E-commerce Partners: The Digital Agency Hiring Guide for VCs
There’s more than one way to help your startups.
Apps and websites are baked into the e-commerce business plan of practically every startup. As startups move past the early funding rounds, the VCs funding and advising them have to ask, “What’s slowing online growth and how can we help?”
A usual suspect in these e-commerce growing pains is staffing. Ramping up a solid internal team takes a while, especially when management roles and product plans surf the taller waves of Series A. Startups find themselves confronting a common trade-off between spending on product and spending on marketing and user acquisition.
Finding a nimble partner at the beginning can help control costs and ensure that you’re establishing a strong product foundation until a company’s internal team takes shape. Experienced developers, UX designers, user acquisition experts, and project managers can provide much-needed stability and deliver product updates on time.
Find an Agency That’s Flexible
Startups vary greatly in the expertise they bring to the table. Some founders are engineers, some favor product management or design, others focus on market research and marketing, and so on.
An effective product partner will be experienced and flexible enough to immediately plug into your most urgent needs, whether it’s front-end development or user acquisition or content strategy.
That flexibility extends to cost too, sometimes you just need a few people, other times you need an entire team to design, develop, and test a site and app. If an agency can’t go lean or be nimble, move on.
More importantly, determine if an outside agency can fit in with an existing product team, understand the product vision, and provide firm guidance and structure without stepping on toes.
Beware False Prophets
When you’re hiring an agency, cost looms over everything. We get it, it’s unavoidable. Startups can feel abstract in the early days, so you don’t want everybody thinking you’re burning cash on something that’s still taking shape.
But beware of outliers that promise the moon and come in with a low estimate. The long-term cost of using a crummy company the first time around is exorbitant and can be a real company-killer. When bad UX and development get in the bloodstream that early, correcting problems later is a challenge. Broken products, broken dreams!
VCs should look at an agency’s longevity and relationships:
- How long has the agency been around
- Do they form long-term partnerships with their clients
- Do they get to iterate on projects and therefore really understand users and their needs
- Does the agency portfolio have a healthy mix of large and small companies
You want to assess an agency’s UX process. How do they get to know users and how do they translate UX insights into better experiences? What’s their idea of a frictionless customer experience? And, can they provide reviews and references, just like an individual who’s applying for a job?
Be Realistic About “Turnkey” Solutions
Please carry grains of salt when considering e-commerce solutions that position themselves as easy and out-of-the-box. Even if your startup is already doing $2-3 million in online sales, chances are you’re going to need a team to help you overcome hurdles you didn’t expect.
There is a tremendous number of third-party applications for Shopify that handle things like wish lists or reviews or shipping calculations. Some we euphemistically describe as “budget quality,” offering limited customer support, wobbly functionality, and infrequent updates.
When these apps are updated they can wreak havoc on the rest of your ecosystem. They need to be vetted, monitored, and often tweaked beyond the original code to fit your customer UX and product fulfillment needs.
Updates can come fast and furious from the solutions providers too. Shopify, Netsuite, and AWS roll out updates big and small all the time (and occasionally unannounced). The potential for things to break, especially if you’re making changes to a live site, can be alarmingly high.
Since We’re On The Subject of Updates…
Get used to them. For some reason, there’s still a perception that digital updates and upgrades are a one-time cost, and that once an update happens a product is finally “done.” But that’s really never the case. No software is that way anymore, really.
Consumer products from Adobe and Microsoft have charged monthly subscriptions for their products for years, and they roll out updates regularly. Ditto for many photo and video editing apps on your phone.
Once you move into the e-commerce space, that principle multiplies. Shopify isn’t a flat fee for a reason. Baking in a regular “maintenance” cost is mandatory, and you’ll save yourself headaches by planning for it quarterly versus ad hoc.
Managing updates applies to product offerings too. E-commerce plans need new products to stay interesting to customers, which in turn requires digital expertise. Are there wholly-new offerings? Are existing product names/lines changing, and are new sizes and colors available? Are new filtering capabilities required since there are more products?
Don’t Sleep On Mobile
There’s a library of articles dispelling the myth that people don’t buy things on their phones. Some estimates put mobile driving 36% of online sales and 58% of all retail traffic.
And yet, that myth persists, maybe because the UX of mobile retail changes so quickly. Or, it could be that the process of getting the web experience right is so time-consuming and cost-intensive, mobile simply becomes an afterthought.
Lockdown has finally changed that perception, and like clockwork, the percentage of mobile purchasing is ticking up every month (especially among younger shoppers embracing “decentralized commerce”).
We’ve also observed changing mobile patterns among customers in loyalty programs. The sharp rise of contactless payments (overall use in the U.S. has increased by 150% since March 2019) will boost mobile purchasing across retail sectors too, in-store and at home. It just can’t be an afterthought anymore.
Think About Customization
Even if a business doesn’t have many SKUs at the moment, room to grow is essential. Customers (especially in sectors like wellness, jewelry, or fashion) want variants, and a lot of them: different colors, sizes, accessories, and add-ons.
Some e-commerce platforms offer a very limited number of product variants. If a startup has highly-customizable merch, find out how many options your solutions provider can offer … and how smooth the UX ride will be for customers.
Even if customization isn’t an essential part of your product plan, you should think about (at least) one or two highly-specific technical “must-haves” the online shopping experience will need as it evolves.
For instance, how will a product fulfillment team’s workflow integrate with a new e-commerce setup? Can a new site handle your post-purchase automation strategy? If your solutions start looking makeshift and jury-rigged, it’s probably because they are. Don’t run from simple solutions to complex backend problems.