Solve the problems of your online store 1/3: Large companies
This series of articles addresses e-retailers’ most typical problems and offers solutions for them. Some of these solutions have immediate benefits, while some are more likely to yield profit in the longer run. In the first part of the series, we handle challenges of large enterprises and ways of approaching them.
During their careers, Omni’s staff has been in contact with hundreds, even thousands of e-retailers. We have discussed the many challenges and opportunities, which you, retailers, have faced in your everyday lives.
We have heard harsh words against system vendors, faced change resistance, and shared hysterical laughs with entrepreneurs. We have examined business reports, which, when compared with other merchants’ figures, can give at least a glimpse of the truth. We have faced difficulties and solved them. We have peeked behind the scenes of dozens of online stores, and used our own methods to examine about three thousand other online stores.
Based on our experience and discussions, the problems of e-commerce do not lie within weak systems, shabby service providers, or high logistics costs, or even in the small size of the market when it comes to small countries such as Finland. They lie somewhere much deeper.
In this article series, we take a look at the common problems of online stores. We also present some solutions for them, which have been inspired by e.g. discussions we have had with e-retailers around Europe. Some of the benefits of the solution models are immediate, some appear later. Naturally, this is not an all-encompassing catalogue of problems and solutions, but a selection of issues that e-retailers need to work on.
The first part of the series addresses challenges and solutions from the large enterprises’ perspective. By this, we refer in this context to online stores of established chains, brands and mail order companies.
Stumbling blocks: large system projects, pricing and availability
It is almost a rule that large companies buy from each other. Often large enterprises also follow the one-stop shop principle, which may not be the most affordable alternative. Rather than shop for a large system in the Proof of Concept (PoC) stage, get the basic stuff right in the 2-to-3-year piloting phase, and use your money in marketing instead.
So far, we have run into only a couple of large companies that have purchased a light online store platform for the pilot phase. The rest have made large system purchases, while often allocating too little resources for the project. It is peculiar if the internal resources for an IT project of a couple millions can be counted with the pinky of your left hand! A million-budget can surely guarantee an excellent system that integrates easily into other business control systems. Yet easy integration does not ensure a competitive edge; you need to invest as much in marketing and follow-up procedures as in the system itself, or even more.
We believe that huge system purchases are not worth investing in, if the company lacks a clear vision of what the goals of the venture are for the next five years. There is nothing wrong with large ventures per se, if the company’s goals for the it and operational skills in the digital environment are at such a level that allows internationalization and upward scaling of operations.
Another common trial of large enterprises has to do with product pricing and availability. The consumer couldn’t care less about whether you are a top brand in your own country, if the pricing and availability of your online store sucks, not to mention issues with selection or delivery times.
These problems can often be solved by improving your purchasing actions. Your purchase department is most likely constructed to serve brick-and-mortar stores and chain operations, which provides a nice volume edge. The operational model is highly stiff, though, and it does not serve the modern omnichannel consumer.
Large companies should invest in these:
- Hire competent staff and train your employees. Hiring for example the owner of a smaller online store can boost your business quite a bit. At best, an e-retailer with entrepreneurial skills will take things to a whole new level – that is, if given enough freedom to operate and make decisions. By investing in creativity and problem solving, you will likely achieve much more than when fussing over whether something follows the company policy. You need to change your recruitment policies to remain in the race.
- An online store should have its own buyer, or at least a buyer tuned into the online store environment. Their task is to pay close attention to customer feedback and study what smaller online stores (both in your country and abroad) with the same target group are selling. Based on this, they will weigh what to buy and what to sell. Your online store may also provide an interesting platform for trying out the demand for different new products in your target group.
- Introduce modern methods of marketing and shift the focus from campaigns towards a tactical and continuously iterative marketing. Challenge your strategic partners to really think about different media options and marketing solutions!
Need help with developing your systems, processes or marketing? Don’t hesitate to get in contact, we are here for you!