7 Stages of E-Commerce Product Strategy – A Complete Guide

Your customers interact and engage with your brand because of the products you sell.

And this is why the importance of a robust eCommerce product strategy cannot be underestimated.

Building a product without a proper product strategy is like cooking without knowing the recipe and the ingredients to go in it.

While it may succeed sometimes, there is a higher likelihood of failure. Hence, when you have a product strategy in place, you are not solely relying on your instincts and instead have a proper direction to follow.

What Is A Product Strategy?

Simply put, a Product Strategy is a roadmap for your product. It helps you to differentiate your products from that of your competitors and gives your customers a reason to choose you every time.

A successful eCommerce product strategy should explain the following:

  1. Who will use your product?
  2. Why will your customers choose your product?
  3. What steps are you taking to develop the product?

A Product Strategy should typically cover:

  • The Product Design
  • Key attributes
  • Quality
  • Branding
  • Target Audience
  • Market Positioning

It should also complement your brand and align with your company’s vision and the overall product lifecycle.

According to a study, 70% of businesses refer back to their Product Strategy when making key decisions.

Why Is A Product Strategy Beneficial For Your Ecommerce Business?

In this highly dynamic eCommerce marketplace, it is imperative to build a strong eCommerce product strategy for the following reasons:

It Gives You Clarity

A Product Strategy helps you deliver a solid and well-thought-out plan for your product development team and your business. It also helps your customer-facing teams gain a better understanding of your products which will help them deliver a satisfying customer experience.

It Offers You A Clear Roadmap

It is easier for businesses to deliver on their promises if they have a clear roadmap of their product offerings. It helps teams to stay on track and report variations from the plan by flagging them at the right time.

It Helps In Strategic Business Decisions

A Product Strategy will be your single point of reference in key product decisions like new product launches, product developments, or while creating product variations. Since the document accounts for uncertainties, you will always end up making better decisions while keeping contingencies in mind.

Components of Product Strategy

The Market

In order to create a product, you would first need to have a thorough understanding of the market, your target audience, their needs, and challenges. Hence, a good product strategy should always take the Market into consideration because that will help you position your product better.

The Foundation

Once you understand the basics of your target audience and buyer persona, the next important component is to build a robust roadmap to develop the product. You need to lay out the specific challenges that your product wants to address.

The Execution

After planning comes execution. This is the component that draws out the entire plan in a structured and organized format and includes time-bound, smart, measurable objectives and goals.

Stages of eCommerce Product Strategy

Let’s look at the seven stages of an eCommerce product development strategy.

Product Ideation

Every eCommerce business starts with a product idea. An idea that promises to meet the needs of your target audience is always the foundation for a great product idea.

Product ideation can happen in a variety of ways, and one of the most effective ways is by gathering information or feedback about existing products from your target audience.

Determine Demand

Once you have narrowed down what you are going to sell, the next logical stage is to determine the demand for it. After all, you do not want to sell a product that is not in demand.

This is the stage where you would need to do a thorough market and competitor analysis to ascertain the demand for the product. A few ways in which you can do that are:

  • Customer surveys
  • Pre-orders
  • Crowdfunding Campaigns
  • Analyzing online Search Trends

Create a Prototype

Prototypes are a very important part of any product development. Prototypes help you to test the design and usability of the product and help you see the defects or shortcomings.

Although this stage will vary according to the nature of the product, a prototyping process will include the following stages:

  • Sketching the idea/product – This helps to visualize the product and details out main components of the product and how it will be used or what it will be used for.
  • Digital Prototype – This will involve a 3D rendering of the product that will allow you to view the product from different angles. A digital prototype will allow you to see the item in more detail and refine it before creating the physical version.
  • Physical Prototype – The next stage is to create a physical prototype. Typically, you will need an engineer or a prototype designer for this stage. There is no limitation as to the number of variations you want to create as a physical prototype. Creating multiple product variations will enable you to compare and test the different variations and go with the one that works best.


This is the stage where you test your prototype on your target customers. They should be able to test the prototype and provide you with their feedback.

Actual Product Development

Once you have tested your prototype, you are now all set to develop the actual product. This is also the stage where you determine your manufacturer or supplier.

Trade publications and Business Directories in your industry should be able to list manufacturers. Some things you need to discuss with your potential manufacturers are:

  • Turnaround time of production
  • Payment Terms
  • Minimum Order Size
  • Contingencies like delays and special circumstances.

Launch The Product

A successful product launch should be a powerful combination of the right time and appropriate marketing initiatives (like email marketing, Facebook Ads, paid search, etc.).

It should be able to make a strong first impression on your target audience. Leverage different marketing tools available to you to make your product launch a mega online event.

Gathering Feedback

Your product development strategy shouldn’t end with the launch. Gathering customer feedback and collecting reviews is what will tell you whether the launch was a success. There are different ways in which you can gauge that.

  • By looking at Product Ratings & Reviews – The insights that you gather from product reviews can be really impactful and one of the most valuable sources of feedback.
  • Social Listening – Listen to the online chatter and try to find out what your customers are talking about your product. Analyze the Star Ratings your product is receiving and try to engage with customers who have not given you a high rating.

Types of Product Strategies

Cost Strategy

The objective of the cost strategy is to create the best product at the least cost.

This strategy analyses your available resources and determines where you can save in manufacturing. 

This may prove to be an ideal strategy for products where customers often don’t prioritize loyalty for a particular brand. Low-effort purchases like household cleaning items can be an example.

Differentiation Strategy

There are different ways other than price to make your product stand out from the crowd.

The idea is to create a strategy that distinguishes your product from competitors based on some unique attributes or revolutionary features. It’s this strategy that personifies your product and gives it a unique personality that makes it appealing to potential customers.

Focus Strategy 

You can utilize Focus Strategy when you want to focus on the demands of a particular group of your target audience and make custom changes to your product based on their needs and preferences.

This typically works where you already have a huge consumer base, and you want to cater to a specific group of customers.

Quality Strategy

You can adopt a Quality Strategy when you want to cater to elite customers who are willing to pay a high price for the quality. This strategy is generally used for High-value luxury items.

Customers will not mind going out of their way to pay for these products if they believe the product is worth it.

Customer Service Strategy

Many businesses impress their customers with a very high standard of customer service. And there are customers who may be looking for a specific product but who will base their buying decision on a company’s customer service.

This strategy is adopted by businesses when they want to build brand loyalty in the market by delivering timely responses to customer queries and offering the highest level of after-sales support.

Tips For A Successful Product Strategy

Understand And Identify Your Target Audience

One of the most common reasons why eCommerce businesses fail is the lack of product-market fit.

It’s always advisable to understand your target audience and the demand for your product ahead of developing the product, instead of the other way round.

Putting customers and their needs first is the key.

Analyze The Need

You need to do Analysis is critical in product development strategy. Your product should be able to address a need, overcome a challenge, or help your customers in solving a problem.

Once you have identified the problem, it’s also worth determining whether the problem is worth fixing. For instance, you would want to find out if your potential customers are ready to pay a certain price for the solution.

Define A Vision For Your Product

Vision is the bigger picture of where you’d like to see the product going forward, and it should not be confused with product development strategy. Product vision is important for everyone involved in product development to stay on track and on the same page.

Determine Your Unique Selling Proposition (USP)

List some key attributes of your product that makes it appealing to customers and distinguishes you from your competitors.

Explore both the design and the usability to determine features that set it apart from the others. Remember that the idea is not to explain the product in great detail.

The purpose is to identify the features that are most relevant to your potential customers.

You need to ask the following three questions to yourself in order to identify the USP for your product:

  1. What makes my target audience want to buy it from me?
  2. How does my product differentiate my business from my competition?
  3. What are the unique product attributes that help me and my product stand out?

Define Your Metrics

Your Metrics or Key Performance Indicators (KPI) will enable you to stay on track with your product strategy. Some examples of KPIs can be estimated growth numbers, number of sales, number of returning customers, and many more. Your metrics will depend on the nature of the product and the target audience it caters to.

Buffer In Contingencies

eCommerce is not all rosy. With the emergence of small and medium-size eCommerce businesses, it can be a tough nut to crack if you are unable to factor in risks and contingencies. So, a few things you need to clearly draw out in your product strategy are:

  • Challenges
  • Product longevity – which is how long do you expect your product to survive
  • Risks
  • Possible causes of decline in product demand

Product Development Strategy – FAQs

1. What is the product development process?

1. Product Ideation
2. Determining Demand
3. Create a Prototype
4. Testing
5. Launch the product
6. Gather Feedback

2. How can I come up with new product ideas?

1. Looking at Trends
2. Identifying a need or pain area
3. Researching the competition
4. Analyzing keyword search

3. What is the difference between product development and product management?

In simple terms, product management is about the ‘what,’ while product development is the ‘how. ‘ For successful product development, both product management and product development should work alongside each other.

4. What is E Product strategy?

E-Product strategy is the roadmap of product development. An E-Product strategy tells us the complete story of a product that a team builds, who will use it, and what will it be used for.

The strategy also defines the course of action that a business must take to develop a product and helps the product team to stay on track throughout the entire product development process.

5. What are the five types of product strategies?

1. Cost Strategy
2. Differentiation Strategy
3. Focus Strategy
4. Quality Strategy
5. Customer Service Strategy

6. Is a product strategy the same as a product plan?

A product strategy broadly gives the reason you are creating the product and includes an analysis not only of your current situation but also of the result you are aiming for and the steps you intend to take to get there.

The Product Plan is a list of things a team wants to build in a particular timeline. It’s a bird’s eye view of what the product is going to be and is a pliable format that can be converted easily to fit any situation.

Final Word

Every product is unique, and in that sense, how every product strategy is developed is also unique.

There cannot be a standard one-size-fits-all guide to developing a product strategy.

However, the stages of a product development strategy will be similar, and that’s what has been attempted to put across in this guide.

There’s no denying that a successful product has to be preceded by a solid product strategy.

Further Reading on Growing Your Ecommerce Business

Step 1: The Ecommerce Mindset: How To Build A Sustainable Business

Step 3: Product Launch Strategy For Ecommerce Business (Step By Step)

Step 4: Evergreen Traffic: Drive traffic using these 45+ Free and Paid strategies