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Occam’s Razor; the most important principle in Ecommerce success

Ecommerce, at its most basic level consists of three iterative steps:

  1. Marketing. Compellingly communicating the items you sell to as many potential buyers as possible.
  2. Conversion. Making the online sale.
  3. Fulfilment. Quickly and reliably delivering the order.

Each of these component parts of ecommerce can be relatively simple or they can be relatively complex. Inside every ecommerce business, those charged with its day-to-day operations should be looking for ways to avoid complexity. To make this process as effective, efficient and profitable as possible each ecommerce component should be as simple as possible.

While simplicity and complexity can be thought of as abstract ideas, it turns out they can also be expressed at the level of pure logic and as mathematical formulations. This relationship between complexity and simplicity was first seriously studied by William of Ockham.

Background to Occam’s Razor

William of Ockham (or Occam) was a 14th century Franciscan Friar who studied logic. His great insight was to take his own ‘Law of briefness’ (lex parsimoniæ) and formalise it as follows:

Suppose that there are two explanations for something. The explanation that requires the least speculation is invariably better. The more assumptions you have to make, the more unlikely it is to be right. This is called Occam’s Razor. The term ‘razor’ means a principle, heuristic or rule of thumb.

This formalisation takes a general opinion that ‘simple is good’ and translates it into something that can be tested/logically applied.

Personally, I view this as the deepest and most powerful single idea in science, technology and life in general.

Examples of over-complexity

Proposal Bloatware

In our view, the most effective business proposals are invariably the ones that focus around the Minimal Viable Product (MVP). These are usually the most effective because they should result in systems that cost the least money (lowers risk). Also, they can be delivered in the shortest time (which gets you trading quicker).

We regularly find ourselves trying to talk clients out of overly complicated proposals. These include whistles and bells that result from the client asking others for a wish-list of functionality. This can also happen when the proposal is to migrate an existing ecommerce business website. Clients may then want the new site to include all the functions that exist in the old site. This is true even when several of those functions add nothing of value to the site. The task here is to look at each item of functionality and either through discussion or analytics look to find ways to simplify the new project functionality.

Too many websites

Running all of your business operations using a single website is much simpler than using several websites. Any solution involving multiple websites will cost more to build, host and maintain as well as taking longer to develop than a single site. Business owners can sometimes think that by having more websites with different brands they will be able to create more sales. In practice, the opposite is usually true. Costs at all levels are higher with multiple sites. Equally, by splitting the marketing resources across multiple brand websites you dilute the ability to gain traction and potentially dominate a market niche. Conversely, consolidating multiple websites into a single brand domain invariably leads to an increase in sales and profits for the client business.

Splitting B2B and B2C across different channels

Some companies use different websites for their B2B and their B2C operations. More often than not, this is a bad idea. As well as multiple sites costing more at every stage, Separating the two is usually pointless. Unless there are compelling reasons for separation, then every manufacturer/brand-owner should keep the two together. Just because somebody buys one of something doesn’t necessarily mean they are a B2C customer. Just as likely, they may be a B2B customer out looking for a sample. With a single site all you need is a login for trade customers where they can directly purchase in volume. This then takes place from a given range of products at a given range of prices along with a different payment method.

Internationalisation & translation

One area where business owners often believe that they need to complicate their business is when selling into overseas markets. They can be misled into thinking that to sell products to places like Germany or France they need to build versions of their website on a .de and a .fr domain. This is wrong. It’s (a) unnecessarily expensive and (b) is less effective in terms of SEO. The diminished SEO results from losing domain rank.

The correct approach is to have the international sites cannocalised to URLs such as https://www.ford.com/de/ or https://www.nike.com/fr. Conversions may be a bit higher for a .de site that is written in German. However, provided the site provides prices in Euros, delivery details that are specific to Germany and making it clear that delivery there is straightforward then conversion loss may only be minor. If the loss of profit due to a slightly lower conversion is less than the cost of building and maintaining a dedicated German site then don’t build the dedicated site. For the majority of businesses, this simple approach will be quicker and easier to implement and will ultimately provide the best Return On Investment.

Minimal Viable Product

The Minimal Viable Product (MVP) is a way to consider the simplest possible system that works. The MVP is different for the client and for the supplier. The client MVP is based around an analysis of the core business activities that result in sales. The Supplier MVP is likely to include an additional set of functionality. The supplier knows that the vast majority of clients need/value the functionality even if they are not part of the client MVP. The supplier is likely to provide a package that does more than what the client typically needs in their initial build. Defeaturing this supplier MVP is likely to be more costly than simply accepting the supplier bundle with all the key functions included.

entropy function

When to add complexity

The simple answer about when to add complexity is ‘when you really need to’.

A simple business model for your website and its marketing is based on treating potential users in the same way. As your business matures and you get more customers, the customers can be segmented in different ways so that you can ever better address their requirements. Each segmented part will need to be treated differently if it is to be optimised. This means complicating the business model in terms of marketing, conversion or fulfilment.

If as a result, this makes you more profit and the profit earned is more than the cost of implementation then it’s the right thing to do. This will show up as ever more channels and options  in your marketing as well as increased functionality in the way the website works. The key point for the website, you should only add to the basic functionality when there is clear evidence that the result is that you will make more money. The same approach should be taken to both the marketing and to the ecommerce fulfilment.

Two Quirky Footnotes

  1. The inventor of algorithms and originator of what we now call computer programming, Ada Lovelace, once lived at Ockham Park in Surrey right next to where the famous friar had also lived.
  2. During the 1980’s I was part of a group working on military software projects at the Turing Institute. The military-standard language we had to program in was called Occam. For the record, it was far from simple. It was tedious, inefficient and took at least twice as long and cost twice as much to develop compared to alternative languages such as C++.