eCommerce for brick and mortar

The current pandemic has been an interesting ride for brick-and-mortar, multi-channel retailers. Reading the headlines, many retailers believed that they too could be eclipsed by an online pure-play that had access to the capital and multiples of the public markets. Given the equity market valuations at the time, who wouldn’t? Heated conversations during this time ranged everything from “how fast can we build this site?” to “is there a potential to carve this division out?” to “how much more can we spend to drive traffic?” to “are we building our infrastructure quickly enough to accommodate future demand?”

With respect to this last question, many traditional retailers spent heavily and quickly on technology, in a bid to match their competitors and to defend their market share. Now that the dust has settled, retailers are trying to define the new landscape and ask the hard questions — what really is the potential of eCommerce in my segment, and will my prior investments in technology, people, and business models deliver on this potential?

Globalization of eCommerce is not a matter of if it will happen, but how fast. Online sales continue to grow at an impressive rate, especially in specific categories. Without the best possible eCommerce strategy, companies will lose market share to their competitors, and miss out on the ongoing upside presented by the still-developing online market. So how can you, as an online or multi-channel retailer maximize your online opportunity? What can be learned from the technology investments made to date? Are there better ways to employ web-based technology to drive sales and conversion, and to increase operating leverage?

Do the challenges listed below sound familiar?

  • Traffic is not a given. The standard online traffic generation techniques (banner ads, affiliate programs, etc.) have failed to deliver to expectations. E-mail sent to your current list of customers and prospects is one of the few reliable means to drive traffic.
  • Conversion too low. Online retention, site stickiness, and order conversion could all be improved.
  • Channel seamlessness is hard to achieve. While the Web promises truly seamless customer service among all channels, it is a great deal more difficult in execution. For example, how do you easily give online customers the ability to access the inventory held in your stores?
    Marketing and personalization potential not met. Selling online offers marketers immense amounts of data, and yet it is difficult to mine this data to drive conclusions and to create meaningful segmentation and personalization. Even more difficult is merging the online data with the offline.
  • Content is expensive. While you would like to offer your customers an online experience beyond product images and descriptions, the cost of additional content is too high to consider.
    IT budgets can quickly mount. With enough resources and talent, all of the above is feasible. The reality is that very few retailers can afford the multiple software applications, hardware, and staffing to build this kind of site. At a minimum, this would require a sophisticated eCommerce platform with personalization, a content management application, a marketing/analysis application, and an e-mail management application, assuming all the back-end processes were already covered by an order management system. Add to that list, hardware, and integration costs.

Once you have your site up and running, you start to tackle the less-standard but more differentiated aspects of your business with your website. For example, your business might depend heavily on bundling of products, multiple warehousing, drop shipments, promotions, multiple price lists, or even on monogrammed personalization. However, when you try to extend or customize your web applications to fit your needs, you realize that the changes are infeasible or prohibitively expensive.

Online, differentiation is hard to achieve – True innovation and differentiation are hard to come by.

Operations are not yet web-enabled. You have a sense that your operations can be greatly enhanced using the Web, that your product sales are only as good as your complex product development and supply chain processes, and yet these projects are difficult to scope and fund, given that “higher return” projects await on the customer-facing web site. At the same time, you know that while the payback may not be there to re-engineer your entire supply chain, there are those 20% projects that could get you 80% there.

IT investments pose an upfront risk. As a direct marketer, you are accustomed to a test and move approach, involving a low commitment of resources until there are indications of potential. ECommerce platforms, however, tend to be large upfront investments with expectations for quantifiable returns.

Top issues still need attention. Bottom line, top customer complaints come down to the simple issues of inventory and site speed.

As your web efforts become the foundation for more of your business operations, the selection of a platform for ECommerce becomes an increasingly important undertaking. A wrong selection could lead to a failed implementation or to a business crippled by its technology. A less-than-ideal selection could result in a less-than-complete implementation and diminished returns, or require that a business re-work its core processes to fit those assumed by the platform. In either situation, the resulting business model may not be that much more efficient than the one that it replaced.

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