eCorner

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Wednesday, 5 January 2011

Can your retail store sell online?


What is the big deal about selling online? 

10,000's of Australian businesses, and millions worldwide, do it now successfully. Some large Australian retailers like Dick Smith and City Beach do it successfully. But a few narrow minded retail executives can't see past their wallets. 

If they want to compete then go online and stop the whinging. 

Does it mean losing jobs? Well I don’t think so. One of the largest department stores in the USA, Macy's, has just announced that its online channel is adding 725 jobs

Does it mean losing customers? Definitely not as you will be able to compete outside of the traditional demographic and geographic space. 

Does it mean taking "in store" business away? Macy's as an example believe that for every dollar spent online drives $4 to be spent in store.

Is online selling today eating into the traditional retail sector in Australia? No it is not but lets get the numbers straight. Online retail accounts for less than 8% of all retail in Australia. Online sales from overseas account for around 20 - 30% of all online sales in Australia so less than 3% of all retail. 

Online retail is growing rapidly and exceeded $20 billion in Australia in 2009.

The challenge for traditional retailers is to get their heads around another channel selling for the business.

The addition of an online channel for a traditional retailer just needs some planning. It also needs to be approached like any other investment in your business. If executed well the online channels can add significant value to your business both in revenue and equity.

On the other hand poor execution will just mean that you may not be as successful and that you miss an opportunity and probably waste money. Poor execution in my opinion is to not adequately planning or funding the channel. As with any new shop that you might add to your brand the online shop needs to represent your business, its qualities, products and level of customer service. So think before you execute but don't procrastinate.

As a technologist I have to tell you that technology should not be the driver. Great technology can be poorly or improperly implemented. I am not saying that technology does not matter just that it is not the most important consideration. Large retailers often have large information technology organisations; who immediately absorb eCommerce projects as information systems projects. The online shop or eCommerce channel is first and foremost a marketing and sales vehicle for producing revenue and creating customers.

You would not hand over the decision on establishment and strategy for a new bricks and mortar store to a bunch of carpenters, plumbers and electricians regardless of how good they might be.

Building an eCommerce Strategy: 

In building a strategy and plan for your eCommerce channel you need to look at the following topics and that covers 80% of the plan.
  • Mission and Aims
  • Business Objectives
  • Business Alignment
  • Tactical Deployment
  • Marketing Requirements and Goals
  • Content Gathering and Management 
  • Fulfillment and Logistics 
  • Financial Management and Payments 
  • Social Media 
  • Platform and Technology 
  • Maintenance and Management 
  • Review and Recycle 
You must also produce a budget in line with your expectations of sales and revenue with KPIs that can be monitored. Give your online store its own P&L and Balance Sheet.
 
Questions and Issues About The Business:
  • How you will deal with;
    • Content,
    • Pricing & inventory,
    • Logistics,
    • Service & support,
    • Payment & refund/returns,
    • Security.
  • What is your business model
  • What kind of resources will you need
  • What is the demographic focus
  • What expertise is available
    • Self managed
    • Need assistance
Shape your Competitive Advantage by understanding the landscape
  • Market and demographic shifts occurring?
  • Develop an easy-to-use purchase process?
  • Consider localisation requirements?
  • Consider customer relationship management and personalisation?
  • Make sure that you select a scalable platform or solution?
  • Make sure you have a team in place?
  • Marketing Campaigns and requirements?
  • Integrate to external systems, suppliers or 3PL?
  • Customer service help desk capabilities?
I am remarkably positive about the future of online retail in Australia and New Zealand. We have a rapidly growing opportunity base, we have buyers who have come of age, we have good companies competing, we have payment security and we have logistics and shipping covered. Australia is a great place for your online store whether it sells just in Australia and New Zealand or to the world. Remember - "fail to plan equals plan to fail".
 
 
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