How to be the best e-commerce retailer?

Quick practical tips

Darko ButinaBUDS Consulting

E-commerce and brick&mortar retailers

• E-commerce is still retail• It is not all about visits, conversions, average order value etc.

(although all of this is also important for e-commerce)• Key factors in retail industry:

• Offer• Pricing policy• Marketing approach

• Key advantage of e-commerce retailers when compared to brick&mortar retailers is technology and the fact, that they are building their business from ground up• Advice:

• Main competitors of e-commerce retailers are not other e-commerce players, but brick&mortar retailers – biggest opportunity for growth of e-commers retailers are customers, who still shop only with brick&mortar retailers

Crucial processes for e-commerce retailer

1. Purchasing2. Sales3. Marketing4. Logistics5. Customer support• Advice:

• Although website is not listed above as crucial for success of e-commerce retailer, it presents an important factor of success – but great website without great processes doesn‘t mean a thing (while vice versa – average or even bad website with great processes – can still be a success – just look at Amazon…)

Purchasing

• Start your e-commerce business with focus (first cover certain niche really well), then expand your offerings• 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• Price favorably – do not price only cheaply…

• Advice:• Take the list of your suppliers and mark which suppliers honour agreements

and which do not – change those which do not• If you are dependant of your suppliers and can not change them, find

additional market niche (with good suppliers), which will enable you to lower your dependency of bad suppliers

Sales

• Selling different segments requires different approaches:• Different supply channels – different suppliers• Different sales approaches – seasonality of particular segments, constant demand

for others, one-time purchases vs. regular purchases etc.• Different marketing approaches – different target groups, constant and regular

advertising vs. once-a-year advertising etc.

• Learn from the most advanced markets – USA, Great Britain, Norway, Finland etc.• Advice:

• Make sure your pricing policy is automated and can be setup as needed – by departments, categories, product groups etc. (all the way to individual products)

• Do an analysis of your sales by product categories and find out, which products you sell the most, which bring you the highest margin, whether products from your inventory sell better etc. – act based on results of the analysis (purchase certain products and put them in your inventory in order to improve sales of those products, remove certain products from your offering etc.)

Marketing

• Differentiate yourself from brick&mortar retailes so that you:• Measure everything (success of sales and marketing activities)• Act on the basis of data and thus be more efficient

• 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• Advice:

• „Think out of the box!“ – example: if you specialize in furniture, buy billboard advertising space close to a furniture brick&mortar shop and target your potential customers there• Communicate with your customers – do not just send them e-mail

advertisements, send them also usefull tips

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 (or it will start to own / manage its logistics…)• 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.)• Advice:

• Logistics has potential for biggest savings – write down all of your processes, so you get clear overview of them – then optimize processes by scratching activities you do twice in a roll

• Plan your logistics employees (and make appropriate agreements with your suppliers regarding their deliveries of purchased goods to your warehouse) in such wa, that you improve efficieny of your employees (so they do not have time without work during their work hours) – start with writing down, how do you plan your employees now and when are goods delivered to your warehouse

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• Advice:

• 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• Always be frank in your communication with customers – and always keep in

mind the first point above – and act in accordance with „underpromise, overdeliver“

About The Author

Darko is partner at BUDS Consulting. Till the beginning of 2013 Darko led mimovrste=) (largest e-commerce retailer in Slovenia) as CEO. In the period from 2010 he managed to significantly improve company‘s business together with his co-workers. He also led the company through investment from Netretail Holding (leading e-commerce player in CEE region) in 2011 and through acquisition by Netretail in 2012. Prior to mimovrste=) Darko held executive positions in Trimo (in United Arab Emirates and in Slovenia) and at Najdi.si (largest Slovenian search engine). In 2005 Darko founded his own start-up Adeptio (Povej! svoje mnenje) for which he received Slovenian Best business idea award in 2006 and for which he successfully raised funds – from himself (together with his wife and 1 year old son they sold their appartment to fund the start-up) and from various investors. Before Adeptio Darko served as procure holder at NIL Data Communications. Darko graduated in management and leadership (Faculty of Economics, Univesity of Ljubljana).

Contact details:Darko Butina, BUDS Consulting Ltd.

darko.butina@buds.sisi.linkedin.com/in/darkobutina/

@TheDarewww.buds.si