Many online retailers, big and small, operate without a strategic plan. This is a mistake, according to industry experts. Without a plan, the experts say, Internet retailers are simply reacting to tactical moves by competitors, to unanticipated fluctuations in supply or demand for their merchandise, or to new developments in the industry.

"A lot of times a business will just roll along and there is not much effort toward improving," says Craig Smith, founder and managing director of Trinity Insight LLC, a consulting firm that works with online retailers. "People spend their time putting out fires," he contends, instead of thinking about the future. A formal ecommerce strategic plan is one of the best tools for ensuring happy customers and profitability, according to Smith.

Online retailer, Tool King, recently completed its first formal plan. Owner Don Cohen used an ad hoc, informal planning style for the first five years of Internet selling before he felt the need to create something more structured. Cohen founded Tool King as a small regional hardware store chain in 1978. It remained that way until 2000, when Cohen discovered eBay. Now his company pays claim to being eBay's biggest tool seller, and it also operates its own ecommerce site.

In 2006, the company racked up total sales of $36 million, and 85 percent of it came from online business. This year Cohen hopes to double that sales figure and has incorporated that among other goals in his new online strategic sales plan.

"When you are smaller, strategic planning is not as important because you are in a learning curve," he says. "But as you add more people and experience growth, you deal with lots of issues, like facilities, space requirements, fulfillment; and things become more complicated. You have to move from impulsiveness to structure and organization, and being able to define where the value is coming from."

It took Cohen three months to develop a two year plan. During that time, he and his top managers thoroughly examined all of the company's ecommerce data. They identified what they were doing right, where they could improve and where new opportunities might be. Through that analysis, they concluded they could increase the initial revenue projections in the strategic plan by 30 percent.

No matter who is involved or what the goals are, any good plan should start with the numbers, many experts advise. Tool King had lots of raw data.

However, the planning process led the company to create 17 new reports, to track the numbers that would tell whether the plan was working, and exactly where adjustments were needed. "If we can isolate a problem to a department or even an individual," Cohen says, "we do not have to make sweeping changes."

Information in this article was edited from a story on InternetRetailer.com.