E-commerce is big business, and it relies on the right distribution channels and models in order to succeed. How are current, outdated models holding retailers and e-commerce brands back ? How can we fully embrace the omnichannel retail environment? Here are some challenges that businesses face in the current climate — along with some potential solutions.
Outdated distribution models
Many businesses are operating on an outdated distribution model. Traditional distribution models aren’t always the best way to go for ecommerce businesses; they need a flexible model with seamless technological integration. Integration is important – it helps manage inventories accurately, ensuring high operational efficiency.
The big ecommerce giants are waging a war for logistical supremacy. Amazon has recently invested in freight shipping – a move which shows Amazon’s ongoing fulfilment ambitions, whereas and WalMart has just scrapped its Prime rival program, opting for free shipping for a large proportion of its customers instead. Big companies with competitive distribution channels are able to compete for customers with increasingly attractive delivery programs.
Global markets vs. domestic markets
China is where everyone is looking right now. Recently, Alibaba CEO Jack Ma had talks with Trump about expanding into America; Chinese Alibaba is effectively a giant marketplace, with little involvement in distribution and fulfilment. This hands-off model leads to problems with branding and customer experience — something more traditional retailers often perfect.
Ecommerce vendors entering the US markets from countries like China and India will put pressure on national brands who struggle to meet consumer demand cost-effectively. Rather than compete on price, brands will have to learn how compete on customer experience and brand consideration.
Lack of process efficiency
Sales are trumped by the new omnichannel hero — efficiency. Efficiency is all about seamless operations and a commitment to data analysis.
Adding value to customers is all about refining retail processes. It’s important to focus on efficiency over volume — scalable business over results right here and now.
Inefficiencies lead to stagnation and frustration. In B2B, merchants often struggle let go of legacy systems like paper purchase orders; we need to embrace automation in order to hold onto valued customers.
Not investing in the future now
Ecommerce is an exciting place full of emerging technology. Brands who want to stand the test of time need to be prepared for the technologies impacting customer experience, marketing, operations etc.
Huge improvements in machine learning mean that live chat functions are now replacing the traditional call centers. Robots are entering distribution, and VR is making waves in the fashion industry. Amazon is even looking into the possibility of flying warehouses — the challenges of retail are being tackled by increasingly innovative solutions.
The technology of today is tomorrow’s tool – companies need to invest in new ways of doing things in readiness for the paradigm shift. Mobile commerce had been on the radar for a number of years, but some companies were still surprised by mobile, leading to a colossal loss of revenue and market share.
Ethical consumer choices
In the hectic world of automation and mass production, consumers are going back to more local, authentic brands who offer them a more genuine experience.
So how can brands speak to consumers on these terms, whilst also managing a business on a huge scale?
The key is to make sure that process automation doesn’t also lead to brand autopilot. Mission statements, values, corporate social responsibility, and working with ethical suppliers are going to become increasingly important in the ideological battle for the consumer.
PR in a digital world
Open forums like social media are a hotbed for misunderstandings and PR nightmares. Brands need to be careful about the messages that they put out there as consumers will react badly to something they see as being in bad taste. (Recent #DeleteUber fiasco case in point.)
To avoid PR disasters, brands need to get out of the lab more and test things out on real people. User research and studies will help align brand messaging with what people want. (And staying clear of politics is probably a good idea).
Going digital is expensive
Not going digital is perhaps even more expensive.
Upgrading the backend and frontend of a store is a huge endeavor, but it’s an investment into your company’s future as a brand. Digital isn’t just about selling online — it’s about having more data, selling smarter, and operating a multichannel retail hub. Omnichannel and multichannel selling is becoming the norm; it’s how businesses stay competitive. (The much-publicized Shopify store/Amazon integration shows how platforms are encouraging the multichannel seller trend).
The new era of ecommerce is all about giving customers joined-up experiences, reflecting efficient and streamlined company processes. What distribution challenges have you faced recently? How did you overcome them?