Digital commerce success factors in 2018

E-commerce no longer means simply selling products online. It requires holistic advisory approaches and solutions, the ability to think within the context of service systems and ecosystems, and concepts that are no longer tied to desktop browsers and smartphones. And, above all, it requires that providers take account of customer views in all their facets and do not allow themselves to be restricted by internal constraints. The challenges facing e-commerce in 2018 could not be any more diverse.

Blog-Digital-Commerce

At present, the share of goods that is sold to end consumers (B2C) in Switzerland accounts for around 9 % of retail trade volume. And breaking this figure down a little further: around 2 % for food and approaching 15 % for non-food.

History has taught us that progress tends to be rather tentative until a market penetration of 10 % to 15 % is achieved – and this has also been true for a large number of technological developments. Then, however, the floodgates can really open. We now find ourselves right before this stage.

And this does not even take account of the almost 45 % of purchases at stationary outlets that are prepared online. A professional digital sales platform is now a requirement that nobody can afford to ignore – even if it is not just a matter of sales. A digital platform does not represent another store, but rather the biggest shop window for merchants and service providers there has ever been. And this places especially great challenges on the strategy and design of such platforms as well as their implementation and operation.

Demand for solutions rather than products

The majority of Swiss online shops sell products online and express surprise that they are growing slower than the market and constantly losing market share. Today, anyone can sell products online.

Many of the concepts we are able to review quite simply fail time and again to take account of the customer. Few consider exactly who their offer is targeted at, when they will reach their target group with the offer and what problems they want to solve for their customers. Providers want to sell their products online on an a priori basis and thus find themselves trapped in price spirals that only know one direction, namely down.

If customers only want to purchase a single product online, and there are indeed such cases, then they will go to the cheapest provider who can deliver the product the fastest and at no cost. It is very simple. Wanting to keep pace internationally while applying Swiss cost structures is already almost like asking for a miracle.

However, a large number of customers are not looking for a product, but rather a solution. For example, they may seek a solution for how to mount a heavy picture to a concrete wall rather than search for a drill hammer, a set of dowels and the corresponding screws. Customers are not looking for a cocktail dress from Chi Chi London, shoes from Högl and a bag from Valentino. Instead, they simply want to look amazing at the next gala dinner.

The objective is to transfer existing expertise and advisory know-how into digital channels and not merely provide online warehouse access.

Thinking in terms of ecosystems, platforms and marketplaces

However, there is far more to it than the provision of advice and solutions. The thinking within ecosystems is heading in a similar direction here, albeit with a focus on technology and processes.

Operating a professional and successful e-commerce platform is not only time-consuming, but also takes up considerable resources. The question then is why use it for just this one purpose and not benefit in other ways or open it up to third parties?

Why not intelligently monetise your wide-ranging skills and also generate income with services, be this in the area of category management with first-class content and conditions, by making use of pioneering technical innovations and breathtaking scaling options or by applying highly efficient and modular processes or marketing/communication measures that are unparalleled.

One of the best examples in Switzerland is Digitec Galaxus, which has developed into a veritable online department store, allowing it to benefit from interesting growth effects.

There is also Brack.ch, which has such a good command of its own infrastructure and processes that it is now developing into an e-commerce enabler. For example, Brack will take care of all of Intersport’s e-commerce logistics and also operate the company’s sales platform, while working on the basis of its own systems and processes.

These examples all have a common denominator; these providers are not resting on their laurels after generating their own success but are instead attempting to monetise their acquired core competencies and competitive advantages and open them up to third parties. The fact that these providers are further strengthening their own role in the process goes without saying.

Everywhere commerce

Current e-commerce models still place too great an emphasis on the desktop browser. Successful mobile concepts, which are not only extremely rare in Switzerland, offer unthought-of possibilities.

However, the focus on smartphones as the devices used to place orders falls short of what is required. Instead, providers need to open themselves up – B2C and B2B – and focus clearly on those situations, locations and options where needs arise and orders can be made on the spot.

The launch of the Amazon Dash Button almost three years ago in the US, which was followed shortly afterwards by the Amazon Echo, shows where we are headed. Orders are registered where the need arises. This is something, by the way, that leading B2B merchants, including in Switzerland, have been using very successfully for some time.

Here too, however, the sale of products, the satisfying of needs or the stocking of a warehouse is not the only focus. Just as pioneering are the interaction opportunities offered by state-of-the-art devices. In the area of low-interest household products or C-parts for the wholesale sector, these opportunities include simple actions such as the pressing of a button for the reordering of toilet paper, detergents or razor blades or for the restocking of new sealing rings, screws or spacers. With respect to advisory services, the use of our voice and conversations with a machine are increasingly coming to the fore.

While Apple took the first step in this direction with the launch of Siri on its smartphones, Alexa on Amazon’s Echo devices is already in another league when it comes to voice-control devices.

Psychology and trust

And yet everywhere in the distance selling sector, where buyers and sellers do not see each other, the level of trust is especially high. Here, social components such as assessments, ratings and live elements, including details of who else is still in the same shop and what they are doing, help. After all, what the majority are doing is often perceived to be the right course of action.

Trust marks, trust elements and the communication of benefits are also essential, especially for new or smaller online shops.

Be these seals of quality, association memberships, such as VSV affiliation in Switzerland, or simply the presentation of trustworthy and prominent partners such as media companies, logistics partners and, very importantly, payment partners – as trust is particularly high at the checkout. The effect of these elements should not be underestimated and a glance at the biggest and most successful online shops in Switzerland reveals that even the big players still place their faith in them.

Author: Thomas Lang

Thomas-Lang-Carpathia

CEO and owner of Carpathia AG, the independent and neutral management consulting firm for digital business and e-commerce. Author of numerous specialist articles and studies, lecturer on online sales models at various universities and a much sought-after speaker at international conferences on the topic of e-commerce and the digital transformation in the retail sector.

Event tip: Connect – Digital Commerce Conference and Digital Commerce Award


Connect, the leading digital commerce conference for merchants, manufacturers and brands, will take place on 23 May. Once again this year, the programme will attract visitors with top-class speakers and panel participants. Following the conference, Carpathia will present the Digital Commerce Award together with a broad-based jury. Tickets are still available here.

 

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