E-Commerce Essentials: Managing Security, Financing, and Performance in 2023
By Thomas Miranda, Partner, Assurance Services
E-commerce is a lucrative channel for consumer product companies, as it offers access to a large and diverse customer base, convenience, variety, personalization to customers, lower operational costs, and higher profit margins. However, participating in E-commerce also raises many challenges, involving cyber and data security, customer experience, obtaining traditional financing, and creating a platform for accurate data analysis based on key performance indicators. Here are some of the top E-commerce issues that consumer product companies need to be aware of and how to navigate them:
1. Cyber and data security
E-commerce involves the collection, processing, and storage of sensitive customer data, such as personal information, payment details, or purchase history. This data is vulnerable to cyberattacks, data breaches, or identity theft, which can harm customers and damage the reputation of consumer product companies. To protect customer data, consumer product companies need to implement robust security measures including encryption, authentication, firewalls, and antivirus software. They also need to comply with data privacy laws and regulations, such as the General Data Protection Regulation or the California Consumer Privacy Act, and inform customers as to how their data is used and protected.
2. Obtaining traditional financing
Traditional financing, such as asset-based lending or factoring, often requires E-commerce companies to provide collateral, such as inventory or accounts receivable, to secure the loan. E-commerce companies typically don’t maintain enough collateral to qualify for these traditional financing facilities. However, there are new age financing products that have been developed to help E-commerce companies finance their operations and working capital needs. These new facilities are generally trend based and provide capital using a formula tied to various Key Performance Indicators (“KPIs”).
3. Measuring KPIs
E-commerce companies need to implement and analyze KPIs to measure and improve their online business performance. KPIs are quantifiable metrics that reflect how well an E-commerce company is achieving its goals and objectives in terms of sales, marketing, customer service, and operations. By tracking and analyzing KPIs, E-commerce companies can gain valuable insights into their strengths, weaknesses, opportunities, and threats, and take data-driven actions to optimize their strategies and processes.
However, implementing and analyzing KPIs is not a simple or straightforward task. E-commerce companies need to consider various factors, such as their business goals, growth stage, industry standards, customer expectations, and data quality and availability, then use this data to consistently recalibrate their goals and operations.
The above items represent three of the main issues affecting consumer products companies in today’s E-commerce landscape. Navigating these issues can be challenging. However by maintaining a secure platform, obtaining the right financing for your E-commerce business, monitoring your KPIs, and remaining open to re-calibrating your operations based on KPI data, you will be able to minimize market disruptions that can affect your E-commerce business.