Shops feature a wider assortment, you can differentiate between high service and low price, and local vs. global players can be compared. Of course, more choice isn’t always better. It can also make it harder for the customer to make decisions.
Common best practices:
- When you don’t have the largest assortment, make sure it’s clear how your product and services distinguish themselves from the competition. How can you convince the customer of the unique qualities of your product or your services?
- When you do have a large assortment, invest heavily in correct, up-to-date, rich product data. If you have an extensive assortment but poor data management, finding the right products becomes a daunting task, with the customer drowning in all the available options. Use product data to:
- Offer the customer clear navigation, search and filter options.
- Make choosing easier by offering a product comparison tool.
- Provide intelligent up-selling and cross-selling alternatives based on related product in your system.
- Personalize your customer experience, by displaying relevant recommendations based on the behaviour and purchase patterns of other customers.
In most branches, digital commerce leads to more efficient markets, direct lines to the customer, and tougher competition. As a result, the customer benefits from lower prices, although there may be a trade-off with the impact on the service you’re able to provide.
Common best practices:
- Find your USP. Being the most affordable can fill this role, but it’s hard to both keep this position and stay profitable over time.
- Find another way to distinguish yourself. Being a niche player in a global market can be very profitable and rewarding.
- Invest in the relationship with your customers. How certain are you that your customers will still purchase your goods if prices are lower elsewhere? What are your unique qualities that will convince them to stay? Or better yet, which shared interests do you have to collaborate on?
CONVENIENCE OR "EASE OF DOING BUSINESS"
E-commerce makes life more convenient, both in a B2B and B2C environment. 24/7 availability, online order entries (or integrations), tailored fulfilment processes, and easy access to a lot of relevant information are all good examples of the quality of life improvements provided.
Common best practices:
Continuously improve your customer experience but be smart about it. Before you consider any improvement, especially the ones that the entire market seems to chase, ask what specifically your customers want most. This isn’t a figure of speech, literally ask them. Talk face-to-face with your customers, or use a customer experience tool like Qualtrics to understand what drives them. Do they really need same-day delivery, or are they better served with more delivery options? How about improving the return process? There are many options to improve convenience.
There are also alternative E-commerce models to consider, such as:
- Subscription based commerce.
- Replenishment (usually B2B).
- Tight integrations through EDI, or procurement integration (B2B).
- Offline purchases through an app or Progressive Web App (PWA).
BEYOND BENEFITS: GENERAL ADVANTAGES AND DISADVANTAGES OF E-COMMERCE
Customers all profit from lower prices, more choice, and improved convenience. But these benefits don’t come without their own challenges. So what are the disadvantages of E-commerce? The competitive landscape that’s responsible for the benefits also leads to lower margins, technological dilemmas, dependencies on vendors, and the ‘war for talent’. Looking at E-commerce from this perspective can make you wonder if it’s really worth all the trouble. But perhaps, instead of talking about disadvantages, it’s better to talk about challenges and risks. This will allow you to make rational choices in all key areas of your business.
- Make the right decisions regarding your target audience, markets, channels, and organization.
- Optimize the use of your resources.
- Create a realistic planning and manage expectations.
Challenge 1: Knowledge and experience
Good, experienced employees are scarce, especially in digital commerce.
Define what a good mix between external and internal employees should look like for your business, and if this ratio should change over time? Of course this all depends on the strategic value you assign to digital within your organization, as well as the ratio between the expected one-off and structural work over the coming years. Allocate time for learning for internal employees.
Challenge 2: Way of working
The dynamics of the digital domain require an agile organization that can react quickly to internal and external changes, the competitive landscape, changes to the solution architecture or budget, and all other unexpected bugs and opportunities that present themselves.
Embrace agile internally or, if you aren’t ready yet to make the change, stay flexible by hiring externals. Note that working with external agencies is most effective with an agile mindset. This means regularly evaluating what you’ve learned and how this impacts your next steps. Instead of defending choices made, or pointing fingers, focus on learning, so you can apply your experience in the next sprint. What will deliver the most value in the coming weeks? What’s the best balance between short term and long term goals? The larger the scope of your digital efforts, the bigger the need for self-sufficient digital teams. Refrain from applying a rigid management method, but coach the teams on intrinsic motivation and desired output.
Challenge 3: Competitive landscape
The online competition can be overwhelming. How do you stand out from the crowd?
Analyze the market and make your own value proposition very clear, both internally and externally. Define your target audience (demographics, characteristics, and needs) and choose the most effective channels to reach and support them. This can be through your own webshop, but also consider marketplaces, and channels such as social or email. Streamline your brand message and use consistent communication and behaviour across all touchpoints. Persevere if you’re convinced of your value proposition and strategic choices. A good brand strategy needs time to develop and flourish.
Challenge 4: Risk of new dependencies
In your attempt to establish an online presence and reach the right audience as fast as possible, you might be taking shortcuts that lead to new dependencies. It’s important to be aware of the risks you take so you can make deliberate choices. Consider the following risks and potential courses of action.
Risk: Dependency on online advertising.
Google ads can help you reach your audience very quickly. But the competition is fierce and designed to eat away all your margin.
Advertising can certainly be part of your marketing mix, especially when you’re launching a new product. But make sure you always balance short term results by also advertising with longer term investments in content marketing, SEO, branding ,and customer loyalty. Create an escape route that enables you to be independent from Search engine marketing if you need to.
Risk: Dependency on marketplaces
Marketplaces deserve a place in many strategies, but there’s a risk of losing touch with your customers and becoming a commodity. Will your customers stay loyal to you if a new and cheaper competitor surfaces on the platform?
Brainstorm with your marketers on how to stay in touch with your customers. Offer them an incentive for registering to your mail, engage with them with on your social channels, write blogs, and offer relevant advice. Prepare a strategy to become independent from the marketplace. Consider creating your own sales channel, or team up with partners that have a complementary portfolio and matching service level, and create your own marketplace!
Risk: Dependency on software vendors
To a certain extent, a marketplace can become a vendor lock-in. But if you decide to create your own channel, make sure you don’t run into similar challenges. Going all-in with one solution provider can make you vulnerable when prices increase or development slows down.
Choose a platform and technology stack that’s generally accepted and enables you to find good internal or external support (for development and operations). A Service Oriented Architecture can make you less dependent on technology and vendors, such as a Best of Breed approach with a strong middle layer, or a full micro service architecture. (MSA)
This list of potential risks is by no means complete, but it provides a good view on potential bottlenecks and pitfalls to be aware of when implementing E-commerce. As long as you respect the risks, and react accordingly, your organization can benefit greatly from properly setup digital platforms and E-commerce.
Read also more about this topic here: How to truly benefit from your E-commerce platform