How To Improve Your E Commerce Business

Transcription

1 Top E-Commerce Challenges Facing the Wholesale Industry Contents Executive Summary 2 Upgrading an E-Commerce Platform for the Right Reasons 2 Choosing the Right Time to Make the Transition 3 Addressing Internal Change and Transition Challenges 4 Integrating E-Commerce with ERP 4 Adding Big Data Analysis to the Technology Mix 5 Implementing a Product Content Management Solution 5 Managing Data Complexity 6 Future-Proofing a Commerce Business 7 Making the Right Decisions the First Time 8 Distributors have long relied on relationship selling to capture and secure customer loyalty and repeat business. By nurturing a consistent wholesale customer base, slow and steady revenue growth can be accrued over time. However, in today s faster-moving global business environment, slow and steady is not sufficient. Significant and sustainable growth comes from delivering a richer, more satisfying multichannel customer experience. As enterprise resource planning (ERP), customer relationship management (CRM) and other corporate software tools have evolved to become a fundamental part of the wholesale landscape innovative companies are seeking new ways to leverage the data contained within those systems. The goal is to deliver better information faster to the field, packaged in ways that compete not solely on price, but on providing salespeople and buyers with rich, accurate, near real-time insights into product capabilities and availability. This paper discusses the most common challenges that wholesalers face when leveraging modern e-commerce technologies to accelerate sales growth. It also provides suggestions to help make the transition to an effective business model that adequately supports traditional, online, and mobile commerce operations. 1

2 Upgrading an E-Commerce Platform for the Right Reasons During a series of focus groups in May 2013 conducted by hybris software, an executive from a prominent distributor made the following observation about the wholesale industry. E-commerce is here now. It s here to stay. It s mission critical. For distributors with years of experience, moving aggressively into digital commerce may be a frightening idea. The traditional wholesale operations model is challenging enough. The notion of building a new and separate infrastructure for online commerce, and another one for mobile operations, can be truly overwhelming. Before an organization begins the process of selecting a comprehensive commerce platform, its leadership should consider the following questions: Do customers want faster and easier purchasing options? Do they prefer self-service? Close interaction with staff? Or a combination of both? Do customers want self-service on the Web? Via mobile devices? Or both? Do companies that operate in just-in-time (JIT) and other tightly scheduled environments need the ability to order on short notice, directly from their place of operations? As such, the correct commerce platform makes wholesalers and distributors more responsive, efficient, and productive. For most organizations, the question of whether to implement an integrated commerce solution has already been made. The more compelling issues to be addressed are: When should the transition be made? What potential solutions will best match the organization s and customers specific needs? How can the solution be implemented to deliver the greatest immediate and long-term advantages? Done well, the evolution into a unified commerce platform can help capture new customers away from less nimble rivals, and provide protection against non-traditional competitors seeking to invade a wholesaler s traditional market. If the competition has already established integrated catalog, online, and mobile operations, the need to make the change is especially urgent. It must be done correctly on the first attempt, since there is little patience among customers who routinely use e-commerce sites to order products, and no margin for error. Choosing the Right Time to Make the Transition Another participant in the May 2013 hybris focus groups offered an insightful comment. The main purchasing people (among our customers) are members of Generation Y. Sales people in the field are just not as effective getting to Generation Y buyers. Historically, wholesalers and distributors have been conservative in their adoption of technology. For many, after making major investments in ERP and other platforms, the move to integrated commerce is difficult, because to some it seems like just another disruptive IT expense. When the answer to any of those questions is yes, the next step is for the distribution organization to position itself for growth through an integrated commerce platform that supports large volume catalog, online, and mobile operations. Those that make the transition will find themselves better positioned to enter new markets, adopt new business models, and respond to unexpected competitive pressures. The key for many organizations lies in selecting an e-commerce platform that streamlines their existing operations while preparing them to expand their business model to include online and mobile methods of reaching customers. Businesses gain the ability to expand into new geographical markets more easily, and to enable self-service sales to B2B customers and even consumers. The tipping point between e-commerce as an interesting idea and e-commerce as a practical necessity has already been reached. Wholesale customers now expect fast, seamless purchasing and support. Customers want to be able to find what they need quickly and accurately while getting the right item at the right price, delivered how and when they want it. Customers spend their money where they find the highest levels of service. Long-term relationships are no longer as important as a satisfying, multichannel experience, supplemented by low prices and exceptional added value. The entire process of migrating to an integrated commerce platform needs to take place with customer expectations in mind, rather than what is comfortable for the wholesaler s personnel. Customer expectations are the driving force. Successful organizations must learn the right ways and the wrong ways to use e-commerce to fulfill customer needs. 2

3 Addressing Internal Change and Transition Challenges Selecting the right platform and the right vendor requires working through different implementation models such as on-demand, on-premise, or managed service plus billing models (up front, over time, or percentage of sales), proper internal planning, and education. Before day-to-day operations are interrupted by a technical implementation, senior management must take steps to familiarize team members with the new system s capabilities. This should include the benefits it delivers, and any changes in processes that accompany the integration with existing systems and the overall business culture. Staff members need to know why management has created online and mobile channels alongside more traditional ways of sales and distribution. They have to understand that the new system is built to expand opportunities, even if it threatens those more comfortable with the old ways of doing business. Wholesalers and distributors must balance internal concerns with what customers expect the new commerce platform to deliver. At the end of the day, the business must adapt to what the market currently wants. The correct choice in vendor and platform can greatly lessen this disruption, but the opportunities that come from digital commerce and its necessity for future growth should not be underestimated. As former British Prime Minister David Lloyd George famously put it, There is nothing more dangerous than to leap a chasm in two jumps. The challenge lies in making that leap in a deliberate, planned manner. Integrating E-Commerce with ERP Yet another wholesaler from the May 2013 hybris software focus groups observed, Data is king within the e-commerce system. I think that s an area where we have not focused a lot of our time and attention. Many wholesalers have positioned ERP systems as the central nervous system of their operations. These platforms define and contain the key processes necessary for running the business. Integrated commerce platforms expose ERP to customers in new and productive ways, acting as a translator between customer expectations and the order fulfillment process. The right commerce platform will help ensure that customers interact successfully with the ERP solution across a variety of channels, including offline catalogs, Web site content, and mobile apps. By opening up the ERP system through the commerce platform, customers and staff gain real-time insight into inventory, order status, and other valuable types of information. A properly integrated e-commerce system will also enhance a wholesaler s ERP performance by ensuring that similar or identical items from multiple manufacturers carry the same descriptions and other identifiers. This process becomes particularly valuable in organizations that have grown through merger and acquisition. Distributors with multiple systems need a means to break the barriers that isolate product information from different parts of the organization. Product content management (PCM) capabilities within the commerce platform remove the challenge of deciding where product data resides, replacing it with consistency regardless of the back-end systems in use. By removing duplication of similar or identical inventory with different descriptors, an integrated system delivers more accurate insights into product, market, customer, and geographic segmentation. This also helps maintain flexible and accurate pricing, even across multiple languages, currencies, local business cultures, and governmental regulations. 3

4 Adding Big Data Analysis to the Technology Mix Many organizations may opt to introduce a big data analytics layer between the ERP and commerce platforms to simplify the flow of data between the two systems. In such cases, both the commerce platform and ERP system must be easily extensible, not only to each other, but also to the analytics engine. The advantages of linking a commerce platform and big data to augment ERP are many. They begin with the ability to search for patterns of interest within the information stored in the ERP system that may identify areas for operational improvement, changing customer needs, and new business opportunities. This also enables the product cross-referencing infrastructure that customers already enjoy from large online retailers, such as Amazon. Other organizational benefits come from moving key operations closer to the point where a customer makes the purchase decision. Mobile sales staffers gain the ability to check inventory in real time, place orders, schedule storage and/or delivery, accept payment, and issue receipts. Sales reps can mine customer behavior information to determine upsell and cross-sell opportunities based on live conversations while on site. This extra level of convenience is a major component of the enhanced user experience that customers now demand. Implementing a Product Content Management Solution The other thing we learned was that data produced for a paperbased catalog is not necessarily the right data, the right structure or the right taxonomy for the digital world, a commerce executive commented during one of the 2013 hybris wholesale focus groups. No one wakes up in the morning and says, Today I want to wade through millions of inventory items and make sure there are no errors in our product descriptions. This is a difficult, tedious process. Done manually, it can take many months to complete. The overhead cost in time, staff, and market opportunity lost due to obsolete or hard-to-access information is more than most wholesalers can afford. At the same time, paper-based catalogs are often poor taxonomic models for the digital world, where text information and photographs can be supplemented by audio, video, customer comments, and reviews. All of this information has to be searchable and those searches need to be as intuitive as possible. Adding to the challenge is the requirement for standardized information from multiple manufacturers, each with its own naming and categorization schema, with different types and amounts of information. Knowing what to do with all of this information how to find it, how to organize it, how to standardize it, and how to use it is an essential skill. Developing these skills is neither a trivial task, nor something simple to solve, using ERP experience or in-house IT resources. That is where PCM becomes a decisive competitive advantage. Another challenge comes from knowing which types of product data make sense for each sales channel, market, and geographical area of operations. How can existing product descriptions, images, and technical schematics be supplemented with content more commonly associated with online sales, such as videos, reviews, links to complementary products, and links to similar items purchased by other customers? What is the best balance between too much and too little information for each audience? Content depth, format, and quality differ from manufacturer to manufacturer. Wholesalers and distributors who successfully automate the process of standardizing the breadth and depth of their product content gain opportunities to deliver branded, searchable solutions that customers may not be able to find anywhere else. Managing Data Complexity Another benefit that comes from an integrated commerce and ERP environment is the development of rich data for identifying areas of operational improvement. Wholesalers may rapidly discover that not all commerce platforms can handle the number of products, or the complexity of the product information required to leverage the system effectively. A solution that scales from hundreds of thousands to millions of items is essential in modern, multi-channel wholesaling. Consistent product descriptions across the enterprise open a number of possibilities for identifying sales and savings opportunities not possible outside an integrated environment. Marketing departments can generate real-time product catalog updates so that physical documents, in either print or PDF format, match their online and mobile counterparts. Marketing content can flow automatically into predefined design templates, greatly reducing labor hours and costs, while also increasing accuracy. Accurate and consistent product categorization enables big data analyses of how customers interact with the organization. These insights help management respond faster to changing conditions, better aligning purchasing, sales, and supply chain management, to maximize profitability and minimize expenses. 4

5 These new data insights can help organizations identify areas where customers can be guided from high-cost points of contact to less expensive areas. Online sales may be more operationally efficient for certain items than catalog sales. Consistent product data helps identify which customers need to be coaxed from one ordering environment into another. Future-Proofing a Commerce Business When a commerce system is fully integrated into the existing ERP platform, it becomes easier to realize the cost savings that come from integrated offline, online, and mobile operations. This establishes a common platform for describing products that simplifies the transition, as well as delivering a direct linkage between purchasing, inventory, and search engine optimization. The right commerce system, integrated into an existing ERP platform and processes, can help distributors future-proof their businesses through the following benefits. Devote less time, staff, and resources to data synchronization, which in turn drives consistency across offline, online, and mobile operations as well as automated customization for localized markets, regions, and business regulations. More easily identify, market, and communicate products, values and deals, based on previous customer history, trending products, inventory that needs to move, etc. Enable customers to find what they need faster and more easily whether they are looking for a specific item or browsing until they see what they need. Provide field sales representatives with information to upsell and cross sell from the field in real time. Maintain current customers and win new ones with a richer customer experience. Ensure the best possible price with quick recognition of similar or identical items from different suppliers. Better manage inventory and enhance selling solutions, rather than individual items by more logically grouping related items. Identify new opportunities for sales and operational savings via big data analyses. Assure smooth processing, even across disparate l egacy systems. Demonstrate and measure return on investment. Directly and transparently support offline, online, and mobile operations Implement a future-proof commerce platform that supports product data standardization, makes it easy to react to future technology trends, and becomes the last commerce platform the company will ever need. Recognize changes in customer behavior sooner, and adjust business models accordingly. Quickly adapt to whatever channel is most profitable offline, Web property, mobile, or something new wherever the customer expects to be reached. Making the Right Decisions the First Time E-Commerce is more than a mere necessity for wholesalers and distributors. It s the key to establishing efficient operations and growth opportunities critical to ensuring the future success of the organization. The complexity associated with moving into an integrated e-commerce environment should not be underestimated. For most organizations, there is only one opportunity to make the transition and it has to be done successfully on that first attempt. Organizations that learn how to maintain integrated operations across traditional, online, and mobile sales channels have a better chance to grow and prosper. Many of those that do not, will slowly decline in relevance. The ultimate challenge lies in choosing the right commerce platform for the right reasons, while considering customer demands, legacy ERP requirements, change management within the existing corporate culture, and recognition of new opportunities generated by disciplined data management. This is a disruptive process, but one where the rewards can be tremendous when the process is properly managed. 5

6 About hybris, an SAP Company hybris helps businesses around the globe sell more goods, services and digital content through every touchpoint, channel and device. hybris delivers OmniCommerce : state-of-the-art master data management for commerce and unified commerce processes that give a business a single view of its customers, products and orders, and its customers a single view of the business. hybris' omni-channel software is built on a single platform, based on open standards, that is agile to support limitless innovation, efficient to drive the best TCO, and scalable and extensible to be the last commerce platform companies will ever need. Both principal industry analyst firms rank hybris as a leader and list its commerce platform among the top two or three in the market. The same software is available on-premise, on-demand and managed hosted, giving merchants of all sizes maximum flexibility. Over 500 companies have chosen hybris, including global B2B sites W.W.Grainger, Rexel, General Electric, Thomson Reuters and 3M as well as consumer brands Toys R Us, Metro, Bridgestone, Levi's, Nikon, Galeries Lafayette, Migros, Nespresso and Lufthansa. hybris is the future of commerce. For more information, visit Version: September 2013 Subject to change without prior notice hybris GmbH hybris is a trademark of the hybris Group. Other brand names are trademarks and Top registered E-Commerce trademarks Challenges of the Facing respective the Wholesale companies. Industry 6