Rädsla för kannibalisering (kanalkonflikt)
Det finns för lite relevanta publika siffror som bevisar att man faktiskt säljer mer totalt sätt när man satsar på e-handel, och det saknas också siffror på hur mycket en e-handelssatsning ger det fysiska butiksledet eller de andra säljkanalerna. Den här frågan blir mindre och mindre idag då hela branscher transformeras, se till exempel på på böcker, CD skivor och resor, där sker idag den större delen av transaktionerna på nätet. Dock kvarstår ändå utmaningen i affärsmodellen för många, speciellt om man inte äger sina egna butiker (franchise) eller om man inte idag säljer direkt utan endast via återförsäljare. Under den här punkten kan ju även nämnas att många är rädda för att vara så pass transparenta med sitt sortiment och sin prissättning som man faktiskt blir när man lägger ut sitt sortiment med priser på nätet.

Saknar logistiska förutsättningar
På lagret har man brist på yta samt att man inte plockar varorna styckvis utan i större förpackningar som går ut till butik där de packas upp. Skall man satsa på e-handel måste man vanligtvis bygga om sitt lager för att frigöra en yta specifikt för e-handel där man har styckplock på e-handelssortimentet. Detta är ett projekt som tar mycket resurser i anspråk och något man inte anser sig kunna prioritera ”just nu”.  Vanligtvis finns även en rädsla för hanteringen av en större mängd returer och reklamationer.

Kortsiktighet och för många andra prioriterade projekt
Att satsa på e-handel påverkar hela organisationen och är väldigt krävande för hela verksamheten. Det är svårt att driva ett e-handelsprojekt parallellt med att man uppgraderar eller byter sitt affärsystem, kassasystem eller andra förändringsprojekt.

Det är för dyrt, för lång ”Return on investment”
Fokus ligger ofta på lönsamhet och många tänker relativt kortsiktigt på sina siffror, ett e-handelsprojekt räknar sällan hem sig på ett år, vanligtvis tar det två, tre eller upp till fem år innan man räknar hem den initiala investeringen vilket gör att man prioriterar andra ändringsprojekt med snabbare ROI. Skall man ha snabb ROI på sitt e-handelsprojekt krävs det att man tar i med hårdhandskarna och gör en rejält fokuserad satsning.

Övrigt
Utöver anledningarna ovan så inser man ofta när man börjar titta på en eventuell e-handelssatsning att man inte har de interna förutsättningarna på plats vad gäller till exempel produktinformation, konsumentinformationshantering, kompetens om e-handel eller central kundtjänst.

Det finns fler anledningar och de skiljer sig såklart åt från verksamhet till verksamhet, men här har ni en kort förklaring. Vill ni dela med er av fler går det självklart bra att lämna en kommentar på det här inlägget.

Johan pratade om hur du får en smartare kundkommunikation via 7 enkla steg.

1.        Multichannel communication- integrerad kommunikation

• Utnyttja befintliga kanaler fullt ut
• Använd samma tonalitet i alla kanaler
• Anpassa budskap efter kanal

 2.       Vårda relationen till befintliga kunder

• Vad ger du dina befintliga, trogna kunder?
• Stärker du relationen eller byter du bara ut en trogen, lönsam kund mot en ny illojal kund?

3.       Öka relevansen i din kommunikation

• Segmenterad kommunikation är det första steget
• Personlig kommunikation är nästa steg

4.       Händelsestyrd kommunikation

• Följ upp din kund

5.       Lönsamhet i fokus

• T ex en kundklubb

6.       Välj rätt kanal för din kommunikation

• SMS
• E-mail
• Print

7.       Mervärden

• Visa att du uppskattar dina kunder t ex via bonussystem, riktade utskick mm
• Status som mervärde- differentiera produkterna

On the discussion slate was:

• Multichannel retailing vs. classified ads – similarities in challenges and opportunities
• Product catalog syndication
• Optimization before strategy
• Market expansion (looking east)
• Scripted tests
• Way to grow

Similarities in challenges and opportunities

It is always rewarding to seek similarities in related businesses. If you are in online business, you will always face the same challenges with regards to traffic recruitment and conversion. The same resources and the same knowledge applies. So the managers could probably swap traffic, analytics media planner people between them. Then there are many operational issues which are the same. They face the same decisions about site development, payment strategy, personalization, pricing strategy, product presentation etc.

Product catalog syndication

We will probably see much more of Product catalog syndication in the near future. This is when the e-tailer seek a distributed presence over the traditional ”buy-traffic-then-convert-on-site method”. The challenge is to find the sites and contexts where your target group is already in ”buying mode”, and then distribute your product catalog to this site. The e-tailers site delivers the landing page and the transaction functionality. The syndication site delivers the buyer and the shopping experience. Interesting about this is that you let go of exclusively managing the whole branding and buying process on-site. The price-comparison sites have ofcaurse been around for a long time, but this can certainly be taken to the next level.

Optimization before strategy

An interesting conclusion – The Swedish limited online market requires more focus on optimization, than bigger markets such as UK and Germany. Swedish e- tailers therefore need to be even more streamlined and have even more super efficient sales oriented sites. The e-tailer needs to have an ”Optimization before strategy” orientation. This is important as a cultural statement. This requires a organizational culture which says that optimizing your site is the coolest thing you can do. It also requires in-house development team who can implement the fine tuning that is needed. Optimizing before strategy also means follow leaders rather than of making the big bold moves.

Market expansion (looking east)

A natural geographic market penetration for Swedish e-tailers is to the east. I.e. Ukraine and the Baltic regions. As always new markets requires special arrangements for delivery and payment, and the eastern countries even more so. Decisions about Central control of concept vs. local adjustments needs to be taken. Local rules and regulations have to be taken into account.

Scripted tests

Use Selenium IDE. Useful for regressional tests. Can be applied every time new code is compiled.

Way to grow

Start basic with low overhead. Research customer needs. Launch. Market through distribution to market places, price comparison sites, search engines (applied online marketing and link building) etc. Take care of customer (conversion and fulfillment), make sure she comes come back (loyalty). Optimize!

What will you choose?

Depending on the financial situation of your company and what market you operate in, there are different strategies to select:

Strong economy / high growth

If you have this starting position, you have great opportunities to go out of this recession as a winner. Now is the time to invest in your e-commerce in several ways to take market share. Think broadly and consider how you can develop new channels such as mobile, social networks, Kiosk solutions and create an effective multi-channel strategy. Expand to new markets, extend your range of offers, set up micro sites for specific brands, audiences, products or for individual campaigns.

Strong economy / mature category

For companies that have a good economy, but operates in a mature market should focus on enhancing your customer experience on you r e-commerce site. This can be done by creating a more efficient customer service with intelligent chat functionality or with a user experience management system from Tealeaf. Consider how you can integrate and work with your existing customer base. Invest in a feedback platform like uservoice to create a dialogue with your customers and collect valuable insights on how you should develop and expand your business and e-commerce site.

Weaker economy / high growth

Companies that are not financially strong but seem to have a positive market should focus on activities that rapidly increase profitability and take market share. Bet on a personalization strategy by using automated systems from e.g.  Avail. Take advantage of all the benefits of a personalization, both on the site to create a high relevance for the visitors but also in your e-mail marketing to increase profitability.

Weaker economy / mature market

If you are in the unfortunate situation where you are not financially strong and you work in a mature market you should rethink and evaluate new opportunities. Is it to reach out to your customers through other channels?  If you are not already blogging, or in any way making your messages and communication with your customers more personal, this is something you should start doing as soon as possible.

There is a final strategy that all companies should invest both time and money in, regardless how the financial situation is or on what market you are operating in. This is to create a process, knowledge and tools to measure, analyze and test. To create a process to constantly increase the traffic, order value and the conversion rate is something that all companies who want to succeed in with an e-commerce sale have to have a process for.

E-merchant X is a bit dissatisfied with his e-commerce site. He does not think it builds the company’s brand and he hopes that visitors will buy more. He does not really know who visits the site, why they are visiting and if they are leaving the e-commerce site happy, but he knows he is not satisfied with his sales.

He raises the issue with the advertising agency. They agree with the problems and start to talk about the customer experience. They say they like to ”spice up” the e-commerce site with a new design that captures the visitor, reinforces the brand and attracts visitors to buy.

E-retailer X gets what he has asked for: a better looking site. But because he did not have knowledge of the visitors and their preferences, it is not certain that it will lead to more buying, or a stronger brand. His sales will probably not increase.

E- retailer Y has heard that a red buy button in the right corner works better than a green one on the left. She implements the change immediately, because she really wants to increase the conversion rate.

The problem is that she does not test the change before implementing it, and the customers who are accustomed to the green button do not see the new button. This will make the customers annoyed, but Y will not notice because she has no tools to listen to customers or to test the new design of the buy button.

E-retailer X and Y are making changes to their e-commerce site in the same way that most e-retailers do. A study done by Web service award, in collaboration with Wipcore, only 15 percent of e-commerce works with statistics, tests and evaluation.

There is a right way to make changes and achieve goals for an e-commerce site. Right change requires the right decision basis. This can be collected from visitors and statistics. When the change is implemented it is essential to test and measure the effect. Making changes with this information does not need to be expensive, and it will strengthen the brand and increase sales.

Begin by asking the visitors what they think about your e-commerce site with the help of a simple questionnaire in which the visitors can rate your e-commerce site, indicating the purpose of their visit and whether it was achieved. Afterwards, if they did not achieve their purpose ask them to tell you why, and those who achieved their purpose may give suggestions for improvement on the site.

The survey gives the company the decision basis necessary to make changes to appeal to visitors.

When you make changes on the site you should test their effect. An effective and inexpensive way is to divide the visitors into two groups and let them test the old version alongside the new and compare how they behave. In this way, they can refine the change and the broad launch until it is perfect.

Do not turn to the advertising agency to improve customer experience and increase conversion rates on your e-commerce site. It is a mission impossible without the right decisions basis. Instead, take the time to analyze traffic statistics and ask your visitors what they think first.

By listening to their requests, understanding the web analytics and measuring the impact of the changes on the e-commerce site you will increase your sales and strengthen your brand. It is a pity that so many make chances and hope when they change their e-commerce rather than to be sure and do right the first time. Shortcuts are not the best way to succeed with an e-commerce site.

My tips for e-commerce managers

• Collect visitors’ opinions, which come in via phone calls, e-mail and personal meetings, all in one place.
• Provide customer service in the mission to make monthly reports on complaints on the e-commerce site.
• Perform site surveys
• Implement continuous improvement according to customers’ requirements
• Test the changes correctly with A/B testing or with multivariable testing.
• Have an ongoing process that measure, analyze and test.

Increasing sales on an e-commerce site can be done in three ways: 

1. Increase traffic 
2. Sell more to costumers that are already buying
3. Increase conversion rate

Drive Traffic

This theory is based on pulling in as much visitors as possible to the e-commerce site. This is can be done through banners, sponsored links, search engine optimization affiliate program. This type of pull marketing costs some money per visitor or costumer, depending on how you measure. To maximize sales by this approach requires the system to efficiently add, modify, remove and test the effect of the campaigns. This approach is short-sighted and the changes you make are direct and have no long-term effects on your profitability.

Merchandising

With merchandising, I mean how to optimize product management and display of various products to the visitor and create a buying spirit. The key is to sell more to those who already have bought, or to sell products that have a higher profit margin. In regular e-commerce terms we usually call this ”cross and up sale”. Cross sale is to show accessories or complementary products to the goods or products the customer already has in his or her basket, usually this is displayed in checkout process and on the product display pages. Up-sales are when you display additional products that are more expensive, or where e-merchants have a better margin. This is now with modern technology automated in a very intelligent way and there are infinite variations that can be tested to achieve the best results. A further step to increase the order value is to apply behavior-based merchandising. This can be done by automatically analyzing how visitors enter the e-commerce site, which products they are looking at and aligned with this behavior you can present relevant products.

Increase conversion rate

Conversion rate has for a long time been the golden ratio for e-retailers. It may be obtained by dividing the total amount of orders with the number of visitors during a specific time. What affects the conversion rate for an e-commerce site is really all an e-retailer is doing or not doing. It may be how the navigation is built into the color or the size of the buy button. Here there are always things to improve. A small detail that usually does not cost as much in investment can still affect the sales result significantly. The impact of increasing the conversion rate is long-lasting compared to buying traffic to a e-commerce site. Having a process for continuously working to optimize the conversion rate will both increase sales directly but efforts will affect sales in the long term.

Conversion pyramid

To become a successful e-retailer you have to work with all these three parts. You cannot just optimize the cost of driving the visitors to the site because if you cannot convert visitors into customers you do not earn any money. The same is if you only focus on optimizing the site so as to convert in the best possible way and you do not have any visitors there will be no high sales.

To succeed with e-commerce sales you will have to build a solid structure. Your first task will be to optimize the conversion rate so that the visitors that are on the site achieve what they want. Hopefully it is in line with the business goals for the e-commerce site and usually this is sales. After you have optimized the e-commerce site so that the visitors will buy, find and accomplish what they want on the site you should take a look at what I call merchandising. That is how you can get those who want to buy on your site to buy more, or buy products that have a higher profit margin. Then you have become a master in merchandising and only then should you drive traffic to your site.

Exponential profitability

By first focusing on converting visitors into customers and creating a solid base which, in turn, optimizes and enhances the efficiency when you want to persuade customers to buy more or buy something else. It goes without saying. If you cannot get X number of customers to buy at all, how can you get them to buy accessories, additional goods or any other product? However if you have optimized the site with a focus on getting visitors to convert to buyers, there are great opportunities to get them to buy something else or better yet, get them to spend more money on every transaction.

When you have these two parts in place it´s time to add gunpowder on your marketing efforts and get traffic to your site. Then any visitor will be much cheaper because you convert more visitors into customers. This creates an exponential curve of the profitability of your e-commerce site when you look at the ROI on all costs spent on increasing sales in an e-commerce site.

Abstract

I do not mean that you should stop optimize your search phrase in your sponsored links, terminate your affiliate network or stop optimize your cross sale and up sale impressions. If you want to create a successful and profitable e-commerce business in these difficult times you will have to focus on the right parts and with the right allocation of resources and investment. Do this gradually and in a structured approach. What is better when we talk structure than to describe this by using one of the military’s most-used rhetoric approach:
Initially get as many visitors as possible to convert to buyers.
Then get them to buy more or buy more profitable products.
Finally, drive more traffic to your e-commerce site.
Prepare to administer more orders than you have ever dealt with.

We have no idea where it will end up, but I do think (or hope!?)  it will cover all aspects of e-commerce from business oriented to technical questions. I will try to write here once in a while about my days as managing director of an e-commerce consulting company, see you around friends!