This financial crisis and current down economy affects all companies in some way. Many companies are now trying to do everything to reduce costs and streamline their business. Now e-retailers need to go back to basics and build a solid structure

Increasing sales on an e-commerce site can be done in three ways: 

1. Increase traffic 
2. Sell more to costumers that are already buying
3. Increase conversion rate

Drive Traffic

This theory is based on pulling in as much visitors as possible to the e-commerce site. This is can be done through banners, sponsored links, search engine optimization affiliate program. This type of pull marketing costs some money per visitor or costumer, depending on how you measure. To maximize sales by this approach requires the system to efficiently add, modify, remove and test the effect of the campaigns. This approach is short-sighted and the changes you make are direct and have no long-term effects on your profitability.

Merchandising

With merchandising, I mean how to optimize product management and display of various products to the visitor and create a buying spirit. The key is to sell more to those who already have bought, or to sell products that have a higher profit margin. In regular e-commerce terms we usually call this ”cross and up sale”. Cross sale is to show accessories or complementary products to the goods or products the customer already has in his or her basket, usually this is displayed in checkout process and on the product display pages. Up-sales are when you display additional products that are more expensive, or where e-merchants have a better margin. This is now with modern technology automated in a very intelligent way and there are infinite variations that can be tested to achieve the best results. A further step to increase the order value is to apply behavior-based merchandising. This can be done by automatically analyzing how visitors enter the e-commerce site, which products they are looking at and aligned with this behavior you can present relevant products.

Increase conversion rate

Conversion rate has for a long time been the golden ratio for e-retailers. It may be obtained by dividing the total amount of orders with the number of visitors during a specific time. What affects the conversion rate for an e-commerce site is really all an e-retailer is doing or not doing. It may be how the navigation is built into the color or the size of the buy button. Here there are always things to improve. A small detail that usually does not cost as much in investment can still affect the sales result significantly. The impact of increasing the conversion rate is long-lasting compared to buying traffic to a e-commerce site. Having a process for continuously working to optimize the conversion rate will both increase sales directly but efforts will affect sales in the long term.

Conversion pyramid

To become a successful e-retailer you have to work with all these three parts. You cannot just optimize the cost of driving the visitors to the site because if you cannot convert visitors into customers you do not earn any money. The same is if you only focus on optimizing the site so as to convert in the best possible way and you do not have any visitors there will be no high sales.

To succeed with e-commerce sales you will have to build a solid structure. Your first task will be to optimize the conversion rate so that the visitors that are on the site achieve what they want. Hopefully it is in line with the business goals for the e-commerce site and usually this is sales. After you have optimized the e-commerce site so that the visitors will buy, find and accomplish what they want on the site you should take a look at what I call merchandising. That is how you can get those who want to buy on your site to buy more, or buy products that have a higher profit margin. Then you have become a master in merchandising and only then should you drive traffic to your site.

Exponential profitability

By first focusing on converting visitors into customers and creating a solid base which, in turn, optimizes and enhances the efficiency when you want to persuade customers to buy more or buy something else. It goes without saying. If you cannot get X number of customers to buy at all, how can you get them to buy accessories, additional goods or any other product? However if you have optimized the site with a focus on getting visitors to convert to buyers, there are great opportunities to get them to buy something else or better yet, get them to spend more money on every transaction.

When you have these two parts in place it´s time to add gunpowder on your marketing efforts and get traffic to your site. Then any visitor will be much cheaper because you convert more visitors into customers. This creates an exponential curve of the profitability of your e-commerce site when you look at the ROI on all costs spent on increasing sales in an e-commerce site.

Abstract

I do not mean that you should stop optimize your search phrase in your sponsored links, terminate your affiliate network or stop optimize your cross sale and up sale impressions. If you want to create a successful and profitable e-commerce business in these difficult times you will have to focus on the right parts and with the right allocation of resources and investment. Do this gradually and in a structured approach. What is better when we talk structure than to describe this by using one of the military’s most-used rhetoric approach:
Initially get as many visitors as possible to convert to buyers.
Then get them to buy more or buy more profitable products.
Finally, drive more traffic to your e-commerce site.
Prepare to administer more orders than you have ever dealt with.