Getting on Board With E-Commerce

Fifteen years ago, e-commerce companies like Lazada and Shopee didn’t even exist. Today, they have a large presence in regional and international markets, becoming household names in the e-commerce sphere.

In larger countries like Malaysia and Indonesia, building a consistent retail presence across the entire country can be unfeasible for smaller businesses. Both brands and consumers may face challenges dealing with traditional logistics in more remote areas and instead embrace online logistics to expand their reach.

As a growth trajectory, e-commerce no doubt appeals to traditional businesses. With the Internet, reaching out to new markets has never been easier for companies both large and small. However, setting up shop in the online marketplace is easier said than done. Your plan should account for the fundamental properties of the Internet and user behaviour. When customers shop online, they’re having different experiences and looking at your brand from a new, digital perspective.

Even as you’re jumping on the bandwagon, remember that tried-and-true strategies do not guarantee increased profitability online; what appeals to an offline shopper may not appeal to an online one. No matter what your e-commerce strategy ends up looking like, its success rests on customer acquisition, customer loyalty and channel optimisation.

Enterprises are increasingly moving towards a multi-channel commerce model that integrates online, print and sales channels into a single unified ecosystem. Traditional businesses looking at this new model must take several new key elements into consideration. The road to e-commerce strategy forks at the beginning – you must decide whether to sell on your own platforms, or through third-party online marketplaces like Lazada, Shopee and Qoo10.

Strategising for Maximum Potential

In crafting an e-commerce strategy, you should first understand your e-commerce position relative to your competitors; this can be through a detailed competitive analysis. In some industries, nimble e-commerce companies have capitalised on their lagging traditional counterparts entering and expanding the playing field with varying levels of success. Elsewhere, unconventional companies have broken new ground, speeding ahead with the momentum from their first-mover advantage.

If you find yourself in such an advantageous position, you should not be complacent, but instead continue to invest and innovate to maintain your early lead in the market. That said, don’t worry if your company is not a first-mover or an early bird; you can still weave into established markets as the first business to provide unique services or value propositions. In order to catch up and keep pace with industry leaders, you’ll need large investments and a willingness to explore new business models and processes.

After evaluating your position in the market, you’ll want to look inwards – your e-commerce strategy should be consistent with the overall corporate strategy. To customers, brands are the most visible aspect of your business; companies often rely on strong branding to build trust and acquire customers. Effectively positioning your brands online helps both new and existing customers find the company’s products and websites, providing a starting point for them to explore your business and discover other products.

For this reason, you’ll also need to decide what products to offer on websites. When your products don’t have to compete for shelf space, they collectively become more noticeable, marketable and can widen your potential consumer base. This is a powerful inherent advantage of online channels. For instance, American retailing giant Home Depot appealed to customers and maximised the effectiveness of their online platforms by offering a wider variety of products than their physical store equivalents.

While e-commerce platforms hold great potential, one thing customers will miss from shopping in physical stores is the helpfulness and personal touch offered by retail assistants. To inspire loyalty in online shoppers, it is critical to build reliable customer and fulfilment services.

“When your customer service is just as great online as it is offline, your e-commerce users will grow to trust your products and services – this is the differentiator that will make them repeat customers.”

Don’t make the mistake of viewing your e-commerce website and physical store as two separate entities. Think cross-channel coordination with an emphasis on convenience for the customer. For example, when you allow customers to pick up and return online orders through your physical stores, you’re making your business more accessible to them and elevating your customer and fulfilment services in their eyes.

Budget Planning for the Customer Journey

In contrast with traditional offline businesses, e-commerce does not require heavy initial investment in infrastructure, rent, shop space and stocks. Nonetheless, proper stock management, forecasting and planning remains necessary even as you take your business online.

Just like any other business, you’ll need to take fixed and variable costs into consideration when starting out in e-commerce. Some examples of fixed costs include business licences and website domain names, while variable costs include media assets and products – for instance, you may need to hire a photographer, designer or writer to produce high-quality images and product descriptions that can win over potential customers. Inventory and shipping costs must also be considered when procuring and delivering products; this includes import duty taxes incurred from shipping to and from overseas when you’re engaged in cross-border selling.

Budget planning should not only include the above factors; it is best undertaken while keeping a long-term strategy in mind, with particular focus on the development of your online presence and platform. One of the biggest misconceptions about online channels is a temptation to view them as merely standalone digital shopfronts, rather than crucial customer touchpoints that can generate customer loyalty and increase online sales.

For any e-commerce budget build, the rule of thumb is to always think about the customer journey that you hope to facilitate. If you are a florist, you might aim to enhance your mobile conversions and delivery experience. On the other hand, a contact lens seller may want to have a more engaging, personalised website that can offer different products based on customers’ preferences.

When you understand the customer journey, you can outline the possible requirements for your website upfront – this makes it easier for you to consider the most optimal website functionality for your needs and how it can contribute to your e-commerce business in the long run.

If a tree falls in the forest and no one is around to hear it, does it make a sound? This philosophical question can also be applied to the retail sector.

It’s no exaggeration to say that retail stores live or die on customer awareness. The little unassuming shop in the corner that fails to catch the eyes of curious shoppers will quickly find itself out of business, no matter how good its products are. Being noticed is so crucial that the entire industry of advertising is built upon it.

On your screen, e-commerce is two-dimensional. What makes certain products more noticeable, or puts them on the first page of search results? Behind the scenes, there are certain critical elements that influence your rankings and product placements on e-commerce platforms – algorithms, the number of clicks, how attractive your images are, the relevance of your information – that can help your products become more visible and even grab the coveted first entry on the search results of e-commerce websites.

While there is a wide variety of metrics used in e-commerce to quantitatively assess performance, the most frequently adopted product metrics (and those I personally use) are usage, retention, engagement and conversions.

Some ways to understand the concept of ‘usage’ in e-commerce are through the categories of average daily active users (ADAU) and monthly active users (MAU). When you divide ADAU by MAU, the result shows you what percentage of days in a given month a consumer uses the website or web page. This statistic can be measured across multiple platforms, from desktops to mobile sites and apps.

Depending on the type of product you’re selling, you may need to look at customer retention statistics differently. The average person would shop online for shoes and clothing on an irregular basis, possibly returning to the site after an extended period of time. In contrast, someone who buys infant milk formula online would frequent the product pages every two weeks or monthly.

Online engagement is a statistic that identifies when and where customers are actively engaging with your products on e-commerce sites. Taking engagement into consideration helps you build focused campaigns. For instance, running flash sales during office hours can target an overlooked niche audience – desk-bound workers who may be browsing the Internet within small pockets of spare time. Conversely, to target stay-at-home dads or mums, you can aim to run online campaigns during the late morning hours, where they would have additional time after taking their kids to school or making breakfast for the family. E-commerce sites even have information on shoppers’ age and even how many kids a user may have – using these statistics, you can differentiate an office worker from a stay-at-home parent.

How do you put a number on window shoppers that become shoppers? Sales conversions help to quantify actual sales against the number of customers who are merely browsing your products. Just like customer retention, one should not take low sales conversions at face value – a low percentage of sales conversions can be acceptable depending on the product. For instance, buying a car online would require much more prior research and careful consideration, compared to buying a pair of shoes.

When you’re competing with thousands of products and brands in the online marketplace, you should account for the customer journey. Gain knowledge on their online shopping preferences, and even how they search for products. This will help you to identify the right products and promotions for your target audiences, making your products more relevant to them in a world of abundance.

The right data can help you further refine your e-commerce strategy – consistent nudges throughout the day, or cross-promoting a variety of complementary products to loyal consumers can help you secure more conversions and boost customer retention.

Organisational Investment in E-Commerce

Having accounted for your e-commerce positioning strategy, potential costs and even quantitative metrics, you would be forgiven for thinking that it’s all smooth sailing from here. However, the journey ahead will be rocky if you have not accounted for other stakeholders when venturing into e-commerce.

Integrating your online and traditional businesses begins from the top – CEOs, company leaders and senior managers need to be committed to establishing a significant role for e-commerce in their organisations. In particular, the CEO would do well to initiate a company-wide dialogue on the business changes necessary to fully encourage e-commerce efforts. Oftentimes, the real decision-making rests with the CEOs, VPs and senior leaders – having this conversation is crucial to ensure that everyone is aligned and properly supporting the e-commerce transformation, especially when traditional business mindsets persist.

Top executives and department heads must come together and ascertain the company’s current market positioning through a competitor analysis, examine how e-commerce can help it further grow and then lead the required investment and collaboration across functional departments.

While a successful e-commerce strategy should integrate the traditional business with its new online presence, keeping this integration healthy and effective means that cross-functional teams and remotely working teams should assemble with greater frequency to ensure that the e-commerce business remains strategically focused and continues to perform effectively.

Traditional businesses wishing to adopt multi-channel e-commerce might also encounter friction further down the company hierarchy. If the importance of e-commerce remains poorly understood, you might find your distributors and salespeople pushing back against its implementation.

Salespeople, for instance, may worry that the e-commerce business will take a bite out of their potential commissions. Educate your sales teams on how e-commerce can actually complement their daily sales activity. For example, a decorative lighting retailer could have an online terminal installed within the physical space to promote more product variety on their platforms. The salespeople in the store could be offered commissions for e-commerce sales completed through the online terminal. This would go a long way in demonstrating how the different sales channels can avoid competing, but rather complement each other.

It’s not always easy for traditional businesses to embrace change and expand into new, unknown markets. Just as every traveller navigates better with a reliable map, a comprehensive strategy for e-commerce will help your business venture into online marketplaces more safely and progress with greater purpose and confidence. By taking into account the unique shopping behaviour of online consumers and how e-commerce sites work, you can use data-driven campaigns to attract customers to your products. Then, keep them engaged with superior customer and fulfilment services delivered through integrated channels.

1. Choose the Right Marketplace

When expanding into e-commerce, first decide whether to set up your own online platform or to use an existing online marketplace. Your choice is the foundation of your e-commerce strategy.

2. Integrate Online and Offline

Your e-commerce platform should boast the best of both worlds. Unite greater variety and convenience with strong customer and fulfilment services to maintain consumer loyalty. Cross-functional business teams should align often to ensure successful integration.

3. Keep Consumers Engaged

Boost your e-commerce presence by continuously engaging consumers to stay relevant. Track your performance with engagement metrics and use them to run targeted sales campaigns. Consider flash sales or cross-promotions to earn more value from potential customers.