End to End eCommerce Guide
What is End to End eCommerce?
eCommerce requires much more than a website with a cart. Complete end to end eCommerce includes not only technology, but ALL physical operational components required to launch and manage an eCommerce business:
- Warehousing & Fulfillment
- Customer Service/Call Center
- Digital Marketing
- Integrated Website
The people, processes, and systems connected to these components should all be well coordinated in order to have an efficient and profitable operation.
What are your options for sourcing the essential components needed for an end to end solution? What are the challenges? How much should you outsource? What the advantages and downsides to the most common roadmaps that businesses take to launch their eCommerce businesses?
After reading this guide you’ll be armed with the basic information you’ll need to begin your journey.
What Is Needed for Complete End to End eCommerce?
The Challenges of End to End eCommerce
- Many Components: Software, fulfillment, customer service, payment processing, online marketing, warehousing. It can seem overwhelming.
- Bandwidth: Many organizations lack the time to evaluate multiple vendors and find the right mix of solutions for each area while working on their core business.
- Manpower: eCommerce requires headcount to run the ongoing operations.
- Budget: Concerns about the investment required before ever realizing a profit
What are the challenges of launching a true end to end solution?
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Orderhouse CEO Mike D'Errico
Direct to Consumer Warehousing and Order Fulfillment - Are You Prepared?
Manufacturers understand shipping to distributors and retailers, but fulfillment for consumers has a different set of challenges.
Shipping to channel accounts usually involves infrequent, large, pallet-sized orders. The warehouse and material-handling equipment conform to these requirements. Employees who service the account often have a relationship with the stakeholders and detailed knowledge of how to best meet their needs.
DTC fulfillment is a high-volume pick/pack/ship environment with smaller orders. Your warehouse that is configured for B2B shipping won’t be optimal for DTC needs, which requires different storage and material handling systems, such as:
- Frequent receiving operations for replenishment and returns (returns are infrequent in B2B)
- Warehouse zones configured for the needs of B2C
- Pick/Pack/Ship able to handle same day/next day shipping
- Return processing – back to stock, damage processing, credit to customer
- Carrier rates negotiated for small shipments
- B2C packaging requirements, both generic and branded
Advantages to outsourcing to a 3PL (3rd party logistics) provider:
- No burden for sourcing space, equipment and manpower
- If your business is growing or has seasonal fluctuations, the 3PL can scale to meet your needs
- Best practices and processes for eCommerce fulfillment already in place
- Integration challenges. Can their systems integrate easily with yours?
- If not, will the integration be costly, time consuming and flawed?
The importance of a seamless flow of data can’t be overestimated – your customer service and management teams will need visibility in order to perform at optimal levels.
- You’ll have tighter control over costs, process and quality.
- You’ll have to modify existing facilities and add manpower.
- If you don’t have expertise in the latest best practices you’ll have to get up to speed quickly.
- You’ll need to integrate systems and processes.
There's another outsourcing alternative that we'll discuss later.
How is DTC fulfillment different from B2B and how it does it impact Customer Service?
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Orderhouse COO Jim Madaj
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Customer Service - The Emergence of the Omnishopper
Statistics compiled by Invespcro.com show that up to 89% of online shoppers have switched companies after a poor customer service experience.
B2B DOESN'T APPLY
B2B customer service involves servicing the demands of a relatively small number of customers who place infrequent large orders. The orders may be complex and involve multiple decision makers and points of contact. Each account might have a dedicated customer care rep or even a team that has a relationship with the account and understands their requirements. In the DTC eCommerce world, there is a large volume of interactions and the pace is fast. According to a study, 30% of products bought online are returned.
OMNICHANNEL RAISES THE BAR
Omnishoppers use multiple devices to search, research, and make purchases. Its common to research products online, then buy in-store. Or vice versa. To meet the demands of the omnichannel consumer, it requires providing a seamless experience across the various channels available to the consumer. This means that your Customer Service team must be able to support every step of the buyer’s journey and user experience, across all channels, even if the customer has changed channels and devices during the process.
- “Live Chat” functionality
- Optimized for Mobile
- “Self-service” options for returns, exchanges, etc.
Call Center Support:
- The ability to manage all support channels: phone, live chat, e-mail, social media
- Customer service software that integrates effectively with your website and relevant enterprise systems
- Trained to answer pre-sales questions and as well as resolve post sales issues
Now that you know that customer service requirements for DTC, end to end eCommerce are different, what are your options for building a successful team:
- Outsourcing providers bring best practices, experience, infrastructure and personnel
- The ability to scale up or down to meet spikes in demand
- Less control over quality
- Hourly rates usually higher than employees
- Greater control over quality, time, and activity
- Recruiting, screening, and hiring can be time consuming
- Best practices must be defined or already in place
- Must manage turnover and spikes in demand
- Build a core internal group to manage normal support hours
- Outsource for weekends, nights, and seasonal demands
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Poorly designed websites with broken processes cause shoppers to abandon carts and leave the site in frustration. Its critical to have a website with superior design and properly integrated technology in order create an enjoyable user experience that results in sales and customer loyalty.
- Cart Software
- Online Catalog
- Secure Payment Gateway
- Branded Design
The most practical solution for most businesses is an eCommerce platform. eCommerce platforms include some or all of the following:
- Customizable website templates
- Integrated shopping cart software with the ability to accept various forms of payment: credit cards, PayPal, and eChecks.
- Catalog/Inventory Management software
- SEO functionality
- E-mail marketing
- Social Media integration
At first glance, some eCommerce platforms seem very inexpensive – a small monthly fee gives you access to a powerful platform that enables you to run an online business. The real costs of launching and maintaining a branded online business on an eCommerce platform can be much higher. In fact, a survey conducted by Forrester found that 43 percent of all e-Commerce platforms end up having a higher total cost of ownership (TCO) than predicted.
Most costs fall into these categories:
- Licensing - Monthly/Annual Fees
- Website Customization & Implementation
- Ongoing Maintenance
Licensing: Companies using licensed platforms are usually obligated to pay higher fees or acquire additional licenses when they exceed thresholds of usage.
Customiaztion & Implementation: eCommerce platforms sometimes come with free or low cost website templates and themes. But if you’re serious about establishing an online brand you’ll probably want a customized website. The most popular eCommerce platforms have well developed ecosystems of development and consulting firms that customize website themes and provide implementation services. Depending on the platform and degree of customization, a project can range for the low 5 figures to the mid 6 figures.
Maintenance: An eCommerce site requires constant ongoing support and maintenance. This includes:
- Updating content, graphics, and catalog
- Changes to website design and styling
- Managing product and store configuration
- Adding custom coding and functionality
The Forrester study, “Understanding TCO When Evaluating E-Commerce Solutions", found that online retailers spend an average of 7 percent of their total online revenue to support their e-commerce platforms. If a company generates $1 Million from its e-commerce platform, it should expect to spend $70,000 in a year just to keep it updated and well-tuned.
These costs may be considered the hidden landmine of operating an eCommerce business. According to Internet Retailer, more than 74% of retailers plan to change eCommerce platforms within the next two years.
Your eCommerce website shouldn’t be viewed as an isolated sales channel. Out of sync eCommerce processes can result in waste and increased costs in warehousing, labor, order fulfillment, customer service, and more. All impacting your bottom line. Integration with back-end business systems will enable you to eliminate data entry and have consistent, up to date data across all systems. This streamlines management of orders and inventory and facilitates better customer service.
According to Gartner, many online retailers end up integrating their e-commerce platform with up to 15 back-end technologies. A comprehensive integration project can cost well into 6 figures. Your integration requirements may not be as extensive, but most businesses at a minimum choose to integrate their eCommerce platform and ERP systems because it delivers ROI by improving operational efficiency and decreasing administrative effort and costs.
When evaluating your eCommerce roadmap for putting together a complete end to end solution, consider not just the individual pieces, but also whether you have the bandwidth for coordinating integration projects.
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What About Amazon?
But just because
- The online marketplace owns the customer relationship and valuable customer data that can be used for targeted marketing. You lose.
- Your products will be displayed against competitors on the same category promoting pricing competition.
- Transaction and fulfillment fees reduce margins.
- Amazon often competes against their merchants with their private label products. This one is particularly troubling. Read on.
Currently Amazon has private-label brands in various product categories, including:
- Computer accessories
- Home goods
- Pet supplies
- Baby products
- Snack foods and other consumables
How do you co-exist with Amazon without damaging your brand?
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If your product is doing well on Amazon’s marketplace, you can be sure they know it—and they can choose to act on this information, even if it means capitalizing on your brand’s success. Do you really want Amazon to replicate your hottest product and sell it under their own name?
Despite the downside, for brands that take an omnichannel approach to direct to consumer, there are ways of cultivating a mutually beneficial relationship with the eRetail giant without being consumed by it. And if you don’t have a presence on Amazon, you’re immediately ceding sales to your competitors who do. The key is to develop a strategy that enables you to leverage the benefits of Amazon without damaging your brand.
Amazon’s name, reputation and built-in customer base can be a reliable source of sales for your company. When you add a DTC strategy with your own eCommerce site, customer support and fulfillment, you get to call the shots. You control your brand story, promotional efforts and own the customer relationship.
Managing Channel Conflict
Some companies choose not to sell direct to consumer due to fears of channel conflict. Yet they're under pressure to add ecommerce because it's growing. This is the dilemma that many SMB organizations are wrestling with.
Many companies and manufacturers have a strong online presence. They have a website with a product catalog optimized for online browsing. And perhaps, a portal for their distributors. However, direct consumers can and will land on their website looking for information about their products. Instead of capturing the purchase on the spot, their websites have a "Where to Buy" page to send them elsewhere.
They're missing a huge opportunity. Here are the facts. EMarketer reports that retail ecommerce sales [PDF] totaled $1.67 trillion with a potential to jump to $3.57 trillion by 2019. Furthermore, almost 70 percent of Americans shop onlineat least once a month.
There’s nothing wrong with being concerned about how going DTC will affect your relationship with your channel partners. Ultimately, though, you have to consider what’s best for your business. But if you start a direct selling channel with all of the benefits that brings—a closer relationship with your customers, increased awareness of your brand and more robust customer data—and maintain your channel partner for distribution and fulfillment, you create a win-win for everyone. If you want your product to succeed in a disruptive retail environment, you need to be agile and prepared for what’s next. It may be scary to rock the boat, but it’s far worse to stand by and let it sink.
The good news is that it’s possible to avoid channel conflict and make it work. The added benefit is that it will expand the omnichannel customer experience. In other words, it'll give your customers a unified experience whenever they interact with your brand.
Is it possible to maintain channel relationships AND sell direct to consumer?
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7 strategies for managing channel conflict
You can take steps to prevent distributors from seeing you as the competition when you start selling on your website.
1. Share data with distributors.
Implementing ecommerce will provide the manufacturer with valuable data for tracking key performance indicators. Turnkey solutions for ecommerce serves up real-time information about product availability, pricing and shipping status. It helps management make practical decisions about the product line.
The information will tell them where to focus and what slow moving products to consider dropping. This will give distributors the data they need to better manage inventory and pricing.
2. Set up a pricing structure for channels and direct sales.
Creating a pricing structure can eliminate concerns about undercutting the competition. Channel pricing is more than volume discounts. It helps pay for activities that distributors do on behalf of the manufacturer, influence behavior with incentives and save on supply chain costs.
3. Create joint marketing promotions and ads.
Manufacturers can create promotional material for the channels to use. It saves time and money, which strengthens the partnership and trust. Go a step further and ask for their input. Imagine how proud they'll be if you implement their ideas.
4. Send alerts and bulletins about new products.
The more information you provide about new products before their release, the more prepared resellers will be for its introduction. They won't be scrambling to understand the product, add it to their systems and train the staff.
5. Offer training and certification.
Training ensures the resellers understand the product's positioning and value proposition alignment. The more they know, the more they can sell. This helps the resellers correctly represent the brand.
6. Allocate specific products to channels, distributors and the manufacturer.
Have you ever seen "Sold only at [store name]" products? These are the result of an exclusive deal between the reseller and the manufacturer. By assigning products to specific channels, you give them a unique product that no one else sells.
7. Provide a partner portal for collaboration on products, sales strategies and information sharing.
You can post alerts, bulletins, media, marketing promotions and ads in a portal for easy access. If a channel wants to plan a promotion, they can visit the portal to download images, videos and other resources to use. The content will also help them build out product pages on their websites.
Do You Have an Omnichannel Strategy?
Today’s consumers are using technology to control their own buying experiences. According to a Pew Survey, 64% of Americans indicated that they prefer buying in stores to buying online. In addition, more than seven-in-ten think it is important to be able to try the product out in person (78%). At the same time, 74% think it’s important to read reviews online, and 45% have used smart phones to research products while inside a physical store. It’s essential to engage with customers wherever they are, across multiple devices and channels.
Through a branded ecommerce site and social media you can provide the robust product content, reviews, and personalization that enhance brand awareness. By doing this you’ll support the buying behavior of the large number of Americans that still prefer the in-store shopping experience. Retailers benefit because these shoppers are effectively fully qualified referrals – they’ve done their research, have made a buying decision, and will make their purchase in a physical store. And the retailer will benefit from increased traffic and have the opportunity for incremental sales of other products once the shopper is in the store.
And even while you're building your online brand and DTC sales, you can still be an ally to resellers if you share data and partner with them on marketing programs that help drive traffic to their stores. A sensible strategy will enable you to maintain your channel relationships while gaining online sales and keeping your business competitive.
"Ultimately, an omnichannel approach allows a business to gain additional trust from the consumer, which results in increased revenue, better customer satisfaction ratings, reduced costs, fewer mistakes, better productivity for employees, and less rework," writes Adam Robinson in The Expanding Use of E-Commerce for Manufacturing Companies. According to one study, companies with extremely strong omnichannel customer engagement retain on average 89% of their customers, compared to 33% for companies with weak omnichannel customer engagement (Aberdeen Group).
Why do you need DTC and Omnichannel strategies?
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Which Road Map is Best for Your Organization?
1. MANAGING eCOMMERCE IN-HOUSE
- Tight control and centralization of operations
- The ability to maximize profit margins
- Bandwidth required to screen and evaluate technology options
- Significant investment required for staff and infrastructure
- Considerable expertise and bandwidth required for operations set up and ongoing management
2. OUTSOURCING - Some organizations outsource all components of eCommerce by shopping for best of breed solutions from various vendors.
3. TURNKEY SOLUTION - Complete end to end managed services.
- Completely integrated systems, people, and processes : technology, fulfillment, customer service, etc.
- Instant access to best practices & eCommerce infrastructure
- Low startup investment and predictable costs
- Rapid go-to-market
- Better profit margins than online marketplaces like Amazon
- Less control and profit than an in-house operation
- Components are tightly integrated but some may not be best of breed
Use This Infographic to Compare Road Maps
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Questions to Ask When Evaluating Solutions
How can you navigate the process of evaluating the solutions needed for end to end eCommerce? Below are some questions that can help guide your decision making process:
Want Complete End to End eCommerce Without the Heavy Lifting?
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