A lack of co-ordinated approach can lead to chaos and missed opportunities leaving money on the screen.
eCommerce has been on the agenda of companies for many years now, and many are investing significant resource into pure-play, but there are still major opportunities in ‘Grocery’. According to the latest IGD forecast, there will be $257bn on offer globally by 2023.
So, are ‘you’ still leaving money on the screen? At Quantic, we believe that companies must take a total Omni-Channel approach to truly integrate eCommerce into the business and take advantage of the potential growth on offer.
So where are we all going ‘wrong’? We’ve noticed that a lot of the current support and ‘how to’ guides in the market place tend to be:
- Focussed on execution
- Aimed at pure-play channels
- Confused with the wider ‘digital’ strategy, including social media
- Heavy on detailed low level data analysis
… all making eCommerce look more daunting than it is.
At Quantic, we have identified four core areas to help move beyond the fixing the basics and take your business to the next level.
- AMBITION: identify the current eCommerce landscape, where the gaps are and set your Ambition.
- APPROACH: be clear on the right proposition, pricing and pack opportunities in your portfolio, based on your Ambition.
- ACTION: take ‘action’ to close the Shopper Purchase Decision Gap opportunity by understanding how shoppers shop and fix the Nine Execution Essentials.
- ARCHITECTURE: upskill and fully integrate the eCommerce team into your organisation.
All of which needs to be set in the wider context of a Category Strategy.
Ambition: like many processes, the first step, Setting your AMBITION, is critical to building a strong foundation for captialising on the growth on offer.
Many companies are content with the double-digit growth they are seeing in their business, often unaware that this growth means that they are still losing share! They are not meeting their full potential because they are often unaware of the actual size and growth of the whole eCommerce channel. It seems that many companies are tackling eCommerce in an opportunistic way, rather than setting their ambition based on an estimate of the three to five year market size and gearing up the business to respond to that prediction.
A study by Bain & Company confirms this: “They are far from reaching their full potential in the fastest-growing retail channel. Worse, many are unknowingly ceding online growth to competitors. Among the world’s ten largest consumer products brands, seven lag in eCommerce penetration in their categories, despite delivering online sales growth of 30% or more. That group includes names like Procter & Gamble, Unilever, Colgate-Palmolive and Mondelez”.
Source: “The Great E-commerce Illusion in Consumer Products”, Bain & Company 19th September 2018.
Approach: the ‘cost to serve’ is generally higher in ‘online’ channels than in bricks and mortar stores, so if we only transfer shopper spend from offline to online, the chances are that we are simply diluting category profitability. It is vital that we therefore ‘nudge’ consumer behaviour to trade up or drive additional consumption as shopping moves online.
To affect this relies on firstly having a clear understanding of the consumer demand opportunities, which are most relevant for the category, often captured through Category Growth Drivers.
We use several ‘tools’ to ascertain which opportunity/Growth Driver is most relevant. For example, ‘visual mapping’, where we cut the opportunities into price tiers or pack sizes giving a set of ‘matrices’, which help us visualise opportunities in the market. We also look at the missions which shoppers are generally looking to fulfil online. Typically, grocery categories are highly indexed on the ‘Main shopping’ mission, but there is huge opportunity to drive other missions, such as one or two item ‘Replenishment’ shopping, which would influence the range, size and pricing choices.
Ultimately, these tools will help us find spaces where your current portfolio can be leveraged to drive trade up, find new consumption occasions through cross-selling with other categories, or drive incremental consumption of your own category.
Action: closing the ‘Shopper Purchase Decision Gap’ in eCommerce should follow the same principles as those used in the off-line environment.
We define ‘Closing the Shopper Decision Gap’ as: influencing ‘open’ versus ‘decided’ shoppers to make a purchase, by overcoming any mental or physical ‘barriers’ to their needs on any given specific shopping mission.
- Open = browsing type behaviour where inspiration is more important.
- Decided = ‘repeat’ type purchase behaviour, where navigation and favourites are more important.
In eCommerce, this starts by understanding how shoppers shop along the combined on/offline ‘Consumer Shopper Journey’, and then addressing their barriers to the identified opportunities/Growth Drivers along that journey. Quantic has identified and aligned nine types of barriers along the journey to address. We call these the Nine Execution Essentials.
So, you might be asking what are Quantic’s Nine Execution Essentials? The elements themselves (i.e., Hero Images, Ratings & Review) are not necessarily new, but what makes our ‘Essentials’ different is how we align them to the consumer shopper journey, depending on the consumer behaviour change you are trying to achieve and where on the purchase journey their barriers lie. Ultimately, we use the Nine Execution Essentials to solve issues, not just to get the basics in place.
Architecture: as the name suggests, this centres on how your business is structured, both in terms of processes and people, to take advantage of the eCommerce opportunity.
Again, this is not a new problem and we firmly believe that there is no one right or wrong answer on how to structure a business, people-wise or through its processes, but there are some fundamentals to follow.
In terms of who needs to be involved, eCommerce must be the collective responsibility of a multi-functional team and not a stand-alone function. eCommerce readiness relies on having clear multi-functional responsibilities across the Nine Execution Essentials, and having an integrated strategy owner, typically in customer marketing, just like any other channel.
Equally, the organisation must include eCommerce in all of its planning processes and revenue/resource allocation meetings. It’s a strategic opportunity, not a ‘sales thing’ or something we ‘just allocate money to in our day to day customer account dealings’.
In summary, winning in eCommerce can be narrowed down to three topics:
- Setting the right Ambition via your omni-channel strategy: maximise the eCommerce opportunity, the same ‘channel’ thinking applies, just with different inputs.
- ‘Closing the consumer shopper decision gap’: at Quantic we have adapted our model and have identified the Nine Execution Essentials aligned to the consumer shopper journey.
- eCommerce is a crucial input into any Category Strategy: identifying where eCommerce opportunities are identified in the process is critical to give them the ‘strategic focus’ they deserve.