The Academy of Business Strategy - Ecommerce

THE ACADEMY OF BUSINESS STRATEGY - E-COMMERCE STRATEGY

2009-08-22T10:12:00.001+01:00

The traditional principles of marketing strategy can also be applied to e-commerce strategy. Making sure that the mix between your target market, your product or service and your corporate resources is still just as important. What many companies fail to recognize however, is that in many cases their online customers need to be categorized differently. The product or service may also need to be re-developed or re-branded and the online resource requirement is different too.

Online customers tend to be younger, although this will obviously change given time. Online customers also tend to be categorized as passive, with low attention spans. This is not intended to be an insult. It is a simple reality based upon the fact that supply always outstrips demand. Online customers invariably have infinite choice and very little time. But the basic principles of supply and demand still apply. To succeed companies either need to have a competitive product or service if they are operating within a mass market industry, such as supermarkets, telecommunications, retail clothing, or fast moving consumer goods, or alternatively they need to have an innovative or unique product or service, operating within a niche market, or they might need to provide a unique online user experience.

Everything happens much more quickly online. This includes establishing a first impression, corporate branding and product or service branding. This is an important issue because with branding preparation is always easier to achieve and maintain than branding recovery. The former is much less expensive too. It is achieved by taking a step backwards in order to take two steps forward. In other words, making sure that you have a sound e-commerce strategy, which has been thoroughly researched and developed and which incorporates your core business principles, ethics, business objectives and strategies.

Many companies think about their web site as merely being an online advert for their company. This is actually now a very dangerous mistake to make because online users will expect far more from your corporate web site. You should think of your web site as being an online subsidiary of your whole company. It should include and represent each and every department including Finance, Operations, Management, Human Resources, Customer Services, Marketing, Information Technology and of course Production. It should also enable customers to achieve the same experience as if they were to walk into your retail store, office, or factory personally. If it does not then the consequences can be devastating and difficult to recover from. Indeed the perception from potential customers may be that your company does not actually exist at all.

Research has proven that the first task that any customer now undertakes before doing business with a company that is new to them is to review the company’s web site online. The second task is then to search for any independent information which might be available online about the company from other customers. There also needs to be a plausible reason for why the company undertakes business online and it should be obvious to users why the customer experience is going to be much better online than it would be by visiting the company premises personally. Customers are looking for far more than just basic information about the company’s history, contacts, products and services. At the very least they are looking for the same experience which they would achieve by visiting your company premises. Consequently your e-commerce strategy needs to incorporate broadly the same corporate objectives of each individual company department, together with the additional objectives which will be unique to undertaking business online.

Just the same as it can be frustrating to walk into a retail store only to be kept waiting because there are insufficient numbers of sales assistants, it can be equally frustrating to be browsing through the company web site online only to be informed that you cannot proceed with your order because this particular part of the web site is under construction or temporarily unavailable. Both events can result in customers walking away, never to return. Consequently, just as a house has good foundations at its core, a good e-commerce strategy is based upon interaction. The more interaction there is between the customer and the web site, the more the company comes to life.

ABOUT THE AUTHOR

Prof. Patrick A. Ashley DMA MA BA is an e-commerce specialist who has worked for 15 years at board level within the internet industry incorporating FMCG, Information Technology, Telecommunications and Retail products. He has enjoyed a successful and sustainable career in an industry where both of these attributes tend to be in short supply and he is recognized throughout the internet industry for his strong online business consolidation skills. He now works within the professional education industry and is a registered Professor at the Academy of Business Strategy.

THE ACADEMY OF BUSINESS STRATEGY - E-COMMERCE ONLINE STORES

2009-08-21T16:28:00.004+01:00

The internet in principle is no different than any typical town main street. There are plenty of different small, medium and large stores to choose from, some are well known names and some not so well known. There are also plenty of information centres, recreation and food and beverage facilities all designed to improve the shopping experience.

For the majority of proactive retailers however, the internet is now established as being by far the biggest profit centre of all, contributing the lion’s share of corporate gross revenues and yet the online main street store costs far less to develop, far less to maintain and far less to stock than even the smallest traditional main street store. However this unprecedented success has still been achieved largely by accident.

At the beginning of the internet revolution most companies viewed the internet as being a source of new enquiries achieved in much the same way as a main street bill board or advertising on TV. The idea of using their corporate web sites as an online store has very much evolved over time. Now consumers can purchase anything that they can usually purchase within their local town main street online via the internet as well. This can invariably be done quicker, cheaper and more efficiently too.

So what is the difference between good and bad online retailers? Any good marketing expert will always advise you to feature your product as prominently as possible within any advertising or public relations campaign that you undertake. The internet is no different. Visitors to Harrods in London tend to go there for the Harrods experience. Customers expect in many cases to pay slightly more for products which they could purchase elsewhere for less, but the difference is considered worthwhile because you are purchasing the product from Harrods. The same is true of Saks Fifth Avenue and Bloomingdales. Creating the Harrods experience online has proven to be virtually impossible however and the company are still struggling to achieve this goal. Visitors to Harrods online expect to visit recognizable departments in the same way that they would if they visited the store. Providing the same products online is not sufficient in this instance because the same customers would not be prepared to pay inflated prices for products online via the company’s web site if they are not also being provided with the Harrods Experience.

Conversely Amazon has done very well indeed online, although the success has not been achieved without problems along the way, but these problems were caused by too much success and consequential delays with supply chain management and distribution. The main reason why Amazon has succeeded ultimately is because it is actually very easy for them to provide customers with a better experience than they would normally have in a main street bookshop or DVD store and they can also provide the products at a more competitive price. Book shop and DVD customers do not tend to be browsers like Harrods customers. They tend to walk into the store with a product in mind and the frustration of searching for it through endless stocks of other books and DVDs has been unceremoniously stripped away by Amazon. Not only that but they have been able to ensure that almost all of your favourite author’s books are already in stock, which tends to increase sales revenue and subsequently purchasing power considerably. It is a good example of where impulse buying can actually be more powerful over the internet than in a typical main street store.

Another example of this is Tesco. Always leading the market by determining their customers needs and buying patterns in advance, Tesco has developed their online store in such a way that it more-or-less replicates the shopping experience of a typical main street store. All of the products are still decentralized into clearly recognizable departments. You can still virtually pick up the product and read the ingredients, compare health information, browse through alternative products, put items into your basket and then change your mind and take them out again. You can review the total cost of your daily shopping as you go along and adjust this without the embarrassment of having to face a check out assistant. Supermarket shopping tends to be laborious and hard work, particularly for elderly customers, pregnant customers, or customers who work long hours or who have small children. So it has been easy to strip out all of these frustrations and add in numerous benefits when shopping online. Their web site database remembers your last orders which saves you time can you can still take advantage of special offers. You can have your goods delivered to your home and customers will invariably have the time and the patience to browse around for other products which may be of use. In an industry where profit margins are small and competition is fierce the internet has effectively provided the industry with the supermarket store of the future and it is not impossible to envisage a time when their typical main street or out-of-town counterparts will no longer be necessary.

The Academy of Business Strategy has succeeded in developing and facilitating education online, where many mainstream business schools and universities have not. The reason for this is quite simple. ABS provides programmes require the practical integration of academic theory as an integral part of the qualification process and as such students tend to be in full-time employment while training. Many students also travel internationally with work while training as well and as such it is much more convenient for students to be able to study online without having to carry their study material and project studies around with them. You can then make the study experience more interactive, more enjoyable, less daunting and more fun. Individual students can also plan and manage their own study time. Contrary to Harrods for example, ABS can therefore provide its customers with a better experience online than it would otherwise be able to in a classroom on campus.

The general message here is quite clear. Those retailers who are able to replicate their typical main street store customer experience within their store online and are then able to add additional benefits from shopping online tend to be those who will succeed. It is not sufficient merely to offer the same products online at a discounted price.

Innovation can also play a part. I remember as a child being impressed by a particular department store merely because they had installed escalators. Well I had never seen any before! I thought that this store was very modern and even to this day think of them as being at the forefront of innovation. The brand image has therefore been sustained merely because they have invested in innovative development to improve the consumer experience. This can also be achieved online by being at the forefront of innovative technology, which directly impacts upon user experience. This requires significant and consistent investment but it is still far less costly than developing and managing a typical main street store.

The key success factors when developing online stores are therefore as follows:

1.Make sure that your products or services feature prominently. They should always be the stars of the show.
2.Remember to replicate the benefits of your traditional main street store online.
3.Be innovative with the development and management of your online user experience.
4.Your online store should offer additional benefits apart from the most obvious one of cost savings.
5.Be acutely aware of whether you would in fact be able to improve your consumer experience by having an online store, or whether you would be making it worse. Products or services that are considered to be necessities by consumers always tend to do better online, as opposed to those that are considered to be luxury items. This does not of course mean that benefit cannot be achieved online with luxury items, but the e-commerce strategy does need to be approached from a completely different perspective.

ABOUT THE AUTHOR

Prof. Patrick A. Ashley DMA MA BA is an e-commerce specialist who has worked for 15 years at board level within the internet industry incorporating FMCG, Information Technology, Telecommunications and Retail products. He has enjoyed a successful and sustainable career in an industry where both of these attributes tend to be in short supply and he is recognized throughout the internet industry for his strong online business consolidation skills. He now works within the professional education industry and is a registered Professor at the Academy of Business Strategy.