The Modular Approach, The E-merchant’s Dimensions & Metrics: The 4L3P model

The Modular Approach

All major existing e-commerce solutions have chosen this path: a main “core” solution, complemented by a large selection of downloadable smaller programs that extend the core functionality.

It’s a great ecosystem. To a certain extent, one could argue that the entire software industry (Operating Systems and Software Applications) as well as Mobile (Apple and Android) App Stores and even Facebook (and its upcoming own new App Store) have used the same approach.

But when it comes to e-commerce platforms and their “addons”, “modules” and “extensions” (the name varies according to the platform), there is one specific expression that, as a PrestaShop module developer ourselves, we keep hearing from our e-merchant clients, small and large alike: “It’s a jungle out there”.

Many simply do not know which modules are right for them and often purchase and install modules without fully understanding how they will concretely impact their bottom line. And the marketplaces that sell them often lack in structure and categorization to adequately guide and advise merchants through the process of purchasing the right solutions for them.

The E-merchant’s Dimensions

We would argue that truly placing the merchant in the center and knowing which categorization criteria matter most are essential points. Enter the E-merchant’s Dimensions:

• Industry (and its market characteristics)
• Size
• Country
• Functional areas

In effect, we are asking the following questions:

• What are you selling?
• How large is your business? (daily number of orders, catalog size…)
• Where are you located and which country(ies) are you selling in ?
• What part of your business can we help you with today ?

There are of course many additional dimensions that would be good candidates, but if we had to pick just a few, these would be the most important ones in our eyes.

What are you selling ?

This question is essential, because not all modules or Addons are meant for everyone. A module that lets merchants display Facebook Photo Albums might be very useful to a clothing or decoration shop, but utterly useless to an automobile spare parts store. Conversely, some modules are more universal and adapted to almost anyone, such as our Facebook modules for PrestaShop.

It is worth noting that PrestaShop Addons is the only one who has taken this industry factor into consideration, although only for sorting out its graphical themes. Modules, which extend the shop’s functionalities, could definitely use a “tell me what’s good for my products” approach as well.

How large is your business?

Some modules, such as the ones that help automate things, speed up catalog updates and order processing (e.g: bulk update interface tools), will not be of much use to a merchant that is just getting started, with a very low initial volume. They will however become essential once the shop’s sales volume reaches certain critical points.

Where are you located ?

The most obvious categories that come to mind are the ones related to Shipping and Payment. Some, such as UPS and Paypal, are truly global, but many will have country specific offers: Authorize.net in the US and Atos in France in the case of payment, USPS and La Poste, respectively, for shipping. That being said, this can apply to marketing or other areas as well: a given promotional technique may work in one country but not another.

The question…

As illustrated, there are several factors, all critical, one needs to take into consideration when choosing a module. One question remains. And so we ask you :

What part of your business can we help you with today ?

This leads us to our next section…

Business Tech’s “4 Levers and 3 Pillars” (4L3P) Model ®

There is no need to justify the legitimacy of asking a customer “How can I help you today?”, but to help answer this question, we need a simple, yet correct way to sum up e-commerce mechanics in a way that is easy to understand from a business person’s perspective.

So here goes… The following diagram was extracted from our brochure, where we outline our approach as a web agency:

It is our assertion that an e-commerce website’s global profitability can be boiled down to 4 main Levers: Traffic, Conversion rate, Average cart amount and Customer loyalty, as well as 3 main Pillars: Logistics, Promotion and Development.

While levers represent the main opportunities and factors on which a merchant can act to increase revenues, pillars support the online business and allow it to grow, but generate expenses. There are therefore opportunities to act on these as well by implementing functionality that either reduces costs, or saves the merchant time.

• The Logistics pillar includes not only shipping, but additional elements such as payment, insurance, fraud management, order processing and catalog management, activities that all carry a heavy financial or time-based price tag.
• The Promotions pillar is the flip-side of the Visitors lever. Surely, it costs money to advertise, gain visibility and generate traffic.
• Development is a bit of a broader one. It includes of course the costs associated with developing the website itself, but also more concrete aspects like money tied up in inventory and growing one’s catalog and variety of products, structuring processes and staffing the business etc… It also includes all modules related to statistics and business reports, as these provide the feedback loop that is essential to business development.

Taking stock and the importance of metrics

Within this theoretical framework, any piece of functionality provided by a module or addon will serve one or more levers or pillars. Merchants can therefore now look at a module with a structured approach and ask themselves:

• What do I need to work on ? (traffic, conversion rate, average cart, loyalty)
• Does this module seem to be able to improve one of these metrics?
• Is this module adapted to my country and / or to my customers’ countries?
• Is this module adapted to the kinds of products I sell ?

But this approach cannot possibly work if the shop does not have the proper metrics (site traffic, conversion rate, average cart and repeat purchase / loyalty measures) in place. The first thing any shop should check is whether their analytics scripts (e.g. Google Analytics) are properly installed and accurately providing all these measures.

There are much more advanced metrics shop owners could compute for themselves and that e-commerce platforms could provide to their users. This will be covered in another article, so we hope you enjoyed this analysis so far !