Top tips for transforming your e-commerce function
Zhibek Valevka, Associate at Odgers Connect, and Lisa Weaver-Lambert, independent digital and commercial strategy specialist, explain how organisations can successfully transform their e-commerce functions.
Businesses are shifting from being multi-channel organisations, with separate stores, resellers, internal processes and nascent ecommerce capabilities, to having a fully consolidated omni-channel model. Specifically, organisations are evolving in response to the rapidly emerging interdependent relationship of physical and digital channels with the aim of seamlessly aligning marketing channels with customer behaviours and buying patterns. However, with comparative shopping becoming the standard, businesses today need to meet customer desire for ‘suits them’ interactions, fast service and personalisation across all platforms and devices. Omnichannel shoppers have a 30% higher lifetime value than those who shop using only one channel.
Developing their omni-channel experience is however, one of the biggest challenges businesses face. This transformation centres on building an integrated business model underpinned by an analytics capability that can provide a seamless customer experience across all departments; from the first interaction with a company through to purchase, a customer should experience a consistent service. E-commerce is fast becoming one of the main touchpoints of this customer journey with shoppers combining digital and physical platforms - 71% of shoppers use smartphones as a part of their in-store experience. As the high street is having less of an influence, e-commerce needs a scope beyond a simple transaction on a website, it should incorporate wrap around services, engaging content and digital self-service capabilities.
Transformation of an e-commerce function has to begin with the overall business strategy, ambition and the right leadership. Unless an organisation has a tech savvy commercial director, a specialist e-commerce director is necessary at board level. However, hiring a knowledgeable leader is just the first step in transforming an organisation’s e-commerce function; there are several other key aspects that have to be considered and developed in order to make it a successful, and valuable, business function.
1. Agree on how e-commerce delivers on the business’s overall strategic ambition
Thinking about an e-commerce function separately is the most common trap businesses fall into - it is fully connected to the rest of the organisation. The complete customer journey is important to all business areas as customers are now channel agnostic and will fluctuate between multiple different touch points, those being both physical and digital. Isolating e-commerce is therefore no longer an option; the services provided by each part of the business must be considered collectively to be able to meet customer demands in a seamless and consistent way.
To establish a less siloed approach, it is critical to develop a consistent nomenclature and an understanding of the interdependent processes between sales channels, finance and supply chain. For example, this might include defining what qualifies as a sale – for finance it is likely to be post-return, whereas for e-commerce or sales it might be pre-return. To build and enhance an e-commerce function, these departments must be able to converse and work with each other in a clear, open and transparent manner.
2. Centre your approach around customer behaviours
When investing in e-commerce capabilities, a key consideration should be the behaviours of your customers and their interactions with the company. To get a full understanding of how customers engage, analysis of user data collated from across channels can be used to determine journey maps of each key customer segment – a strategic activity to model the needs and steps customers take on and offline. Combining demographics and qualitative research on customer priorities with analytics on behaviours and purchase history can provide a comprehensive understanding with more scope to personalise the precise details of the e-commerce experience – a vital component as 91% of customers are more likely to buy from retailers who recognise, remember, and provide relevant offers and recommendations. Setting these templates to be used at an organisational level can eliminate conflict and encourage collaborative work as each function has the common objective to service the established needs and preferences of the customer. This activity can be fed into a comprehensive strategy to unify pricing and product information across channels.
3. Create a master data set
Every company has a unique data set that is being generated every day. Data collection is a major activity of all e-commerce functions, with 77% of strong omnichannel companies storing data across channels, compared to 48% for weak omnichannel companies. But collecting and storing is not a valuable business activity unless there is a well-structured data analysis process in place. The data capture and processing procedure has to be methodical so that useful information can be pulled across functions.
All data analysis activity should have a focus on (a) increasing sales, (b) customer retention and (c) increasing a moat of capability that the business has over other competition. Many businesses end up analysing isolated data sets, but these ‘vanity’ metrics don’t always offer real value. Part of the e-commerce transformation has to be a consolidation of customer data into a single view that can be matched to product data. Information on conversion should ultimately be used to improve the customer journey.
4. Align your organisation, infrastructure and incentives
Once your customer journeys are defined and there is a clear data strategy in place, then you can start thinking about changing business processes and governance to meet objectives and determine whether you have the right infrastructure for an omni-channel approach. Functions need to be united behind common company goals; there have to be shared KPIs for digital, branches, customer service and IT to optimise rapid response time and collaborative working.
A major component of an integrated architecture is automation – typically an Enterprise Resource Planning (ERP) system. ERP is now becoming the minimum foundation of the digital system; cognitive processing is the latest disruptor that is fast becoming yet another turning point for development in e-commerce infrastructure with 94% of retailers planning on investing in the technology. As software continues to rapidly progress and improve the efficiency of the function, B2B and B2C companies must consider upgrading their systems in a modular manner to stay ahead of their competitors.
5. It’s all about execution
If a company is not fully committed, or is not internally ready, to carry out an e-commerce transformation, outsourcing is a viable consideration. There are many entities that provide a service to those businesses that find making the shift difficult, especially those that are more product led with a strong history in manufacturing excellence. In these cases, it is beneficial to outsource rather than attempt to keep this in-house and on the fringes of the company. Another outsourcing option is to use marketplaces, such as Amazon, as these platforms may already have a dominant share of customers in a given business category.
The e-commerce function, and ‘always on’ multi-device presence has become increasingly important, with 90% of customers expecting consistent interactions across channels. With the decline of influence of the UK high street and the traditional brick and mortar store fronts, businesses must be shifting their focus to their digital presence. It is a strategic investment to transform an e-commerce function, requiring data analytics staff, development of specific processes and upgrading systems, and integration of the work into the broader business and the supply chain. A well-structured and strategy-led e-commerce function that evolves with the demands and purchasing habits of their customers can minimise costs, ease and streamline processes, improve the overall customer experience, and vitally, the function can drive sales and build a moat of capability over competition.
For more information, please contact Zhibek Valevka.