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Profitable ecommerce strategies

Summary notes from Intent Group Virtual Boardroom Discussion on 17/11/20

Hosted by Ed Lawson, Intent Group

Guest expert: Louisa Hosegood, Digital and Strategy Director, Bis Henderson

Ecomm / D2C drivers & lessons learned

  • Consolidating pandemic gains: the pandemic has driven many recent ecomm/D2C initiatives but often in an improvisational way that isn’t sustainable long-term. The challenge now is to understand how much pandemic-instigated behaviour will stick and how to consolidate recent innovations on more solid foundations;
  • D2C needs a clear value proposition: experience has shown that D2C for a single brand struggle to compete unless it’s very unique or can’t be found elsewhere. Better results have come from value-added offerings including customisation but this can pose challenges in terms of sufficient scale;
  • Not either / or: common challenges have been rooted in the perception of the online business as a parallel entity, often because of having originated from a particular department or because it has been a marginal part of the business. A key to success is re-imagining online AND the bricks and mortar business holistically, including the redesign of frontline roles as much as head office strategy...a blend, not a switch. This false dichotomy can also create the illusion of higher costs because new online costs are incurred without simultaneously taking costs out of the traditional business;
  • Stakeholder management: technology is usually less than 50% of the battle: it can be useful to have a team that is healthily distanced from the traditional business to escape from legacy norms, processes, systems and preconceptions…
  • Commercial team alignment: however, there needs to be alignment and integration with commercials: need to avoid ecomm ‘competing’ with other channels: a good omnichannel strategy integrates all sales. Well designed KPIs can make sure ecomm is integrated for a ‘win-win’.  
  • Morphing of B2B and B2C: to a degree, B2C expectations are influencing standards and features expected in B2B. There is though, some retreat from short time slots, faster delivery etc, as businesses are seeing the costs of this service at scale. B2B needs to pick up the good elements of B2C without becoming B2C!
  • Long term viability/sustainability: as the balance has shifted to ecomm, for many selling through Amazon will be the most efficient route.

Key questions to resolve

  • Is the customer always right? Ecomm / D2C initiatives are often driven by customer demand for speed and convenience but this comes at a cost. Asset efficiency and the cost base are important constraints to consider for online operations to be commercially viable which may mean that some segments or products can’t sustain current high service levels. For example, what scale is necessary to internalise?, what synergies are there with existing operations?;
  • Push or pull?: in some cases, the shift to an online model hasn’t happened as fast as anticipated so there are questions about the extent to which this behaviour shift needs to be incentivized?;
  • Practical AI?: online models provide more customer data and a lot of investment has gone into smart algorithms and demand sensing to the extent that, in some cases, they are relied on more than customer forecasts. However, it has been harder to convert these insights into actions that make a practical difference;
  • End-to-end integration? One of the biggest challenges is integration of systems and processes. No single system alone can serve all the requirements but, at the same time, the system is only as strong as the weakest link in the chain so integrating data and systems is critical.


 


 

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