Use Building Blocks To Scale An Ecommerce Business - Sellbrite

Use Building Blocks To Scale An Ecommerce Business

I only had two jobs before getting into ecommerce, and both of them were at restaurants. One of those restaurants happened to be a McDonald’s.

I was a little hesitant about working at McDonald’s – let’s be honest, there is a bit of a stigma attached to it. That said…

I’m really glad I worked at McDonald’s.McDonaldsLogo

I spent three great years there working my way up from “crew member” to shift manager. But, what does this have to do with ecommerce, you ask?

Well, I noticed pretty early on that McDonald’s breaks down and documents EVERYTHING. The smallest tasks are documented in a checklist. Each restaurant is broken out into “stations” – dining area, burger flipping, drive-thru, etc. Every person on staff is taught how to work each station so that team members are interchangeable throughout the restaurant.

I believe that’s why McDonald’s works so well and is so scalable. These little building blocks come together to create a successful, sustainable business.

To scale an ecommerce business, you should aspire to build a system of building blocks like this as well.

When I started my own business I decided to take a leaf out of McDonald’s book from day one – I systemized and compartmentalized my entire business from the word go. I split the business out into a number of different processes, and that has helped greatly. By breaking my business down, it made it really easy for me to outsource or hire staff for specific tasks. I have rigid, detailed documentation for every job function, outlining the role and what’s expected of the person performing it. Every new employee reads these documents before being trained on a specific “station”.

How to break things down

Breaking your business into a series of stations or tasks isn’t as hard as you might think. Here’s how I broke mine down:

  • Marketing: We advertise in a number of ways, including PPC, media buying, and so on. I made marketing a task of its own – it’s something I tend to do myself on a daily basis, but initially I did outsource it until I realised I could do a much better job (and I really enjoy it). When I do gradually hire someone to take the reins, I’ll probably split marketing down into three or four separate tasks – because something like PPC requires vastly different skills to media buying, for example.
  • Customer service: Responding to emails and picking up the telephone can be incredibly time consuming. There are lots of agencies and companies who will look after your customer service obligations for you – allowing you to get on with running your business. Initially I outsourced customer service for less than $80 per week, but now I tend to have someone in-house do it. When I had no employees, however, outsourcing to Asia (in my case) was practical, cost effective and a sensible thing to do.
  • Fulfillment: In my business there’s a big divide between office staff who do the day to day administration, and those “on the floor” actually packing orders. It’s good to separate the two, because administration and fulfillment employees tend to have very different traits and strengths. In terms of fulfillment, we have three types of staff. Runners are the people who literally run around the warehouse grabbing stock from the shelves. Packers are the people who verify the runners have picked up the correct stock, and the people who throw that stock in envelopes and boxes. We also have staff who spend their days re-stocking shelves when deliveries come in and complete monthly stock counts to ensure our inventory levels are correctly entered to our inventory management software.
  • accounting: It’s really important to keep on top of your books for tax purposes – it’s also important to keep on top of accounts payable, so your suppliers are remunerated on time, every time. This is another area that can easily be outsourced to a local accountant – it’s also something that can be taken care of in-house, if your business is big enough to justify hiring a full time bookkeeper.

This is obviously high level, and there are lots of other subcategories you can break a business into – but these are just to give you some idea. The bigger your business becomes, the more you can break it down.

Keep tasks in-house, or outsource them?

Once you’ve broken down your business into building blocks, you must decide whether you’ll keep each role in-house, or whether you’ll look to outsource it. In the early days of running my ecommerce business, I looked to outsource as much as possible (particularly the customer service side of things, and also copywriting for product descriptions).

As my business has grown I’ve employed staff and gradually “re-shored” most of these tasks. In fact, one of the only things I outsource still is product copywriting, for two reasons:

1) we don’t have enough products to justify hiring a full time copywriter…
2) my staff lacks training and experience to write killer copy! (and it’s that important)

At McDonald’s, each crew member could do pretty much everything – from taking orders to flipping burgers to cleaning bathrooms. It’s great for that industry, but in ecommerce things are a little more sophisticated and specialized. I didn’t want to rotate staff between these different areas, so when I hired someone to work on the fulfillment side of things, that’s where they were stationed on a day-to-day basis.

How can you learn from my experience?

Tony Hsieh, CEO of Zappos, chose to scale his business. You can too.

If you’re quite happy running your ecommerce business as a “one man band” and you have no intention of scaling up, there’s probably not a whole lot you can learn. If, on the other hand, you have dreams of creating the next Zappos, you can learn a lot.

Big businesses don’t just “happen” – they’re the result of meticulous planning, and of course, innovation. If you’re serious about scaling your ecommerce business into something pretty remarkable, you’re going to have to address the blocks that your company is built upon. By addressing these blocks you can ensure you hire the right people for the job.

Here’s how I built my workforce around my business over time:

  • First, I realized that taking care of the customer service side of things was going to be a tough task – I had anywhere from five to 20 emails to answer daily, and lots of telephone calls. I decided to outsource customer service overseas, freeing up lots of my time to do something a little more productive.
  • Second, I hired someone to help fulfill all of my orders. Picking and packing items is a fairly arduous, unskilled task, and I decided I could spend my time much more effectively by concentrating on marketing or negotiating with suppliers. I hired a part-time packer to take some of the strain.
  • Third, I increased the packer’s hours until he was working full-time for me to cope with an increasing number of orders.

I continued to add staff to my business – including an office assistant, allowing me to “re-shore” the customer service from overseas, bringing it back in-house.

Hiring people can be a daunting prospect, but if you want to scale an ecommerce business, you’ve got to take the plunge sooner or later. You should always recruit staff in a manageable way – there’s no point going from zero employees to ten employees overnight. Training ten new employees would be an uphill battle, and covering the cost of wages would also be a shock to the system.

To conclude…

Don’t look at your business as one big machine, look at it as a number of different building blocks – or stations – that all come together to allow your business to function properly. Think long and hard about what every task should entail within your operation, then write a detailed description of that task. That description can then be passed to your new employees so they know what you expect from them, and it can also be used to train them.

There’s no use hiring ten staff and having them do a bit of everything, ecommerce is just too complex and nuanced. Give everyone a clearly defined task, and have them focus on one area of the business – the attention to detail paid to the task will yield far greater productivity in the long run.

A focused, well-trained workforce allows you to reach unprecedented levels of scale. Perhaps the best thing about documenting every task and having a well-trained workforce is the fact that I could leave the business tomorrow, and I could relax safe in the knowledge that my business would carry on just fine in my absence. If you’re likely to be planning an exit from your business at any time in the future, following the above advice will help you greatly. A business with well-trained employees carrying out clearly defined job roles is a very attractive proposition to would-be acquirers.

Action tips

  1. Assess where your ecommerce business currently stands, and what roles and responsibilities are critical to keep the trains running – if you’re ready to start hiring people or outsourcing tasks, move onto to step two.
  2. Write a detailed description of every task within your business. Take your time and be meticulous, it’s worth it.
  3. Make the decision on whether to outsource your tasks to a third party company or hire someone in-house.
  4. When you employ staff, hand them a job description and give them an area to specialize. Although it’s hard at first, don’t encourage staff to try their hand at every little task in the business.
  5. Rinse and repeat – each time you hire someone new, make him or her a specialist in some area.