Annual planning
Planning for a new fiscal year in eCommerce Sales and activities related to online sales should be part of any company’s new fiscal year planning to ensure achievement of desired results.
How do you plan the business of your web shop?
Once the web shop is completed, you have a well-established team and satisfactory results, one of the most challenging tasks of the web shop manager of the year is planning.
This article provides an overview of best practices for planning your web shop’s business, in several areas:
– Financial planning
– Planning of income
– Expenditure planning (costs are divided into marketing, operating costs, fixed costs and others)
– Plan activities and resources needed
– Marketing activities
– User support
– Operational activities
Web shop as a separate business unit
When planning the new fiscal year, it is advisable to consider the web shop as a separate business unit or cost center, as it differs significantly from other sales channels.
The differences can be seen in the business processes themselves, in the way they advertise and monitor efficiency, but also in the skills that employees must have in order for a web shop to be successful.
In large companies, the planning process is very comprehensive, strictly defined and systematic, and forms the basis for evaluating results throughout the year and rewarding employees.
In medium-sized companies this is also the case, but depending on the type of manager in the company, planning may focus on only one part, for example, financial indicators.
For smaller companies, the focus is on revenues and costs, and the planning period is sometimes shorter than a year (quarter or month).
Financial planning
The simplest framework of profit planning is the plan of income and expenses (expenditures) by month.
How to plan an income?
For each month it is necessary to estimate the income (excluding VAT) from the sale of goods. Consider the following when planning:
Assortment – if the assortment is fairly uniform, it is sufficient to estimate the total sales and multiply it by the average margin to get the price difference you will make. If you have several different categories on offer, plan the revenue for each category separately. This is useful not only for planning purposes, but also for negotiating with suppliers.
Seasonality – depending on the range of goods, there are bound to be periods of the year when sales are higher or lower. In order for the planning to be of good quality, it is not enough to divide the planned annual sales into 12 equal parts. For each month, estimate how much sales are possible, and finally combine the numbers to get an annual figure.
This is a good test of the “logic” of the annual plan – if you arrive at an unrealistic number for most months when breaking down the projected annual sales, you should turn on the red light!
Also, in some months the average margin is lower because old stocks are sold out (seasonal sales in January and July) or customers are offered attractive offers (Black Friday, Xmas). Include this in the plan, because higher income does not necessarily mean higher earnings.
Competition – We assume you have been tracking your competition over the past year – what’s their offering, what’s the momentum and scope of their discounts and campaigns. If you plan to increase your revenue, your competitor’s customers are a source of that increase. So plan your revenue (and more importantly, your margin) in relation to what your competition is doing.
Good to keep in mind
In addition to revenue from the sale of goods, some web shops also generate other revenue. This mainly involves the marketing investments of the vendors, i.e. the budgets that brands allocate to promote their products in web store campaigns. Since you will be tracking the cost of this advertising on the expense side of the plan, plan your budget on the revenue side of the plan.
The sum of the difference between the price you make and the budget you receive from the vendor is the “positive” side of the financial plan. When you subtract all realized costs from this number, you get a profit, which is EBITDA (earnings before interest, taxes, depreciation, and amortization). This is a number that you can influence in a commercial sense – by purchasing goods, setting inventories, prices, adjusting campaigns.
Revenue monitoring
At the end of each month, do a simple calculation of revenue – from your business system (ERP or CMS web store if you work directly with it) extract the sales figures and enter them in the financial plan table and continue with the planned figure. In case of variance:
– If the variance is positive, i.e. you have achieved more than planned, this is certainly good news, bravo! But if such a variance is repeated 2 or more months in a row, it is advisable to revise the rest of the sales plan so that the plan makes sense.
– If the deviation is negative, i.e. the results achieved are not at the planned level, this is a sign that you should investigate the cause of the failure.
– In case the deviation from the plan is small (a few percent), do not worry – you are doing a good job, but try to find places where you can achieve those few percent more.
– If the variance is large, analyze in detail all the assumptions you started the planning with and find the cause. The answer is never ‘it’s just because’, the reason is always there, you just need to identify it and find a way to solve it.
Monitoring revenue is also important for monitoring cash flow, especially for businesses that are in the growth phase where larger inventory is needed for the upcoming period and are about to hire more employees. These are the two most common cases where it is necessary to spend money up front and wait a while for those funds to come back into the account through increased merchandise sales.
Expenditure planning
In this section, we cover all other costs incurred in the operation of the web shop, except for the purchase value of goods, which is indirectly already included in revenue planning.
Expenditures are divided into: 
1. Marketing costs
2. Operating costs
3. Fixed costs
4. Other costs
1. Marketing costs
Digital marketing is at the heart of any eCommerce business. Tracking metrics and adjusting campaigns to drive optimal conversions will achieve the goal: a profitable online business.
Plan your marketing spend on a monthly basis for the different advertising channels. The most common channels are:
– Google advertising
– Facebook and Instagram advertising
– Email marketing (newsletters)
– PR (paid articles on portals)
– SEO optimization
– Comparison sites
– Affiliate marketing (commissions)
Also plan the costs for the agencies you work with. Enter fixed monthly amounts and estimate variable amounts depending on your advertising budget.
The sum of these costs does not necessarily equal the amount of marketing budget you receive from the provider. A company may even invest more if a conversion to a sale warrants it.
2. Operating costs
The operating costs of the web shop depend on the sales achieved. That is, for each additional product sold, these costs increase.
These are primarily:
– The cost of cards and other means of payment
– Costs for shipping
– Costs for consumables (packaging – bags, boxes…)
Cardholder costs can be estimated using last year’s data. For planning purposes, it is sufficient to take the average cardholder cost (%) in relation to total sales. The same applies to the costs of other payment platforms (e.g. PayPal, cash on delivery).
We look at the cost of delivery here in relation to the total amount of bills you receive from your courier at the end of the month. Postage charges from customers (or all customers) are now irrelevant, as revenue share reflects this.
The cost of consumables relates to packaging boxes and bags, protective film, tape and other materials necessary for the normal operation of the business.
3. Fixed costs
Fixed costs include:
1. Space rental (office space, warehouse, pick-up points, showroom).
2. Salaries of employees – if your company’s employees work more and spend only part of their working time on the web shop, this item includes a proportional share of the 3. Cost of their salary (e.g. 50% of the cost if they spend only part of their working time on the web shop)
4. Monthly maintenance of the web shop, hosting and support
5. Fees for various tools and software used in the shop (e.g. dynamic pricing, ERP, design tools, price tracker, etc.)
4. Other costs
Other costs include:
1. Completion of the web shop – the web shop is a living organism that is constantly growing and evolving, so it is good to plan for completion costs at the beginning of the year.
Track the competition, listen to the profession, and analyze eCommerce and digital marketing trends closely. With each refinement, try to estimate how much the increase in traffic will bring. For example, if you find that 50% of customers abandon at checkout, it is obvious that it needs to be optimized. If the refinement brings 5% or 10% less abandonment, that’s already enough to cover the cost of the checkout redesign.
Another thing we want to mention here – trends change. Something that worked perfectly 2 or 3 years ago may not be ideal today. In this time, not only the habits of customers have changed, but probably your brand, your portfolio, so the web shop needs to be adjusted and the necessary modules added for business optimization.
2. Promotional gifts – during the holiday season
3. Employee training – online courses, conferences
4. Professional association memberships – professional associations such as eCommerce Europe or similar.
Plan the activities and the resources needed
After financial planning, it is time for operational planning – a listing of the scope of activities that need to be carried out to achieve the financial plan and the resources needed to carry out these activities. We divide these activities into 3 groups:
1. Marketing Activities
2. User support
3. Operational activities
Marketing Activities
Ask yourself the following questions:
1. How many campaigns do we run per month?
2. How long does it take to prepare a campaign? 
3. Do we plan a campaign in advance or do we work ad hoc?
4. Do we measure the success of each campaign?
5. How many newsletters do we send out?
6. What amount of content do we create (blog, video, testimonials)?
7. How many times do we post on social media?
8. How often do we optimize basic advertising (Google, Facebook)?
9. Do we have a consistent strategy across all advertising channels?
10. How do we drive traffic to the web store?
11. How to create a marketing plan?
Formalize the plan
Formalizing the plan for marketing activities can also be done in tabular form on a monthly basis. The time unit can be a different one if it suits your industry better, for example, quarterly or even weekly. Plan for each month:
– Number and duration or term of the campaign.
– Scope of the campaign – advertising channels and materials to be created accordingly (banners, texts, graphics)
– Number of blogs to be written and published.
– The planned number of new followers on social media and activities to reach them
– The projected number of new newsletter recipients and how to attract them
– Translate all this into man-hours to check if it is realistic that all planned activities will be carried out, if you need reinforcements in the team and for which specific tasks.
Consider hiring occasional help for your team, such as business or marketing students who are eager to jump at the opportunity to work on a real project and can be your lifeline during periods of high workload when they are free, such as during the summer or holidays. By employing the same person for an extended period of time, you may be building a future member of your team.
The role of the agency in business
Many companies use the services of a digital marketing agency for tasks for which they have no competence in their own team, and it is more cost-effective to leave it to experts. And in most cases, that’s a good decision.
But let us not forget that every agency needs information to get good results. Lots of information that is timely, structured and of high quality. Therefore, determine who in the team is responsible for communicating with the agency and clearly define the responsibilities of this person. We recommend dividing the tasks into 3 groups:
1. Preparation of campaigns and activities
2. Implementation of activities
3. Analysis of activities and efficiency.
Make sure that the person responsible for communicating with the agency has the necessary skills. For example, he does not have to be an SEO expert, but he must know what is important and what to work on.
Customer care activities
A larger number of realized orders brings a larger number of customer inquiries, complaints, and returns. This is one of the most important factors in the success of a web store, and even though it may not seem measurable, it is. How do you plan customer support activities?
If you have not already, introduce metrics
Create a spreadsheet with a summary of the number of inquiries received across all communication channels (phone, email, social media, written, in-person). Put these numbers in proportion to the orders placed. Use this ratio to estimate the number of inquiries relative to the projected number of orders in the new year.
Estimate the number of complaints and returns in the same way. In this case, an additional activity is to coordinate with the warehouse and/or logistics to physically process the returns. Putting these numbers into the time frame will give you the amount of work required to satisfactorily respond to each request.
Set standards for customer support. For example, the maximum response time to an email sent by a user or to a message or comment on Facebook. Make sure your customer support agents realize how important this is and the value they bring to the company. Offer them an added bonus if they reach a goal when communicating with customers, whether it’s a positive review on social media or an up-sell on an existing order.
Introduce customer satisfaction measurement. Use this information as motivation, but also as a reference point for evaluating the work of customer support.
As part of the Shipshape eCommerce solution, there is a Common Inbox for the joint resolution of user requests received through all communication channels, as well as a Helpdesk module, i.e. a ticketing system that ensures that no requests remain unresolved.
Operational activities
From order to delivery, operational activities include all tasks necessary to realize the process. Specifically, these are:
1. Procurement activities – updating the availability and price of goods, listing new items in the assortment, sending orders to suppliers, organizing the collection of ordered goods, preparing documents (receipts, stock records), processing financial documents (invoices, quotations, permits).
2. Warehouse and logistics activities – receiving and preparing goods (taping statements), processing orders, preparing goods for shipment, packing and shipping (addressing packages); receiving refunds, processing refunds.
Based on past activities, realistically determine the maximum activities an employee can perform, e.g.:
– How many orders can you process per day? 
– How many packages can you pack per day?
If adding a new person to the team costs you beyond the limits of profitability, something in the business process needs to be optimized.
Make sure your resources and their skills match the promises you have made to your customers
For example, if you state that delivery will be within 2 business days, you should have backup in stock during busy periods (Black Friday, holidays) or on Mondays when weekend orders are processed.
Alternatively, change the promised delivery time to 4 or 5 working days – customers will adjust their expectations and staff will be less stressed.
No matter how good the marketing strategy and web store assortment, if the operational processes are not in order, customers will not be satisfied, will not buy again, and will not recommend you to others. You are actively working to prevent this from happening.
Are you ready for the planning process? The planning process is not easy, but it has been shown to be necessary and useful for any business, including any department. Successful planning requires the following:
1. A person responsible for planning who is involved in the web store sales process and has the authority to make decisions on a day-to-day basis, usually the web store manager.
2. Involve all team members in the planning process – this encourages accountability and greater commitment to the work later on
3. Monitor the implementation of the plan regularly, with clearly defined rewards for implementation and consequences for non-implementation
4. Remember that operational planning is just as important as financial planning, so keep a paper record of all processes in your online business.
In conclusion, we hope that this article will help you achieve successful business of your web shop in the new business year, and for all of your financial tracking and invoices contact Invoice Crowd team.
