Business strategy vs SEO Strategy in eCommerce

What is a business strategy? And how can it be seen through the lens of SEO?

A business strategy is a way for a company to optimally use its capabilities to gain payoffs in the context of uncertainty and, most often, in the competitive environment. The functional definition of strategy is a ‘smallest set of (core) choices to optimally guide the other choices’, i.e. make other decisions adapt to them (Van den Steen). A "strategic" decision may drive inbound or outbound (external) alignment.

Coordination (or alignment) of choices is a crucial part of being strategic. Interaction is a necessary condition for being strategic. Decisions with many interactions can guide many decisions at once and, hence, should be "more" strategic.

Likewise, for example, a tech choice decision buried deeply in a product design may critically affect a company’s success or failure, i.e. be important, but that does not – by itself – make that decision strategic, so soon that this choice does not command sufficient number of interactions within (and without) the business.

A critical role of strategy is to reduce uncertainty about what others will do, to make it possible to align.


SEO is about how to produce and organise the content and make it available to robots and users alike in such a way that will benefit them most.

eCommerce is a commerce conducted via the Internet, a business model (Investopedia, Merriam Webster).

The SEO strategy in eCommerce is a set of choices made with regard to the state of “strategic dependance" (or sometimes "rivalry”) with search engines being eCommerce firms' principal purchasers, i.e. account for the majority of their sales.

Dependence is one sided relations while rivalry is a subset of competive relations that has two-directional form: the focal firm’s choices must influence the competitor’s actions – by affecting its payoff – and these competitor’s actions must affect the focal firm’s payoffs (Van den Steen).

In eCommerce SEO strategy search engines have much stronger bargaining power when they act in the position of Purchaser. In particular, their choice tends to be "supplier switching". Also, their requirements to sellers is not clear enough to the end. I may put it like this: there's no such moment when this competitor has made all its choices, so with a firm G eCommerce firm F can never build an optimal strategy. So, there can be two states: one-sided relations of dependancy on purchaser and (quasi) strategic rivalry or co-dependency.

10 eCommerce SEO strategy propositions

I will put important propositions to to eCommerce SEO strategy below.

1) no decisions by a firm F will be more strategic than decisions from a firm G (search engine), which means that search engines in the role of purchasers will have far more influence on eCommerce firms in the role of suppliers than otherwise, so no optimal strategy is possible;

2) firms' choices can dynamically reduce the uncertainty about what a purchaser firm G will do;

3) purchaser responses to supplier's choices have a very limited set of decisions: higher price (more traffic, clients, etc) or lower price - it's always the supplier switching mode;

4) the way a competitor chooses between decisions is never clear, i.e. it is costly to investigate what is the relations between factors to decision;

4) SEO - as an investment activity - deals with a cost of investigation into competitive response, with a main competitive being a firm G (search engine);

5) SEO in eCommerce operates operates through making investment in the following resources: pages and their content (category, pdp, etc), pagerank, crawl budget (and it's conversion to visits and clicks), a volume of branded (vs not-branded) search queries.

6) aim of SEO is to obtain a higher price from a supplier while keping the cost of of investigation below the level where acting strategic does not pay off (when SEO makes no sense);

7) where a number of supplier firms is large enough,there's no use to built an external strategy when each specific competitor = supplier can be supplemented by purchaser;

8) where a number of supplier firms is small, external strategy pays off, moreover, a quasi-strategic relations (co-dependancy) with a purchaser may occur;

9) search engines as purchasers tend to attain position 7 when firms don't get any incentives to act strategically in external domain;

9) search engines as purchasers force supplier firms to act strategically internally in order to improve organisational alignment and make specific investments to increase their output capacities;

10) capacities (strategic substitutes) are more strategic than prices (strategic complements);

8 strategy states: an eCommerce SEO strategy Bingo

This creates the following strategic states:

  1. no strategic rivalry, one-sided dependancy on purchaser;

  2. (quasi) strategic rivalry, two way dependency;

  3. high competition, low cost of switching for purchaser (low prices);

  4. low competition, high cost of switching for purchaser (high prices).

  5. strategy informs internal alignment;

  6. strategy informs low or no internal alignment (unannounced strategy, high cost of annoucement);

  7. low sensitivity to prices;

  8. high sensitivity (dependence) on capacities / prices.


Uncertainty

Under proposition 3 when organization can't see the relation between a 'price' and its 'investment', all SEO strategies become uninformed, so firm is better off without any (external) strategy. For example, this happens due to Google Algorithm Updates, effects of which are business contingency.

Purchaser keeps the cost of investigation high

In all, a purchaser is interested to keep a cost of investigation of strategy high in order to force sellers quit acting strategically towards him, which is called 'manipulation' (by a purchaser). It is done in two ways:

  • periodical algorithm updates that changes assortment of 'price' signals as well as their relative power;

  • a deferred effect of seller choices on 'price' (smoke).

A set of working price signals is given by a purchaser (like the rules of exchange), which are necessary to enable the output and inform investments.

Conclusion 1

Purchaser forces parsimonious inward strategy that rewards hierarchy and performs only randomly on external alignment.

Cost of investigation (in relation to purchaser) tends to stay high as it's in the strategic interest of purchaser. This 'same for all' condition in SEO eCommerce. This proposes a 'strategy bet' term instead of strategy choice.

Under conditions of high uncertainty when the strategy is uninformed, commiting to any choice can add value as it may inform internal alignment especially in highly hierarchy organization, but that comes at cost of external alignment that's is no better than random.

So, I conclude that purchaser rewards more hierarchical structure will tend to make strategy more effective within the framework of signals communicated by purchaser as well as resignation on strategic competition.

Presumably, cost of investigation can be outsourced where ___

Conclusion 2

Parsimonious strategy works around helpfulness.

For internal alignment (to be effective), the term of user satisfaction is used. Presumed user satisfaction or helpfulness is then forced to be endogenized (as an epitome of value and a strategy aim). Helpfulness and content quality is communicted by firm G (purchaser) as 'terms of purchase' but the way it is extimated and how it influences the 'price' is never clear due to high cost of investigation.

So, helpfulness is a "catch-it-all" term that works well to optimize internal alignment.


Thinking in Strategy bets. Who are players in the strategy game?

A ‘strategy bet’ is where a company commits to a strategy despite facing very high uncertainty. This may be valuable, especially when internal alignment is important. For example, start-ups in eCommerce (and not only) often talk in terms of strategy bets.

In the situation of a lack of information to make choice participants may be lawfully called "players" as they are forced to make important and far-reaching choices without knowing what card comes next. This poses the question: what is the gain from some strategy (vs a good one) even when it may be uninformed and thus potentially suboptimal.

The question is what is the gain from some strategy, even when it may be uninformed and thus potentially suboptimal. Or, what is better to have some strategy vs optimal strategy?


Strategy as an organisational tool vs decision-making tool

The role of strategy as an organisational tool is to give clear direction to an organization in order to improve alignment and specific investments. But strategy is also a useful decision-making tool to determine that direction. (Van den Steen)

Strategy process

  1. The strategist needs to investigate and announce only the strategic decisions.

  2. The optimal number of strategic decisions is small so that the strategist needs to investigate and announce few decisions.

Let's consider how the strategy process is possible in eCommerce SEO activity.

Characteristics of the optimal strategy:

  • shall be concise, contain a small number of choices (one),

  • would give perfect guidance,

  • achieve the first best,

Yet, in most cases a strategist must consider a cost of investigation or announcement. In such case, the strategies will be even more concise, but then, obviously, won’t achieve the first-best any more.

Likewise, a search engine, a competitor purchaser, is interested in keeping the cost of investigation highest, so a focus firm can't achieve the first best.


The SEO-specific organizational activity is focused to the content, i.e. the way it's created, built, organized and promoted, etc including:

  • Discoverability of content by search robots and

  • Search-ability of content by users, i.e. usage of proper keywords.


What is More strategic vs Less strategic decision?

Decisions are more strategic when they interact more – and more strongly – with other decisions, in particular for inbound interactions, and that strategy is more valuable when there are more and stronger interactions. So, the value of strategy is a number and strength of interactions, i.e. implications for other decisions.

For example, a decision to be ‘low-cost’ is more strategic than a decision to ‘use CFL lamps in the store’ because ‘being low cost’ has more implications for other decisions.

Yet, strategic decisions that produce many interaction shall better not conflict with other (strategic) decisions, in which case it's implications for the company and the power to induce alignment falls. Likwise, a strategic choice made by the CEO shall not conglict with strategic choice(s) made by marketing and the product because in this case its ability to guide othe choices decreases. For example, decisions that constrain other decisions should be considered less strategic and choosen with a great care (in that sense that "contrain" ≠ "guide").

What is the role of uncertainty in strategy?

"Uncertainty seems essential to strategy: without (prior) uncertainty, everyone knows what to do and where to go and there is no role for strategy" (Van den Steen). So, we can can thay uncertainty makes a decision more strategic and, hence, increases the value of strategy.


Search engine as a "strategic rival". A competitive strategy setting

The same logic of a firm's strategy guiding (or influencing / forcing) others decision applies in external decisions, where the firm tries to influence competitors, complementers, suppliers and other external organizations. For example, a firm may expand capacity to force others to delay expansion.

In the simplest form of external interaction, two firms’ choices interacting and each firm having its own objective. The second firm can be any firm that interacts with the focal firm, such as a competitor, a complementer, or a supplier (may collectively call a 'competitor'.).

Competitive relations between eCommerce and a search engine

For example, in the eCommerce SEO a search engine's firm (Google, etc) can be called a "Purchaser" while an eCommerce firm - a "Supplier" - so soon as we acknowledge that the a search engine accounts for the vast majority of sales. If a purchaser uses supplier switching to meet its procurement needs than we can call it competitive relations.

To fix ideas, I will interpret, and refer to, firm Google as the ‘competitor’.

I want to consider two important questions within the context of this very simple model:

  1. what makes a decision strategic in such a competitive setting and

  2. what makes a competitor a ‘strategic rival’ in the sense that it has to be endogenized as part of the strategic analysis,

i.e., in the sense that firm F has to consider G’s reaction when designing its strategy.

Strategic rivals need to be endogenized when analyzing a competitive situation or developing a strategy, while other competitors can be taken as exogenous.

With respect to decisions being strategic, the decisions can be both more and less strategic when they can influence the competitor, depending on whether they influence in the right direction or not.

I will formally define a firm G to be ‘a strategic rival of a focal firm F’ if F’s optimal strategy depends on whether G has already made all its choices.

The following proposition establishes that a necessary and sufficient condition for being a strate- gic rival is the following two directional effect: the focal firm’s choices must influence the competitor’s actions – by affecting its payoff – and these competitor’s actions must affect the focal firm’s payoffs. (Van den Steen)


Capabilities vs Prices

Interestingly, if the strategy is built strictly on resources that are currently available, then a competition won’t not even take into consideration what you do: they simply count your resources.

If you have a limited number of resources, a competition minds your resources spending. Suppose you make a certain move that only lasts for a month or two, then a competition finds a remedy. So, this is only within this timeframe that you can potentially have a strategic advantage. The theory of strategy says that you must have two uncompensated strategic advantages (or strength) to be able to enact them within the same timeframe; if you have only one, you don’t have an advantage (at all).

Since it is the customer’s problems that we want to, first, market and, second, solve through the SEO etc, it’s fundamental to be able to answer the ontology questions: what difference we as a business make to customers and why this difference matters?

A clear strategy drives investment and resources allocation

A persistent and clear strategy of cost minimization along specific dimensions.

A clear strategy not only facilitates alignment (or coordination) but also encourages investment in resources, skills, and capabilities, in particular when these resources and capabilities are specific to the firm’s course of action.


Collis and Rukstad (2008), for example, describe strategy – based on their experience – as specifying

  1. a choice of objective,

  2. a choice of scope, and

  3. a choice of advantage.

This list of choices or decisions can be interpreted as an average experience-based ‘smallest set of choices to optimally guide the other choices’ for the most common situations.


eCommerce SEO list of choices

How SEO may help Market customers problem?

In eCommerce, search engine optimisation can help market and highlight the customer problems in a number of ways, including:

  • Navigational content (Filters, Related searches, Trending products, etc) and so on.

  • Informational content (Buyer guides, Best practices, Articles, Comparisons, etc) as well as

How SEO may help in trying to solve customer problems (by enabling communication)

Also, SEO can significantly contribute to the ways a business can solve the problems, including through:

  • relevant and full presentation of Case-specific portfolios of products (CPV Categories, lists, selections, etc),

  • bundling products and creating Scenario-specific assortments that relevant to user search experience (will show up in search engines),

  • creating adequate product description pages (PDPs), including Images, Description, YMYL information, etc,

  • fostering a community exchange (user-generated content flywheel)

to name a few.

Obviously, almost all of the areas above are not specific to SEO only. Yet, when(ever) it comes to two things:

  1. Discoverability of that content to robots for indexing and to user in search results pages and

  2. User search experience, i.e. searchability of content through keywords, etc,

the mandate of SEO over these areas can be easily claimed and established.

A feedback loop from customers to SEO in eCommerse

If there is no intrinsic value that a business brings to users, even the best SEO can’t help. It’s easy to see through brand-related searches: if a business does not solve any problem of the customers (such as to bring transformative outcomes), then it won’t probably be on the top of the mind of people who google something, so the brand won’t appear in search.

A low amount of brand-related search queries, etc is a clear signal to search engines: a sign or promise of actual value given through SEO to a customer has not been justified, no positive feedback happens. This idea helps to highlight the link between:

  1. the content as a promise of value to the customer and

  2. the actual user experience,

a link that’s sometimes missing in SEO.

Limitations to the eCommerce SEO Strategy

This creates the following limitations to eCommerce SEO strategy:

  1. A promise of value has to be true. The content has to be adequate to both the customer’s problem and the solution proposed by eCommerce as well as clear and complete.

  2. The way a promise is read by search engines is crucial. Engines are gatekeepers of customers.

  3. A promise of value does not equal fulfilment. Or Content ≠ Product. It adds yet another level of complexity to describe and organise content when there are many products (as normally it’s the case in eCommerce).

Yet, a good and simple business strategy is a great help to eCommerce SEO Strategy.

Metric = Strategy

The SEO strategy goes through a number of stations, which are easy to grasp by metrics:

  1. Number and Cost of Production of a Unit of Content.

  2. Number of keywords per unit of content.

  3. Number of UV per unit of content.

  4. Revenue per unit of content per year.

  5. Branded searches (vs not-branded) per unit of content (by segment of pages).

What is the all inclusive metric for SEO in eCommerce?

Yet, it’s (only) one metric that matters in the end of the day. It’s the one metric that drives so much decision making. In eCommerce SEO strategy Revenue per unit of content per year (RUCPY) / Profit per unit of content per year (PUCPY) is the all inclusive metric. It’s a synthetic metric that combines both:

  • users (as they bring revenue) and

  • content that (together with its discoverability and searchability) lies within the mandate of SEO and attracts users.

Cost of Production of a Unit of Content

Let’s start with the first station of the eCommerce SEO strategy Number and Cost of Production of Content, as it’s the first ‘real’ problem that eCommerce SEO strategy faces. It’s the question of "How to increase the number (and decrease the cost of production) of content in order to market the customer’s problem and create numerous touchpoints with her"?

In itself, this problem belongs with search engine robots, not to users, but it’s real nonetheless. This marks a product-centred SEO strategy, and the metric it uses is a Unit of Content.

We say the cost of production of a unit of content (PDP, CPV Category, Blog articles, etc) but this construction hangs in the air without a pivot, i.e. a relation to a subject who essentially produces the content. For example, it can be merchants (online marketplaces), sites content team (classic eCommerce), external providers, users, etc, but most of the time it’s a bit of all.

Illustration how to calculate the Cost of Production of a Unit of Content

Suppose there is a a B2B marketplace that has 1 million pages and 10k (paying) clients. A totality OpEx and CapEx make the Cost of content, i.e. we don’t need any other metric here. Each client is paying 1k yearly, so the Total revenue is 10 mil and the Profitability is 15%, so we’ve got the following core metrics: Cost of Production of a Unit of Content: 8.5€.

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