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Plus Report - By Thomas Baekdal - September 2013

Rethink Your Ecommerce Strategy

Over the past six months, I have been discussing ecommerce strategy with several brands (some in the form of strategy reviews). Ecommerce, of course, is nothing new. I have been engaged in ecommerce discussions on various levels for the past 13 years.

There are four things you learn from looking at ecommerce strategies.

1: The shop is 20%

There is no single ecommerce strategy that just fits everything. In fact, the shop itself is rarely the cause of the sale. Unlike physical shops where location is everything, and where 80% of your sale comes from people who just happen to walk by, digital shops don't have a location.

In the digital world, you don't have 'I just happened to come by' traffic. All your traffic has to be directed to you from somewhere. From advertising (cost), from mentions, from search, from loyalty programs, and many other channels.

This completely changes the model.

2: Wrong culture and insights

Most brands don't have the culture to run a shop, mostly because they have never sold a product. The sales people they employ have always lived in a B2B world in which they have sold boxes of products to retail shops who then in turn connected with the consumer.

Ecommerce skips all that B2B stuff and connects directly to consumers. Your salespeople don't know how to just sell one pan to a person trying to buy a gift for a friend that is getting married.

Everyone in your company is thinking of your products in terms of inventory that you sell to shops in order to fill up store space. And that shows on most web shops.

3: You are creating supermarkets, not shops

Most brands completely forget 'sales' when creating a web shop. Instead they create shelves in which they put random products. These shelves often look nice, but it would be foolish to think that this would work.

4: Many brands don't want ecommerce to succeed

They see it as a threat to their retail sales. So instead of creating a real shop, they buy a standard system, assign almost no resources to maintain it, and hope that it doesn't affect their retail sales too much.

It's not really surprising that most web shops fail (or produce marginal levels of sales).

Of course, it's not all bad. We also hear about a tremendous amount of brands who are doing remarkably well online. From small brands who have been able to make a tremendous difference in a short amount of time thanks to how they embraced digital from the start, to big sales channels like Amazon, Asos, Zappos, and many others.

And on top of this we see countless studies that all point to a future where ecommerce will not only become more dominant but also far more integrated into our lives.

In other words, we are seeing the same age old battle between traditional protectionism and digital disruption.

So, let's dive into these problems in far more detail and discuss what it is you need to do to make your web shop work in the connected world. We will start with the problem that most brands don't actually create shops.

But, that's not a shop. It's a supermarket!

While the digital world is very different from the physical one, people's basic behavior hasn't really changed. And there are a lot of things we have to bring with us from the old world.

In the physical world, you have two types of shops: the regular shop and the supermarkets. And they are as different as black and white.

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Thomas Baekdal

Founder, media analyst, author, and publisher. Follow on Twitter

"Thomas Baekdal is one of Scandinavia's most sought-after experts in the digitization of media companies. He has made ​​himself known for his analysis of how digitization has changed the way we consume media."
Swedish business magazine, Resumé


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