking multi-channel inventory

Tracking inventory is a nightmare as you add storefronts to your eCommerce business! 

You need real-time information about all the products from every shopfront. Also, consider the variety of products you sell. You have many lines, categories, and variants. Good inventory management software is key for maintaining accurate inventory levels.

2. Inaccurate demand forecasting

Predicting customer demand is a tricky business. eCommerce demand analysis suffers from sudden shifts in buying behavior. 

In 2022, Target's profits declined 52%. The reason was its inability to forecast the change in consumer buying patterns. The sharp drop in customer spending for discounts went unnoticed, and the company had to cancel orders with suppliers.

3. Supply chain disruptions

Suppliers aren’t immune to unexpected delivery delays. Natural disasters, instability, long distances, and transport issues cause global supply chain issues. 

It causes delayed deliveries. This leads to stockouts and ruins the customer experience. 

4. Shipping and fulfillment

Present-day customers want same-day or one-day deliveries. As customer expectations change, businesses face more problems with order fulfillment. They are often in a dilemma — should they charge high shipping costs and offer fast delivery or reduce shipping costs and go ahead with slow delivery? It's a challenge to achieve both milestones together.

Besides, customers also want free shipping and easy returns. This is tough for small businesses with no budget for advanced infrastructure. They often struggle to stock the right products in the closest fulfillment centers. 

It delays late deliveries due to international shipping and raises costs.   

The results of late deliveries are often horrendous.

• 23% of customers don’t order from a retailer after a late delivery.
• 21% don’t trust the retailer anymore.
• 17% suggest avoiding the retailer to their friends and family.

In 2018, KFC had a chicken shortage. DHL, its delivery service, was inexperienced with chilled foods, and it had only one distribution center. It led to various failed deliveries and 700+ closed stores.

Online businesses are trying to fix last-mile delivery issues, but there is a long way to go. For example, some companies still struggle to fulfill orders even after using strategic solutions. 

• Amazon has delivery vans and electric drones for last-mile deliveries. But, it faces issues with regulations, flight range, and infrastructure. 
• AliExpress has logistics hubs to handle shipping in the U.S. and Europe. But customs and late shipping cause ongoing issues.  

5. Customer acquisition

The cost of acquiring a new customer for ecommerce businesses has increased by 222% – from $9 in 2013 to $29 in 2022. 

Why do eCommerce businesses struggle to acquire customers? What makes acquiring customers so dreadful and costly for them?

A HubSpot survey found some top challenges in acquiring customers. The survey had 100 responses from customer service experts. 

The top 3 issues associated with customer acquisition include:

• Understanding customer needs — a hazard for most online businesses.
• Customer messaging — often, generic content fails to convey the intended message.
• Using the right tools – small businesses lack the right technology and skills.

Several factors responsible for these issues are:

1. Struggling to connect with customers

With so much competition, customers find it hard to trust brands. As a result, they block out most marketing messages. This makes it difficult for brands to reach and interact with their audience.

2. Declining customer retention rates 

If your customers leave you as fast as you bring them to the business, then it’s a recipe for disaster. Failed deliveries and poor service hurt customer retention, and unhappy customers don't stay. 

3. Customers expect more value for less

Potential customers become more demanding when they see brands scrambling for attention. They seek discounts, offers, and free delivery. They expect high-quality products from businesses. It often happens at the expense of losses for most businesses. 

5 Ways to Improve eCommerce Management

Here are some tips to improve your online store's user experience. They will also help with eCommerce management challenges. 

1. Hire or outsource an eCommerce manager to oversee operations

An eCommerce manager sits at the heart of an eCommerce business. Some of their responsibilities include:

• Setting up and optimizing your online store.
• Coordinating across teams to synchronize operations.
• Looking after regulations and compliance.
• Supervising customer service operations,
• Managing the supply chain and logistical functions,
• Overseeing new product launches, 
• Tracking store performance and analyzing results. 

An eCommerce manager will handle daily tasks. You can then focus on product development and growing the business. They help you grow your online business. And they understand the complexities of running an online store.

2. Use customer feedback loops to improve products and address negative reviews

A customer feedback loop involves gathering input, understanding customer concerns, and responding thoughtfully. This response could be a simple thank you for positive feedback or an acknowledgment of issues with a commitment to make improvements.

A customer feedback loop goes through four main stages:

• Collecting survey feedback, live chat, review sites, and social media using CXM tools.
• Using data visualization tools to analyze the feedback. Then, find patterns in their behavior.
• Replying to feedback with a note and some discounts, or by making the suggested changes.
• Closing the loop by following up with the customers and confirming their satisfaction.

For example, closing feedback loops helped Charles Schwab, a leading financial services company, increase its revenue by 11%.

At Schwab, managers start their day with customer feedback reports. They note any complaints and forward them to their team. The team then tries to get them resolved the same day. 

It helps the Schwab team stay top of mind with customers and creates a delightful experience for them.

3. Use inventory management systems for better decisions

The global inventory management software market will reach $4.84 billion by 2032. The software's growth is due to its solution to many inventory management problems. 

An inventory management system does the following to provide a smooth eCommerce management:

• Automating inventory tracking across all sales channels;
• Offering real-time updates on your stock levels;
• Managing various sales channels and warehouses;
• Saving business costs; and
• Optimizing the inventory to suit seasonal changes, demand fluctuations, and product lifecycle.

It gives you real-time insights into your inventory. So, you never face understock or overstocking. It includes a detailed analysis of your store's inventory. It will help you make informed stock management decisions.

For example, Walmart's AI and ML inventory system is known for delighting customers during holidays. 

It uses past data and analytics to predict demand at centers. The software ensures the right products are in the right places. This allows for quick delivery to customers. 

Other inventory management aspects include:

1- Department-ready freight: This refers to goods that are pre-sorted and packaged in a way that makes them ready for specific store departments. Instead of warehouses having to sort products after receiving them, they arrive organized and labeled, ready to be placed directly on store shelves, speeding up the restocking process.

2- Next-gen fulfillment centers: These are advanced distribution centers that leverage cutting-edge technology, such as robotics, AI, and automation, to process and ship orders faster and more efficiently. They are designed to handle growing demand and offer quicker shipping times to customers.

3- Automated facilities: Automated facilities use technology like conveyor belts, sorting machines, and robots to handle inventory tasks that were traditionally done manually. This increases speed and accuracy in handling products, reducing human error and improving overall efficiency in warehousing operations.

4- Store-based fulfillment: This is a model where physical retail stores act as mini distribution centers to fulfill online orders. Instead of shipping products from large central warehouses, stores close to the customer prepare and ship orders, reducing delivery times and optimizing inventory usage across multiple locations.

5- Integration of sales channels for combined insights: This refers to connecting different sales channels—like online, in-store, and mobile apps—into a unified system. By integrating these, businesses can analyze combined data to gain insights into customer behavior, inventory trends, and sales performance, allowing for more informed decision-making across all channels.

4. Automate fulfillment workflows and consider 3PL partners for logistics

Automated order fulfillment uses software, sensors, and robots in the fulfillment process. It applies to either all or part of the fulfillment workflow.

Such automation helps eCommerce businesses achieve:

• 30-50% higher productivity
• 67% lower picking error rates
• 10-20% higher warehouse space usage.

Here’s what an automated fulfillment workflow looks like:

• No manual data entry; automated inventory management
• Sorting and storage of inventory via real-time recommendations from the system
• Automated shipping and carrier route selections
• Automated picking and packing processes
• Discounts and shipping cost recommendations based on product costs, weight, and final destination. 

Also, 3PL partners in logistics have cut order fulfillment time to under 30 minutes. This helps them use fulfillment centers, even those covering millions of square feet, more effectively.

5. Reassess eCommerce goals based on performance metrics

eCommerce management is a dynamic process. It needs constant attention, execution, and monitoring to drive growth.

One way to do this is to check your KPIs. Analyze performance metrics to understand your current position. 

Following are some important metrics you should look at:

• Customer engagement
• Cost per acquisition
• Click-through-rate
• Conversion rates
• Average order value
• Net Promoter Score
• Repeat customer rate
• Return rate 
• Refund rate

“How often should I analyze these metrics?" you might ask. It depends on your budget, the goals you’re tracking, and the metrics you’re analyzing. 

But you can choose to evaluate them every week, two weeks, a month, or three months. For example, tracking metrics like website traffic and social media use and evaluating them weekly can help you find patterns in changing consumer behavior. 

If you're tracking customer lifetime value or average subscriptions, analyze quarterly. It's a better option.

eCommerce Management Key Takeaways

Ecommerce management involves all aspects of managing an ecommerce business and is a very broad and complex topic. Here are some key takeaways that have the most impact on your ecommerce management:

1- Work with an ecommerce manager: don’t waste your time on guesswork. Hire a seasoned ecommerce manager and lay down the strategy for all the areas of your ecommerce business.

2- Use the right digital platforms: an ecommerce business relies heavily on digital platforms. Some key ecommerce tools you need to use are: eCommerce platforms, inventory management tools, order management systems (OMS), customer relationship management (CRM) tools, payment gateways, marketing automation tools, and analytics and reporting tools. 

3- Manage customer experience: connect your store to a CRM and gather and use customer data to inform your ecommerce strategy. Encourage customer feedback and use it to improve customer experience. 

4- Have the right key performance indicators (KPIs): what are you trying to achieve? Create reasonable milestones for your business and define suitable KPIs to achieve your goals. 

eCommerce Management FAQ

Let su quickly cover some of the most commonly asked questions relating to eCommerce management.

What is e-commerce management?

Ecommerce management is the overall strategy of running, optimizing, and growing an ecommerce business. It provides the strategy for handling all aspects of an ecommerce business from inventory management, to customer acquisition and ensures an efficient workflow. 

What does an ecommerce manager do?

An ecommerce manager is responsible for the operational efficiency of an ecommerce business. They can help set up an overall ecommerce strategy and assign key performance indicators (KPIs). They can focus on any part of ecommerce management including maintaining and optimizing online stores, designing new products to meet market demands, and managing customer experience. 

What is meant by commerce management?

Ecommerce management is the strategy for maintaining and growing an ecommerce business. It involves all the areas that an ecommerce business deals with and ensures all the different parts function properly and in unison. 

What is ecommerce customer management?

Ecommerce customer management or customer relationship management is the process of managing customer relationships and improving customer experience. The process involves using a customer relationship management (CRM) platform that links to your online store and gathers and analyzes customer data. You can then use this data to inform any area of your business from product designing and inventory management to marketing and advertising.