Introducing “e” into industry parlance has caused all manner of problems, not least for electronic commerce. Its use as a convenient prefix to anything vaguely related to the internet has played a central role in many a false start in the technology industry.
Instead of signifying the complexity of taking a physical activity and translating it to the online world, it seemed to have the opposite effect of luring many organisations into action without thinking things through properly.
However, lest we forget, e-commerce has been around for a long time – though perhaps not as we know it today. From corporations trading via electronic data interchange (EDI) systems to high street shoppers buying their groceries online, e-commerce is gradually capturing more of the spend both between businesses and between consumers and retailers.
Despite a shaky start, e-commerce is doing OK. From the dot com boom-then-bust, some useful lessons have emerged. So how can businesses thinking about e-commerce avoid the mistakes of their predecessors?
We can consider this by referring to the life cycle that has evolved during hundreds of years of traditional retailing.
What are the key ingredients? The first thing to acknowledge is that we do not need to reinvent the wheel – the underlying success factors for e-commerce can be expressed in the same terms as normal commerce. This may be of no interest to an online retailer, but is of critical importance to a traditional retailer looking to extend its presence into the online world.
Marketing: Generating demand is all about advertising, word of mouth and events, involving marketing, sales, and product development teams internally, and the customer community externally. Online, the big difference is immediacy. A key guiding principle here is: don’t make bets you cannot afford to lose or promises you cannot keep. With this in mind, online marketing benefits from the ability to introduce and remove a campaign overnight, to take advantage of an event, a move by a competitor or even the weather.
Community: Individuals buy things, but communities influence individuals. The immediacy effect means that the audience is anyone with a web browser, including the competition. Hence, online communities need careful nurturing. They are less constrained than high street shoppers. For example, nobody walks down the high street discussing forthcoming purchases with complete strangers, do they? Today’s online communities are informed, opinionated and have made a conscious decision to opt in, while knowing they can opt out just as easily.
Point of sale: The most effective online checkouts today are more than a transaction engine, but not too much more. They offer a simple route from start to finish, and offer appropriate cross and up-sell opportunities. None of this is possible without additional insight from one or more of the other areas discussed.
Supply chain: Does traditional retail and online retail involve the same products, the same distribution and warehousing? Often the answer is yes, but not always. Does the supply chain work in both directions? Can returns be dealt with? Can the system cope with products being introduced and removed from different parts of the chain? This is perhaps one area where really, only the individual retailer knows the answers. But asking the right questions is paramount.
Customer relationship management (CRM): Somewhere in the equation, there needs to be a mechanism for pulling together all the threads. This means purchasing history and patterns, creditworthiness, individual preferences and so forth. This data can be used to drive product development and marketing activities, thereby closing the loop in the life cycle.
However, the sum is greater than the individual pieces, and this is especially true when it comes to e-commerce. So what else is there to consider to make it happen?
If we take a step back, one of the key enablers of a lifecycle approach is the flow of information. Fortunately, this notion is not just restricted to online retail; the entire industry is paying much closer attention to the need to extract and exploit information more effectively. Treating e-commerce as an extension of existing activities avoids repetition and duplication of effort.
Of course, there are some areas of e-commerce that need specific attention, such as online security and accessibility. Just as your physical store is obliged to offer access to able and non able-bodied customers, so is your web store. Just as you are obliged to protect your customers’ payment details in your physical tills, so too are you expected to take security and privacy seriously in the online world. Consumer confidence here above many other areas remains one of the key limiting factors preventing e-commerce truly becoming the norm.
All businesses need to decide the appropriate weightings for the areas we have touched on in relation to their own needs, and those of their customers. However, while marketing, community, point of sale, supply chain and CRM activities are driven by the nature of the business, the critical foundations – information flow, security, privacy and accessibility – are not really up for discussion. They just have to work.
The tough economic climate means there is little margin for error, and lots to be gained from doing a proper job the first time around. In a few years’ time, those that like doing so may look back and state with confidence that the recession in 2009 was when businesses started to get e-commerce right, because the conditions of the time meant they had no choice.