A recipe for success in online commerce
A recent series of webinars produced by GCommerce, Inc. extolled the virtues and challenges of selling automotive products to and through the leading online marketplaces. A key takeaway was that billions of dollars in sales take place on the platforms operated by Amazon, eBay, Walmart.com and Google Express. Volumes have been written about digital disruption and how the big, bad ecommerce operators are going to squeeze every penny of profit from the value chain and put brick and mortar out of business. Being the contrarian, I submit that brick and mortar is the supply chain for ecommerce. And “digital disruption” is a euphemism for “do it better and more efficiently for less money … or get out of the way”.
There is a recipe for success in online commerce that, if followed, opens a new channel of high volume sales that can have unanticipated benefits to brick and mortar distribution. The major ingredients are, not surprisingly, rich, visual product content; frequent inventory updates; and a high degree of process automation.
It should come as no surprise that rich product content with multiple product images, performance and physical attributes and original market copy such as descriptions and feature/benefits statements represent the minimum acceptable level of content to successfully sell online. Steven Kraft, Head of Industry for the Retail Sector at Google, was a featured keynote speaker at the Automotive Content Professionals Network (ACPN) annual conference in April and his message was about the rewards that go to those who invest extra effort in the data they publish online. Without the benefit of speaking to an informed parts professional, the customer is expecting to find all of the feature statements and answers to any question about fitment and function as well as installation and demonstration videos. That sounds like a lot of content, doesn’t it? Well, it is. But when you look at the most successful online commerce sights, that is what they feature … and more.
Perhaps the most critical ingredient of the three is inventory visibility. The expectation of any visitor to an online marketplace or etailing store is vast assortment or infinite aisles. The advantage of online commerce is that the physical limitations of shelf space and square feet are gone. A virtual inventory can be composed of multiple brick and mortar distributors with hundreds of product lines each and millions of SKU’s collectively. Availability can be extended even further to your supplier’s supplier with electronic punch-outs to order from the manufacturer for drop ship fulfillment. E-Commerce is never having to say “no”. But, you must have frequent and complete inventory status updates multiple times daily, so you can say “yes” with confidence.
And there’s one dirty little secret about inventory updates. If they aren’t in sync with the product information, you could be listing inventory for products that don’t exist or you may be listing products with no inventory records. Either case is going to cost sales or disappoint a customer. But, this problem happens thousands of times every day because the product content files and the inventory status files come from different departments with no reason to check that they have identical lists of SKU in their files. It’s a blind spot for manufacturers and distribution. You are advised to implement a process that compares these data sets and quarantines the out-of-sync content until it can be resolved.
The third ingredient to successfully selling on the marketplace platforms is maniacal automation of every imaginable process. API’s for order processing and integration with the ERP system, geo-vending to the closest shipping point to the delivery address, shipping rate shopping with accurate weights and dimensions using integration with the popular carriers, label and packing slip printing to the requirements of the marketplace and even box size selection. Automate all of it – and leave the decision making out of the hands of those at the end of the shipping lane. Finally, track and manage the cycle times for acknowledgements and shipping confirmations. The best way to avoid the fines and penalties that will kill the profits of marketplace sales is to “do it right” and “do it fast”.
For those who do mix these ingredients and commit to a diversified sales strategy, they find some unanticipated benefits. For one, the demands of millions of new online customers will cause slow moving, long-tail products to turn sufficiently to justify stocking them and selling them to other customer channels – more inventory leads to more sales. The increased purchasing volume of those who have a good e-commerce fulfillment business can lead to steeper discounts and volume rebates from their suppliers. And those added points lift the margins of all sales channels. Finally, online commerce is an added pillar of your business that can help you weather a softening of any other channel such as fleet, installers, jobbers or retail. Diversifying your sources of revenue and profits is a strategy to consider when digital disruption is fundamentally changing the game.
