Is Your Online Retail Business Healthy?

So you started with an idea to try online retail and today you are an e-commerce businessman. People buy products from you everyday, through your website or an online sales channel that you subscribe to. As you spend more and more time on the online marketplace, your venture starts growing in a complicated manner.

Consider a business to be like a large machine, made up of smaller parts that link together to run it as a whole. These parts can be the warehouse, logistics, marketing, product supply, order management, etc. It is your job to make sure that each of these parts function healthily and in tandem with each other, which results in a steadily growing business.

Of course, there are external factors to consider too – market fluctuations, demand scarcity, competition, etc. These are factors you can’t control, but can only be ready for. So how to measure if your online retail business is healthy and growing? What metrics to focus on? Let’s look at it further in this article.

How to Check if Your Business is Healthy

1. Short Term Metrics (less than a year)

• Sales Productivity

Sales productivity metrics is typically the first thing you would check to see if your business is running smoothly. Good sales means good business. One can analyse sales performance by looking at the market share, product pricing comparisons with the competition, sales data on a particular channel and across all channels. A sales dashboard can come in handy during this process.

• Operating Cost Productivity

Operating costs include the resources allocated in all operational processes of the company. These include product packaging and delivery, server and website costs, rent, warehouse costs, etc. The idea is to check whether maximum efficiency is maintained while allocating operational costs and to weed out leakage of resources.

• Capital Productivity

Your online retail business is working on a capital. This includes your property, equipment, workshop (if you are a manufacturer), inventory, receivables, payables, etc. Here you will encounter whether you are using your company working capital in the most productive manner.

2. Medium Term Metrics (one to five years)

• Commercial Health

Commercial health is a marker for your sustenance and improvement over the years as an online seller. You can quantify your commercial health through metrics like brand recognition, customer satisfaction and regulatory risk. These factors directly contribute to the well being of your organization.

• Cost Structure Health

Cost structure health metrics analyze a company’s ability as compared to its competitors and manage its costs over the next 3-5 years. This is a way of looking into the future to extrapolate realistically the costs that the business would incur and plan them accordingly

• Assets Health

Within one to five years of existence, your business will have accumulated a few assets, both physical and online. From workshops and warehouses to domains and brand names, this is where you check how well you have developed and maintained your assets.

3. Long Term Metrics (More than 5 years)

• Long Term Strategic Health

While analyzing your journey as an online business owner in the long term, you need to check whether you have accurately identified and exploited new areas of growth. Have you incorporated new sales channels? Identified new potential markets? Expanded geographically? Built a mobile application for your product? These are the questions that you will answer while analyzing your online retail business health in the long run.

These are some basic factors that you need to be looking at while analyzing your business’s well being. For any more information or in case of queries, get in touch with Browntape. We are India’s leading multi-channel e-commerce solution providers and we are always happy to help!