There is a very common misconception when it comes for companies to decide about how to approach E-commerce.
I am referring to companies that sell through store based retailers. Think Nike, as an example.
Right now, many of these companies are still experimenting and trying to find the right approach to E-commerce.
Typically, the first thing they try to address is how to sell directly to consumers through their own online shop. This is the most common way management look at E-commerce in such companies.
Here is the big misconception: whatever you’ll manage to sell online through your own online shop, it will never be as much as what you could sell through online retailers (a.k.a. e-tailers). This aspect is very often overlooked.
My take is that out of your 100% of online potential sales, e-tailers will account for at least 90% of the total, not less.
Where should you put your focus on then?
The route to market for these companies should start from understanding consumer behaviors online.
Where do your category buyers find information online? Where are they already buying? Which e-tailers are dominating sales in your category?
From here you can start designing your route to market.
Competing with the Amazons of the world for traffic, marketing, fulfillment or customer service capabilities is very tough, to say the least.
You better make these e-tailers part of your route to market. You better master internally how to sell through them. You better stop avoiding them.
It’s not late.
Nike has just announced that it will start selling on Amazon, directly (full control of brand, prices and fulfillment).
What about selling through your own website?
As a consumer, on your own website I expect to get to know better who you are as a brand. And learn about your offerings. And yes, to buy any of your products right from your website. Or, after learning from you, to buy somewhere else online if I find better prices. And that’s just right.
The gold in the E-commerce world is to be found in the wider reach and sales you can get for your brand through e-tailers. Where the vast majority of your category buyers are shopping online.
What do you think?
Photo by Brook Ward
Is conversion rate the ultimate number for your E-commerce? Is it revenue per user?
Companies approaching e-commerce find themselves squeezed by two forces: money making and branding.
When your website sells AND tells the STORY of your brand, then big fights start.
What goes on the home page? Our brand video or the last promo campaign?
How to balance commerce and branding?
Some solve the problem creating different websites. Hi! This is us! Want to buy? Then go there.
What is missing in such a debate?
Yesterday I had a casual conversation on the topic with my old friend Claudio Tonti. He put things from an unusual angle.
When you focus all your efforts on your conversion rate, say 3% (very high for a brand selling directly to consumers through multiple channels), and you keep pushing and pushing to improve it…
What about the remaining 97% of visitors?
Are you serving them?
97% of the time your website is serving people that are not buying yet.
They may be buying in 3 years time.
You want to make the right impression to your 97% of not buyers. You want to welcome them, make them understand who you are, why you exist.
You want to let them understand how their life will be better when choosing YOU, your brand.
Finding the right balance between Brand and Commerce for companies that are not pure e-commerce players is biased.
We are focusing on today’s measures (Revenue, AOV, RPU, CR, etc.).
We have no similar focus on what we are building (or not) when dealing with the 97% left.
I argue that your website can serve both goals well at the same time.
Just let’s do not forget that we are delivering a branded experience.
You can enter a boutique of a renowned brand at the “Avenue des Champs-Élysées” and still buy, right there. That does not imply your shopping experience should feel like buying in a supermarket.
What is the ultimate number of your E-commerce store?
What follows is a short essay I completed for my Managerial Economics module, part of my EMBA course I am taking at the Hult International Business School and it is inspired by the “Zero Marginal Cost society” envisioned by Jeremy Rifkin.
What close are these snapshots from what will actually happen by 2035?
Martin wakes up. It’s 11 o’clock. He takes a shower and meanwhile reads the news & check his emails on the shower glass. He picks up a pair of jeans, a t-shirt and a jacket and go to a Cafe where he gets a Latte, some fresh fruits and a croissant. The place has about 35 tables. Each one accommodates 4 to 6 people. There are some whiteboards around.
In the world of Martin, most people work in the service economy which lately has grown mostly in the fields of the arts, culture, filmmaking, entertainment, theatre, food & cooking, education, sports, wellbeing, health, information technology, design and many other jobs that require lots of common sense. Yes, these are the jobs that robots cannot do yet. Common sense is a difficult task for robots and artificial intelligence. Plumbers, artisans, pizza makers, baristas are some more examples of jobs that still need human common sense.
Luckily enough, robots do most of the jobs anyway. The marginal cost of almost anything is low, allowing the society as a whole to be as productive as ever, with little direct labor involved. More value now is being created from the same amount of capital and work.
Using the internet and the data coming from the trillions of sensors embedded in everything, there is hardly any waste of resources: transportation, energy, people, infrastructure and beyond. We have never been as rich as today.
What drives the economy is the most human part of people: creativity. It is “creativity” that fosters innovation. And creativity nowadays is hardly owned by corporations. As most people are knowledge workers connected to an ever changing marketplace of opportunities, people work on projects based on personal preferences and fit.
Everybody is a company, everybody is a brand.
This has led to almost total flexibility in the workforce, with companies hiring on a project basis and looking for the best talent, wherever is available.
Martin does not own a car or a house and tends to rent almost everything he uses. As most people of his generation, does not have an interest on owning things. It is not a status symbol as it used to be in the past. The relationship of people towards “things” has dramatically changed over the past 15 years as people are more conscious on the impact of their purchasing decisions on the planet. This is why owning stuff that would stay idle most of the time is seen as a negative trait from society.
The social impact each company has on society has become a real business driver. As people can get similar products from companies that do have a positive impact on the society, companies are competing on the good they are doing to the world as a way to gain customers preferences.
Martin lives in the niche economy. Thanks to the availability of technology, knowledge, information and low cost of products or services creation and delivery, a whole new range of micro, small and medium enterprises have grown, contributing up to the 82% of the total value added creation in the economy.
While Martin is sipping his Latte, he votes for 3 new law proposals that are being discussing at the parliament. After the great pressure that most governments suffered from the community about its decisions via Social Media, nowadays is common to consult the broad population on many decisions of public interest.
The Government has the main goal of keeping the neutrality of the internet and to govern intellectual property in such an open world to keep “the platform” open and accessible to everyone who is part of the community.
Martin now lives in a world where he counts more than ever. A world where everybody has the possibility to emerge and, for the very same reason, it is difficult to do so. It is a world of niches and communities of interests that go beyond old national borders. Communities that drive specific markets dynamics and that big companies have hard time to understand. Ironically, the globalization was not what many had in mind at the beginning of the century: the homogenization of consumer preferences. It turned out to be the other way around: every community has its own version of fashion, music, food, believes, and more.
Martin lives in the society of no more-middlemen. Even retail spaces are now places of relationship with brands, more than places where to buy products. Car dealers, brokers, real estate agents, travel agents and the likes are portraits of the past.
Martin goes back home. Kisses her daughter, brings in his japan-mex dishes dinner. Before going to bed, checks his energy account and discovers to be richer than the day before as he is producing his own energy. Then he closes three projects he was doing for three different companies.
For Martin, tomorrow will be another day where to create his own future.
Just back from a two weeks business trip to the US and UK. I met friends and colleagues and spent time trying to figuring out how online marketing can support better their business goals.
Aside from the great time we had, there is something that became, day after day more and more clear to me: the meaning of content nowadays. Here my conclusion:
Business today is all about creating relationships through content.
And this mean much more that what just “content marketing” is supposed to be.
The days of interruption marketing are gone. We agree on that, correct?
The more I discussed with my friends and colleagues WHO our best customers are, HOW they are discovering our company and products, WHY they are buying and are happy about us… the more became clear that CONTENT is the New Marketing.
So, here a few questions.
- Where are your best customers?
- How can you be useful to them beyond your products?
- What content can you create to be relevant and useful to them?
- How can you get that content in front of them at the right time?
- How can you make that content easily shareable?
- Etc. (You get the point)
There are dozens of great examples of how this is happening and is going to happen in the future: an immersive experience on a magazine your are reading on your iPad and click, you buy what a celebrity is wearing or you get to discover a new company while playing a video game, etc.
Bottom line: now it’s the time where business grow through extremely relevant content to a very specific type of customer.
L’Italia è un paese di piccole aziende. Branding è una parola troppo grande nel nostro contesto. Branding evoca nomi come Coca Cola o De Beers o Fed Ex. E così associamo il branding al marchio. Il marchio che evoca… qualcosa.
Quanto ci vuole a costruire un brand?
Il rischio del branding è quello di pensare ai loghi, colori, immagini da usare… dimenticandosi dell’essenza.
L’essenza è la relazione.
Ogni singola volta che una persona entra in contatto con la tua azienda si instaura una relazione. Una relazione è una esperienza. Una esperienza è qualcosa che le persone ricordano e associano alla tua azienda, al tuo marchio, al tuo brand.
E’ il modo in cui mi tratti che determina la percezione che ho della tua azienda e del tuo band.
Giorni fa ho chiamato la Trony (non ci sono paragoni…). Volevo sapere se avevano un modello di TV. Dopo alcuni tentativi, mi risponde una ragazza. Mi dice che mi deve passare “il reparto”. Ring… ring… ring… il reparto non funziona. Metto giù e riprovo.
La ragazza di prima… le spiego… le chiedo “potrebbe informarsi lei e farmi sapere…?” Dentro di me spero che si offra di richiamarmi. Niente, insiste che deve passarmi il reparto… Insomma, la devo tentare la ruota della fortuna. Ring ring ring… ho comprato il TV altrove.
Do you care?
La ragazza era, in quel momento l’azienda: Trony. Non m’importa nulla se a dovermi dare la risposta doveva essere il reparto TV. Ho chiamato il numero che c’era sul sito e ho chiesto di un prodotto che vendono. A che altro deve servire il numero?
La verità è che quella ragazza”didn‘t care”. Hanno perso una vendita, hanno guadagnato un post negativo sul mio blog, la mia percezione negativa, la mia esperienza negativa… Hanno distrutto un pezzettino di brand.
Puoi obiettare che è la norma. O quasi.
Forse hai ragione. Ma allora, che opportunità c’è là fuori?
Costruisci relazioni, costruisciti una buona reputazione. E’ Il miglior investimento in branding che puo fare.
If only you care…
Sapere a chi chiedere. E’ il bello dell’avere dei propri “guru” disseminati per la strada della propria crescita intellettuale.
E’ il caso di Paul Krugman. Mi ispirai a lui ai tempi della mia tesi. Economista internazionale, aveva (in parte) previsto la bolla immobiliare e la crisi. Dico in parte, perché le proporzioni…
Qualche giorno fa Krugman ha detto che il problema non è la scarsa liquidità, ma la solidità delle banche. Dunque, il piano americano, volto a comprare titoli sui mercati (=liquidità) non avrebbe funzionato. Bisognava comprare azioni delle banche (=ricapitalizzarle) per evitarne il fallimento (=collasso del sistema).
Ora tutti si stanno muovendo verso la ricapitalizzazione, come già fatto da Gordon Brown in Inghilterra. I governi si ritroveranno in parte proprietari di molte banche. Passata la tempesta, gli stati potrebbero anche guadagnarci.
Problema: nessuno sa di quanta ricapitalizzazione potremmo avere bisogno. Abbiamo scoperto lo sciroppo che funziona ma non sappiamo di quanto ne avremo bisogno.
p.s. In Italia le farmacie sono chiuse (dove li prende il governo i soldi?).
Aggiornamento: stamattina Krugman ha ricevuto il Nobel! faccio il Berlusca: “Krugman lo l’ho scoperto Io!!” 🙂