How to efficiently compete with e-commerce giants?
Plans of creating Amazon’s operation centres in Poland echoed widely in a domestic e-commerce market. Although no specific plans for creating a local version of a world-wide on-line sales leader’s e-store were announced for the time being, some of the companies are already afraid of competition. How to prepare for facing the so efficiently operating sales machine?
What is the secret of the Amazon’s and similar companies’ success? It is obvious that there must be a number of factors, where the key ones are price, rich products range and quality of customer service. What are the e-commerce customers’ expectations related to the later? Mainly, it is the convenience of purchase, clear product information and delivery costs. After transaction confirmation, customers expect short delivery time and receiving exactly the product they ordered. Seems obvious, but what is the reality?
In accordance to the first e-stores usability report, prepared by Usability LAB and eKomercyjnie.pl website even the best recognised brands selling on-line still have a lot to do here. The average rating of tested entities’ usability was 64 per cent. Most probably, in case of less known brands operating in the market the result would be even lower. Why is it worth considering the on-line sales website adaptation to users’ expectations? In accordance to surveys carried out by the Baymayd Institute the most often reason for abandoning the e-store carts (on the average, even 67 per cent of transactions are not finalised) is the user registration requirement, missing ‘back’ button which prevents purchases to be continued as well as no possibility of editing the cart’s content. While designing the website’s usability it is worth taking advantage of experts’ knowledge on the subject. Apart from comprehensive customer service – including surveys of users’ preferences as well as preparation and testing of prototypes that facilitate the selection of optimal sales platform version – there are trainings and workshops available in the market that extend the expertise of e-store owners.
Logistics is another extremely important issue. It is the area which is often underestimated by e-businessmen but having quantifiable influence on customers purchase decisions. As many as one fourth of on-line buyers complain of long awaiting time for a shipment delivery1. In turn, almost 10 per cent of packages reaching customers contained products other than it was ordered2. Ultimately, cost of logistics services influence final price offered by e-store. Optimisation of that area of operations would help reducing both, costs of warehousing and pick and pack operations as well as costs of their delivery to a customer. E-commerce companies can choose one of the available versions of logistics organisation – starting from in-house model, executed by own personnel, within the framework of own resources, through drop shipping – i.e. the shipment of goods to a customer directly from producer’s/wholesaler’s warehouse to outsourcing services.
Entrusting the e-store logistic service to a third-party company, even if the scale of operations is small, allows for significant savings. Such a model does not require rental of warehouse space and employing additional personnel for packing the shipments, which would generate fixed costs independently of the sales volume (e.g. resulting from seasonal products). Outsourcing gives also the access to technological solutions that allow for automation of logistic processes and elimination of mistakes, e.g. in pick and pack operations. Third-party entity, taking into account its scale of operations, has a much better price negotiation position with its partners, e.g. courier companies, thanks to which it is able to offer competitive prices to its customers.
When in 1994 Amazon entered the market (at the beginning as an on-line book store) its warehouse space was 120-sq metre garage. This is the way most of on-line stores begin their operations, but only a few of them reach significant market position in the branch. Wide range of solutions available in the market allowing for optimisation of e-stores operations without vast capital expenditures is a significant development opportunity for any size company using on-line sales potential.
group account director Cursor, OEX Group