Due to the huge growth potential of the e-Commerce market, most retailers start to see the benefits of being online and are now tapping into e-Commerce. Furthermore, anyone who has ambitious growth plans can easily see that the start-up costs for establishing an e-Commerce business are far less than expanding the business in new offline locations. Actually we see online retailers tapping the offline ecosystem and offline retailers going online.
If you are starting to evaluate e-Commerce you will probably need to build a business case for the investment required.
One SAP Hybris research shows that customers are more likely to do the following online:
- Order outside the core merchandise
- Add items to order
- Order in bulk
- Buy standard repeated orders
- Order frequently
Beware: customer are also more likely to switch to another brand due to offers, better online experience, more detailed product information, etc.
According to Forrester, online channels make it easier for retailers to upsell and cross sell. Furthermore, customers that are online only tend to have a higher Average Order Value (AOV) than customers that are offline online.
Increased gross revenues and competitiveness due to lower costs
- Fewer employees needed to perform operations such as managing inventory and billing customers; e- Commerce players can decrease the cost of managing their inventory of goods automating the inventory management, using web-based management systems
- Fewer licenses and permits required to start an online business than that of a physical store location
- Significantly lower costs on infrastructure and facilities you use in comparison to central locations
- Lower order processing costs
- Lower costs and increased efficiency in sales and marketing (adjusting your strategy based on real time reports, patterns and trends)
- Easy to make comparisons fasts
- Limited number of human errors
- Less time and fewer employees needed for customer support and service while offering repetitive information on price, product description, configuration, availability. Full product description and associated info is available immediately online. (According to a Forrester Survey (B2B Commerce Suites, Q4 2013) after migrating customers to online e-Commerce platforms, over 50% of the respondents of a survey responded that their customer support costs decreased)
- Better productivity for the company and the customer – finding what you need gets faster and cheaper
- Sell 24/7 to customers miles away or across the globe covering a much wider market
- Minimal overheads and will mainly include routine website maintenance and updating content.
- Self service
Easier to build customer loyalty
- Easier to understand customer behavior and preferences
- All customers are already online and would expect their favorite brands to be online
- Competitors are online and would expect you to be online
- Use the power of analytics – you can calculate and evaluate sales effectiveness, best products, product mix, customer engagement, best marketing activities and more
- Enables you to communicate to customer segments in a very targeted way
- Enables deals, coupons, much better targeted campaigns; Though there are physical equivalents to deals, bargains, coupons, and group buying, online shopping makes it much more convenient; customer can use easier online coupons, with benefits a few mouse-clicks
- Gain new customers based on online visibility: Physical retail is driven by branding and relationships. In addition to these two drivers, online retail is also driven by traffic from search engines. It is not unusual for customers to follow a link in search engine results, and land up on an e- Commerce website that they have never heard of. This additional source of traffic can be the tipping point for some e-Commerce businesses
- Cost effective, targeted online marketing instead of costly print media or TV advertising
- Cost of opportunity: If you are not seriously considering going into e-Commerce just check your competition. See their moves and try to evaluate the business value you loose by not being where you customers expect you to be and where your competition most like already is or plan to head to
Possible downsides of e-Commerce in comparison to physical shops
- lack of personal touch
- can be good or bad that it makes it so easy to compare prices: customers can easily migrate to other websites
- inability to try/test the product before you buy it – this is mitigated by very standardized return policies
- possible security issues
- delay in enjoying the purchased goods
- phone and email customer support team is needed
- lack of in house talent – physical shops need to understand the complexity of e-Commerce and have a Head of Strategy to implement it
- possible channel conflict – do not see as identical channel conflict with multichannel as they are not. Existing brands need to make sure that their brand image, pricing, messaging will be unified on all channels
- technical difficulties – it is possible that the existing IT infrastructure does not support online, thus requiring additional investment in other IT solutions for CRM, order management, warehouse management, customer service
- harder to identify scams
- complex regulations and taxations
More about the e-Commerce business case and strategy, e-Commerce trends and recommendations in the comprehensive eGuide we have recently launched available here.
Contact us if you need some impartial advise from our e-Commerce experts.