How to be the best e- commerce retailer? Darko Butina BUDS Consulting Ltd.

What shows who is the best? Gross margin – over 15% Growth – at least +20% above market growth NPS (Net Promoter Score) – above 70 Logistics – no delays (even during peak periods) Conversion rate – above 2% Profitability – above 1%

E-commerce and brick&mortar retailers E-commerce is retail It is not all about visits, conversions, average order value etc. (although all of those are also important for e-commerce) Key factors in retail and e-commerce: Offer Pricing policy Marketing approach

E-commerce and brick&mortar retailers Advantages of e-commerce vs. brick&mortar: Technology Data Building business from ground up Brick&mortar retailers are main competitors of e-commerce retailer – biggest opportunities for growth are in taking share from brick&mortar retailers (not from other e-commerce players)

Key areas for e-commerce retailer 1.Purchasing 2.Sales 3.Marketing 4.Logistics 5.Customer support 6.Website and UX

Purchasing First cover certain niche really well, then expand your offering Secure more than one source for goods Always negotiate – arm yourself with information first and then talk business – if you prepare right, you can bring +10% (and more) to your gross margin Good management of supply chain differentiates good e-commerce retailers from bad e-commerce retailers: Reliable partners / suppliers – predictable and accurate deliveries of purchased goods from suppliers Know your purchase conditions in detail – base purchase price, quarterly / yearly bonuses, marketing contributions, other incentives

Sales Product line-up, presentation and price with various incentives – key tools in hands of category managers Ensure that sales people work closely with purchasing and marketing people Understand what you sell, who you sell to and which marketing channels you use Know what you sell at what time – adjust your selling, purchasing and marketing activities accordingly Analyse your sales performance constantly – and adjust your activities accordingly

Marketing Differentiate yourself from brick&mortar retailers so that you: Measure and analyse everything Act on the basis of data – improve efficiency Web advertising is usually reasonable choice for smaller e-commerce retailers (price vs. performance) – bigger e-commerce retailers should include also other mass advertising channels Creativity brings lower costs – you still need cash, but you can spend less for the same effect Plan your activities at least 6 months in advance Get marketing contributions from your suppliers and brands

Logistics Logistics is key to customer satisfaction – and one of main differences between e-commerce and brick&mortar retailers E-commerce retailer which does not own / manage its logistics, will fail eventually Invest in appropriate automated ERP in time – so you will be able to increase your business without problems and at the same time satisfy all the demands from third parties (government agencies, inspectors etc.) Track, measure and write-down everything in logistics – then analyse and improve There is always room for improvement with logistics process – you can save well over 30% in a year

Customer support E-commerce shop is virtual – and not real as brick&mortar shop Customer support „makes“ e-commerce shop real and tangible for customers E-commerce retailers must be customer focused and not product focused Do not give promises you can not keep to customers – promise only what you can deliver Define standards for communication with customers – time to answer, pre-defined standard Q&A etc. – and then always meet these standards Use NPS (Net promoter Score) – or any other measurment of customer satisfaction – act based on results received

Website and UX Website should load fast and be reliable Data (especially about products and delivery times) has to be reliable – reliable data means customer trust and customer trust means more purchases Shopping process should be intuitive – UX friendly Use agile development – to enable you to adjust UX and website fairly quickly Measure and analyse everything – and adapt website accordingly Do A/B testing – implement what brings results Every serious e-commerce website needs its product manager / product owner

Recap Improve gross margin with proper purchasing and pricing Achieve growth with combined effort and work of sales and marketing NPS (Net Promoter Score) – always be transparent, do not make promises you cannot keep and be pro-customer – and NPS will grow Logistics – no delays (even during peak periods) – always measure, analyse and improve logistics – and you will Conversion rate – besides website and UX, it is the product line-up and pricing policy that affect conversion Profitability – above 1% – as long as margin is OK and costs are under control, profitability will be there

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