Online Retail Success Factors

Online retail success factors are those issues that every online retailer needs to pay attention to in order to survive and grow their businesses in the online channel. Although it is relatively easy to open an online shop and start trading, the fundamentals of strategic business management remains the same, albeit in a different channel.

After all, you’ll still need to ask the following questions and get the answers about the future of your business:

  • Where are we now?
  • Where do we want to be?
  • How are we going to get there?

If you’re planning to start an online retail business from scratch, you’ve probably already weighted its pros and cons against that of opening a physical shop. Ajeet Khurana, writing recently in The Balance, has listed the advantages and disadvantages of eCommerce:

Advatages of eCommerceDisadvatages of eCommerce
Overcome Geographical LimitationsE-commerce Lacks Personal Touch
Gain New Customers With Search Engine VisibilityE-commerce Delays Goods
Lower CostsMany Goods Cannot Be Purchased Online
Locate the Product QuickerYou can't Experience the Product Before Purchasing
Eliminate Travel Time and CostAnyone Can Set Up an e-Commerce Website
Provide Comparison ShoppingSecurity issues
Enable Deals, Bargains, Coupons, and Group Buying
Provide Abundant Information
Create Targeted Communication
Create Markets for Niche Products

Referring to the table, the advantages of online retailing outnumber the disadvantages almost by 2:1. So it seems that business success is guaranteed with online retailing. It’s just a matter of how quickly you can open your shop… But wait, that’s really not that simple.

The reality is that the advantages of online retail can only come good if you know how to, and, you’re able to achieve them. For that reason online retailers should know what the online retail success factors for their businesses are.

Indeed, you need to identify the key success factors for you online retail business.

What are key success factors?

Key success factors (KSFs) are key elements that can be used to understand customers’ needs and, at the same time, reflect on the resources and competencies necessary to satisfy these needs 1. Indeed, KSFs are usually three to five areas that a company has identified to focus on, in attaining its vision.

For example, KSFs for online retailers may be:

  • To have a user-friendly website;
  • Delivering products within 48 hours of purchasing; or
  • Engaging with customers on social media, and so on.

One thing is certain; your KSFs need to help you achieving the vision of your business: “Where do we want to be?”

The vision of your business may be ‘to be the most popular online apparel shop on the net.’ Will it be attainable?  Remember; when you’re entering the online marketplace, there will be millions customers waiting for you. And, unfortunately, so will thousands of competitors…

This implies that the firm should identify who its customers will be, determine their needs, and establish the basis on which they select the offerings of one supplier over those of another.

How to determine the key success factors for your online retail business

Now you need to determine the areas (key success factors) for your business to achieve your vision. The process of identifying the key success factors for your online retail business is shown in the figure below.

Figure: Identifying key success factors 1

Key success factors concerning your customers

The customer is the foundation of any business’ success. After all; without customers you’re online retail business won’t exists. You need to find out who your customers are, and what they want.

You’ll probably find the KSFs for your online retail business if you’ve:

  1. Identified a niche market – i.e. you know who and where your customers are;
  2. Offered them products and services that help solve their problems or that make them feel good;
  3. Made it easy for you customers to find your shop that then give them a great experience when they’re visiting your user-friendly website;
  4. Given them all the information they need about the products – especially what value they will get from them;
  5. Personalized your interaction with your customers by making use of customer data;
  6. Ensured prompt delivery of products and have a fair product return policy in place.

However, your customers’ behaviors, motives and perceptions are not cast in concrete. In fact, they may change back and forth as technology and the environment affect their preferences. Thus, identifying the KSFs of your customers should be an ongoing process.

Key success factors competing in the online marketplace

  • What drives the competition?
  • What are the main dimensions of the competition?
  • How intense is the competition?

Your retail shop has competition in the online marketplace. In fact, numerous competitors with equal or similar products than yours are vying for the same customers.  This intense competition puts pricing under pressure and increase the bargaining power of customers. The end result may be a huge decline in margins. So you need to identify the key success factors that will help you to compete effectively in the online marketplace.

Identifying the internal key success factors that your business needs

Does your retail shop have the internal material and immaterial resources to gain a sustainable competitive advantage in the online marketplace? You can use resource-based analyses to identify your business’s strengths and weaknesses 2. In the following the (a) Financial, (b) Human and (c) Organisational resources are regarded.

  • Financial resources. A key success factor for your online shop may be to do cost effective business. In fact, doing things cheaper is one of the main advantages that your shop will have over its physical counterparts.
  • Human resources. Getting people that have the skills, knowledge and experience that’re needed to succeed in the online marketplace is difficult. A key success factor here may be to identify talented people, to train them and to keep them.
  • Organisational resources. You need to make it as easy as possible for your customers to do business with you. A low organisational complexity level produces a high flexibility, quickness and marketability 2. The processing composed of order taking, delivery of goods, returns processing and complaint management has to happen very customer friendly and service-oriented.


The online retailing industry is reaching the maturity stage of its industry life cycle. Or that is the forecast for the UK market at least (Yuecel Yelken, LinkedIn). For that reason the extraordinary fast growth of the online retail industry will eventually start to slow down. Customers will spend less money and will become choosy; which is bad for your online shop’s bottom line.

It’s now the time to identify the key success factors you need to stay ahead of your competitors. Or, you may just copy what is now doing…

Read more: How Retailers can Remain Competitive during Turbulent Times

A Marketing Plan helps you to communicate the right content to the right audience.


1 Neves, M.F., e Castro, L.T. and Cônsoli, M.A. 2010. Marketing methods to improve company strategy: Applied tools and frameworks to improve a company’s competitiveness using a network approach, Routledge.

2 Klumpp, M. and Jasper, A.  2008. Success Factors for Retail Logistics in an E-commerce environment, Sineuropean Engineering Research Journal, 1:63-68.


Feature image:

Figure in post:


Published by

Douw G Steyn

Management consultant, blog writer, dreamer

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