E-commerce is growing fast: total revenues have doubled since 2008. But it has not yet reached its full potential. The sector offers high opportunities for new businesses and the chance to challenge industry leaders such as Amazon.

To see how you can achieve success in E-commerce, we will write an article series which covers the main topics you need to think of in E-commerce projects. This includes E-commerce readiness, process challenges, architecture as well as integration, and an example of End-To-End Integration.

Working towards success in the E-commerce business can result in many different challenges. However, the sector is growing with the constant growth of the digital sphere and it is often difficult for companies to find the main drivers.

Besides topics like the right software or services, we defined four different main drivers which you should keep an eye on. Each one has different challenges which need to be overcome. As a start into our article series, let us take a deeper look into them:

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1. Innovative Company Culture:

For companies, innovation is one e-commerce driver to always grow or develop new products or services, approaches, and create a refreshed and refocused business. A company culture must be steadily managed and at some point, reinvented.

The question is, how to stay or become innovative? We see two ways, first would be to create a formulaic culture and the second one is to be an entrepreneurial company.

Formulaic companies, such as BMW or Mercedes Benz, fosters fast communication and shares ideas across divisions, as well as embraces critical conversations. This is also displayed in office buildings and design which encourage exchange and cooperation between teams. Naturally, new ideas are supported and tested. The challenge is how to handle slow breakthroughs and missing the drive of steady change.

Solutions can be difficult to find, but a Plan-Do-Check-Act circle or the Japanese Kaizen approach can support a steady change. Companies need to focus on finding a fitting approach.

The entrepreneurial company, focuses on a leader who must inspire the whole business. Just think about startup companies which became leader in their field, such as Mark Zuckerberg with Facebook.

Personality is key in this concept and leaders must create a company culture which is open to risk. While such companies tend to reinvent products and services, they depend highly on their leader.

Dependency creates the need to find a well balanced way in communication and cooperation inside the company. If the leader is too demanding or does not accept a counterpart, struggles can occur.

At one point, there also exist the chance that a leader is kicked out of the company to achieve a more balanced company –which is what happened to Steve Jobs at Apple. There was a power struggle between Sculley and Jobs. Jobs was a demanding person and this lead to him being fired.

Empowering others would have been one way to deal with such a situation, rather than forming a cult around one person. A one-person cult is always a threat to a company, also because his image is often connected to the company’s image. This can be problematic, as leaders are human, and are very capable of creating PR disasters around their mistakes.

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2. Customer Insights:

Insights are key to achieve a good customer engagement. This creates several benefits such as increased customer lifetime value or delivery of relevant information towards your customers at the right time.

But why is delivering specific content so important? We are currently living in the most information rich, attention demanding eras. This distracts customers easily, you only get attention by delivering content your customers demand and need.

Insights are key to create this desired content. On the down side, customers will even get more demanding, like more content and more personalization which will create more problems.

So you need to increase the relevance of products or services through targeted communication,via the right channel.

The internet is steadily creating new channels and with them also new influencers. Influencers are people who are specialized in specific topics. Your customers trust them even more than you.

The most influencing channel are communities. Here, customers exchange their experience about services and products and companies. You need to join discussions in communities, but not disrupt them. Your customers must realize that you bring value into communication and not try to force something on them. If done in the right way, you get information and can create better content and products for your customers.

3. Data Strategy:

Gathering customer insights creates the need to have a data strategy to create and analyze the information you receive. Often, you may ask yourself if a data strategy is necessary. The answer is yes; the reason to have one is simply to capitalize on your data assets. It is key to successful Marketing and Sales activities.

Included into your data strategy are data content, quality, performance, roles and responsibilities, as well as ownership and operational systems and IT strategy.

Data quality is crucial. The better quality data you have, the faster you can react to your market with precision. In this way, you could do real-time Marketing e.g. by using real-time reporting.

A useful point is to define, who is responsible for data quality. Performance is another important factor in your data strategy. From a data perspective, estimate the capacity requirements and anticipated growth for the data repository.  Reporting should be available for computer process intensive routines that require monitoring.

A good data strategy brings several benefits to Marketing and Sales, such as higher productivity and cost reduction. Higher conversion rates will lead to revenue growth.

Another factor, which is often underestimated, is customer retention. This can be predicted with data. Knowing which customers might want to leave can bring the advantage to implement counter-activities to minimize customer churn.

4. Digital Transformation:

The last point which drives your E-commerce and your whole company is the Digital Transformation. This is the use of technology to improve performance or reach of companies. It contains analytics, mobility, social media and lately also the internet of things (IOT).

A successful Digital Transformation contains the following things: A vision how to overcome digital challenges. The next step is to create a strategy which is executed with strong leadership.

Among the strategy, three critical success areas exist:

  1. Customer Experiences
    1. Customer Understanding through customer insights like. Geographical differences
    2. Buying behavior e.g. to offer the channels your customer demands
    3. Touch Points through Omni-channel approaches
  2. Operational Processes
    1. Information Exchange to create transparancy
    2. Performance Management e.g. create real time data to react right on time
    3. Process Digitalization, transfer your processes online
  3. Business Model
    1. E-commerce Readiness, check if you are ready to sell online
    2. Product Diversification e.g. create new products which enhance your current portfolio
    3. Global Operations e.g. share your services worldwide
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Those three areas have a different aims to achieve, and all are linked to improvement.

Customer experience should aim to enhance sales and create customer satisfaction. Examples are in-person sales by using tablet-based presentation to guide customers through information. In this way you can create new customer touch points, which are linked to your customer journey.

Other examples are customer service, SMS, apps or social media. Touch points should be developed based on customers’ needs, those are gathered through customer data and analyzed based on your data strategy.

Operational processes refer to the point, that many workflows can be digitalized with the goal to create synergies. Often HR-Departments starting to use digital processes to reduce workload like online job application forms. Also collaboration is one key focus, such as cross-team work on similar topics through cloud solutions.

Transforming your business model to be online ready is of course a redefinition how functions interact together and are evolved. The first part is to compare your current business to an online business model. The next step is the creation of new online products or enhancement of current products.

A lot of companies add digital services to create an USP e.g. Amazon with Amazon Prime. Global operations are key to gain global synergies by having global shared services for several departments.


Wrap Up:

These are the four drives representing the current challenges in E-commerce. Many companies see those drivers among the digital transformation, but it is important to have this separated. This all leads to the point that you are challenged by a new, digital business environment.

You need to create products or services that complement traditional products. Rethink your business model by creating a new one or update the old one. The most important point is to think in an End-to-End scenario. The four drivers all appear in your approach to sell online, do eMarketing and be a digital company.

To overcome E-commerce challenges you need strong leadership, vision and mission and a business model which is online ready. Your focus is important to act in the right section. You should not approach all drivers at the same time but rather create a project plan to combine them since it depends on your current state where your pain points are.