Positioning your e-commerce channel for growth
Positioning your e-commerce channel for growth
Retailers cannot afford to ignore such a trend, and are responding by rapidly developing or improving their transactional websites. But in making these investments, do retailers risk simply replacing traditional offline sales? Or can a successful e-commerce offering actually increase overall revenues, albeit with some inevitable shift in the channel mix?
The answer to this question depends on a number of factors market dynamics; customer preferences; product characteristics but how you choose to position your online offer will have huge bearing on the outcome.
The holy grail; multi-channel retailing
Many retailers would argue that successfully adding e-commerce into an existing mix of stores, phone and catalogue channels moves you ever closer to the holy-grail of multi-channel retailing; seamless, near real-time interactions between you and your customer via any channel they choose. Satisfying your customer's need for choice and convenience in this way builds loyalty, which in turn encourages them to spend more with you one retailer we have worked with indicated this expenditure could be up to ten times more than can generated via the e-commerce channel alone.
Positioning your e-commerce offer
If your overall objective is growing revenue, then you will need some degree of differentiation between offline and online channels. Broadly speaking, there are three positioning strategies you can adopt: enhanced, extended or differentiated positioning:
"Enhanced" Positioning
This approach essentially replicates the core offer available in other channels, but plays to the advantages that are inherent in internet commerce.
Through a website your product becomes globally accessible, 24 hours a day. The "convenience factor" in our busy lives is one of the key drivers of the growth of internet retailing, but your service proposition must be able to back this up. Delivery policies must be competitive, both from a pricing and lead time standpoint. Customer Service is also very important, especially when it comes to queries about payments, expectations of lead times and returns handling.
An online storefront frees you from the constraints of a physical environment. You can present the entire product range that your company offers, rather than making choices which are influenced by store square footage and format. Many retailers take this further by deliberately moving "fringe" product (that which caters to small segments of your customer base) online to free up precious space in store for faster moving, possibly higher margin, product.
Online you can be more creative in product presentation, using "in situ" or aspirational settings. Complex products can be backed up with readily accessible technical information to allow more informed decision-making. Clever use of product combinations - dynamically generated or linked around looks or themes allow customers to put together complete solutions.
In adopting this position, you are emphasising product availability and evoking its usage, elements that may be constrained by your current store environment.
"Extended" Positioning
You can further extend the online proposition by introducing elements of exclusivity, for example creating product and service packages from your existing range that are only available through the internet. But beware of putting your channels into direct conflict - if customers can easily break down and price compare the package, the more expensive channel will lose out and an associated channel positioning will be cemented in their mind. If that's a concern, consider introducing service elements from a third party. An example could be offering a plasma television with installation by an accredited service provider. This again plays to the convenience angle, allowing your online customer to purchase a complete solution within a single transaction. As before, ensure that the operational complexities are well thought through. Customer Service issues are often exacerbated when third parties are involved.
Another extension approach is tailoring your offer to different customer segments. Understand their motivations and buying patterns, and adapt the online experience accordingly. Allowing customers to "opt-in" to push marketing or access areas specifically designed with them in mind (think new mums or "back to school") can add to the experience that they get online, and serve to complement, but not replace, the in-store experience.
"Differentiated" Positioning
A third option is to offer a product and service proposition that is completely exclusive to the online channel.
Personalisation and customisation features that are facilitated by online interaction can help deliver this exclusivity. For example, we helped one retailer set up a customised shirts capability, requiring only four key measures to create the right fit. The customer can custom-design their own product on-line, without having to visit a store. The average price point was moderately higher than that in traditional channels, creating an opportunity for customers to find purchase reasons both online and offline.
Similar opportunities can exist around product visualisation. The use of online configuration tools (such as kitchen design programs and "to scale" renditions of your living room to help visualise furniture ranges) is becoming more mainstream. As is the "try before you buy" concept, allowing customers to download a sample of the product before purchasing.
These features encourage your customer to shop in one channel depending on the offer and experience that they are after. It is less about competition between channels and more about broadening the range of experiences that you can offer overall.
Whatever you do, be clear on your position!
Bringing an online channel to market is always going to alter the channel mix and is likely to cannibalise sales in other channels to a degree. The extent to which this occurs however is controllable. Your channel strategy has to be clear; customers should understand the value proposition that sits behind each channel choice that you are presenting to them. You will have to plan for some degree of overlap as your customers will want to exercise their ability to choose. However, carefully constructing your channel strategy to play to its strengths and clearly communicating with your customer so that they understand these inherent advantages should enable you to ultimately deepen your relationship with your customer base...and maximise revenue potential accordingly.
The Truth About Overnight Success All Saints' Day 3 Karma Sutra Positions That You Have To Try Fulfillment - whats it all about How to Choose the Correct Grade of Steak How A lot of Carbohydrates Ought to I Eat In A Day? The Most Efficient Way to Live in Balance Imagine Jesus Wearing a Crown of Thorns Do Modern Day Radar Detectors Really Work? Talk Dirty - Everything You Need To Know No pain, no gain when it comes to stategic planning Rapper Young Bucks Cadillac Escalade being repossessed How To Make Her Orgasm - 3 Absolutely Crucial Things You Need To Know