How to compete effectively with e-commerce giants?

Amazon's plans to set up operations centers in Poland have resonated with the domestic e-commerce market. Although so far no specifics have been heard about the launch of a local version of the e-store of the world's leading online retailer, some companies in the industry have already begun to fear the competition. How do you prepare to face such an efficient sales machine?

What is behind the success of companies like Amazon? Obviously, it is influenced by a number of factors, some of the most important being price, wide assortment and quality of customer service. In this last area, what do customers who use a given e-commerce platform expect? First of all, convenience in shopping and clear information about products and delivery costs. After accepting the transaction, on the other hand, customers expect a short delivery time and to receive exactly the product they ordered. Sounds obvious, but what is the reality?

According to the first report on the usability of e-shops, compiled by Usability LAB and portal eKomercyjnie.pl, even the most well-known brands selling goods via the Internet have a lot to improve in this area. The average usability rating of the websites of the surveyed entities was 64 percent. Probably in the case of less well-known brands operating on the e-commerce market the result would be much lower. Why should you lean about adapting your sales platform to users' expectations? According to Baymayd Institute research, the most common reasons for e-commerce shopping cart abandonment (on average, as much as 67 percent of transactions are not completed) are the need to register, the lack of a "back" button, which makes it impossible to continue shopping, and the inability to edit the contents of the shopping cart. When designing the usability of the website, it is worth taking advantage of knowledge of experts from this field. In addition to a comprehensive service - including user preference research and preparation and testing of prototypes, facilitating the selection of the optimal version of the sales platform - there are also trainings and workshops available on the market, allowing e-commerce owners to expand their knowledge of this field.

The second extremely important issue is logistics. This area is often underestimated by e-entrepreneurs, but has a measurable impact on customers' purchasing decisions. As many as ¼ of online shoppers complain about long waiting time for ^shipment1 .In turn, nearly 10 percent of packages reaching customers contain products other than those ^ordered2 . The cost of logistics handling also affects the final price of goods in e-store. Optimizing this area will help reduce both warehousing and picking expenses, as well as delivery to customers. Companies in the e-commerce industry can choose from several variants of logistics organization - from an in-house model, implemented by their own forces, within the framework of their facilities, through dropshipping consisting in sending goods to the customer directly from the manufacturer's warehouse/wholesaler's warehouse, up to outsourcing.

Entrusting the logistics service of an e-shop to an external company, even in the case of a small scale of operations, allows to achieve measurable savings. Such a model does not require renting warehouse space and hiring employees to pack shipments, which, regardless of fluctuations in sales (e.g. resulting from product seasonality), generates a fixed cost. Outsourcing also means access to technological solutions to automate logistics processes and eliminate errors, e.g. when picking shipments. An outsourcer, due to the scale of its operations, also has a much greater ability to negotiate prices with its partners, e.g. courier companies, so it is able to offer customers a competitive cost for such a service.

When 1994 Amazon entered the market (initially as an online bookstore), the company's warehouse facilities consisted of a 120 meter garage. In this way most Internet start-ups begin, but only a few of them reach a significant position in the industry. The wide range of solutions available on the market, allowing to optimize the operation of e-stores without incurring large capital expenditures is a measurable opportunity for development for any size of companies using the online sales channel.

Grzegorz Wroniszewski,
group account director Cursor, OEX Group

_{^1Source: gemiusReport 2012/2013}

_{^{2Data source}: nationwide e-commerce market logistics survey 2012}