April | 2013 | Soleberry
Monthly Archives: April 2013

Sina sells Weibo stake to Alibaba for $586m

From the Financial Times

Alibaba, China’s biggest ecommerce group, has signalled its ambition to become a player in social media by acquiring a $586m stake in the country’s most popular microblogging platform.

China’s answer to eBay and Amazon said on Monday that it had bought an 18 per cent stake in Sina Weibo from Sina Corp, valuing the Twitter-like platform at more than $3.2bn.

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What Makes a Good ECommerce Business?

By Mark Bolitho on EConsultancy

I was asked a great question recently whilst at a breakfast networking event hosted by Clearwater LLP, a corporate finance advisory firm, who had been giving everyone an insight in to the previous 12 months’ M&A activities in the retail market.

We heard about the winners and losers, and Gareth Iley regaled us with possibly the most entertaining skirting board anecdote I’ve heard, illustrating the rise of the niche players.

Over coffee afterwards, he asked me a really interesting question, being: “What makes a good ecommerce business?”

I thought it would be a fun question to pose here, and I’ll start the ball rolling with my instinctive answer to him at the time.

Website

Slightly contradictorily, my first comment was to suggest what wasn’t necessarily a factor: an ecommerce website.

You might think that’s a bit of an odd thing to say: surely a good ecommerce business must have a good ecommerce website?

Allow me to explain.

In previous lives I’ve worked with a good number of retailers and brands and have given them the best possible web presence. We’ve understood the types of customer and their motivations, and we’ve implemented best practice in context throughout the site.

What we’ve found is that the best website in the world does not guarantee success or any particular level of conversion. We’d often see some of the very best sites converting at well below the reported average for the sector.

I also remember a couple of instances where some big names have got it wrong: H&M and Zara spring to mind here. I remember commenting on the thread of the H&M website review by Graham Charlton on how bad the UX was, but even with its many faults the sales were huge.

So, I’m going to argue that whilst I think it’s important to have the best ecommerce website possible, I don’t think a website can be considered to be a determining factor, per se. Clearly there is a complex interplay between website, brand and other factors.

Any user interface is really just a means to an end, not on its own a silver bullet. Chris Webster, VP, head of retail consulting and technology at Capgemini, recently said mobile, like a computer, is just a tool in a toolbox:

Like a computer, it is simply an extension of one’s offering, another weapon in a retailer’s armoury – when combined with other channels to make a truly connected multi-channel experience, it is a very effective tool indeed.

State of mind?

My second thought also stems from personal experience. An early client win was that of a long standing retailer of some 100 years on the high street.

They’d had an ecommerce presence for a couple of years, we were their second provider (which in itself tells a story).

They were a household name, a great brand and had all the resource in the world, but by their own admission they thought like a high street retailer and not an online one.

It wasn’t until they realised they had to learn to think differently that they began to understand the opportunity.

A couple of good strategic hires and they were away.

So, I don’t necessarily feel that a good high street player can simply get itslf a presence online and become a good ecommerce business overnight, it requires the right state of mind and understanding.

I asked a few industry stalwarts from both client and supplier side for their view…

Gabrielle Hase of Soleberry Advisory, which works with investment professionals on commercial due diligence and strategy development in ecommerce and m-commerce.

What makes an ecommerce business successful is what makes any business successful: a unique product or proposition that offers a clear value to the consumer. I know that’s basic, but in the end, online is simply another route to market and is only as good as the product or service it’s selling.

The second thing that makes an ecommerce business successful is how well it uses the unique features of the platform. For example, it’s much easier to offer customisation options online than it is in-store, so customers can design their own raincoats (Burberry) or trainers (Nike) or greeting cards (Moonpig), which goes back to offering a unique product or proposition with a clear value.

Thirdly, it’s about execution. Delivering a great user experience is at least as much about the last mile and getting product into people’s hands as it is about offering a slick front-end user experience. Too many online businesses forget that.

Martin Bartle, Global Communications and Ecommerce Director at Agent Provocateur

For me, it’s not about new innovations or who has all the bells and whistles. I think it’s absolutely crucial to understand what the basics are, and to do them well.

I’m talking about the three pillars of ecommerce: acquire, convert and retain. A good ecommerce business must have these things perfectly aligned in order to be considered good in this context. In addition, it must take care to ensure it delivers on its promises, an area where too many fall down and erode their brand loyalty as a result.

James Gurd, Owner of Digital Juggler, an Ecommerce and Digital Marketing Consultancy helping businesses (mainly retailers) to build and develop digital channels:

A good ecommerce business is one that has a clearly defined set of goals and a customer proposition to help achieve those goals. The front-end design & features are almost cosmetic without this because everything starts with defining your product/service, who would want to buy it and why they would want to buy it – branding essentially.

There has been some interesting research done around what customers are looking for online and the common theme is value for money. Value isn’t just defined by price, it’s a whole set of drivers that create satisfaction. A good ecommerce business understands those drivers because it adopts a user-centred approach to building its brand (users including all stakeholders, not just customers).

Geoff van Sonsbeeck, Founder and CEO at Isabella Oliver & Baukjen

In the online world of unlimited competition and unlimited access, a good Ecommerce business is one which uses the power of brand and data to create a stand-out experience that captures customer’s attention and wins their loyalty.

Stand-out ecommerce businesses:

  • Inspire and engage through rich, cross channel experiences with which customers want to engage. For example: The new Baukjen eStylist service aims to re-create the in-store experience for time-poor customers and engages by providing personal style advice online via video.
  • Invest in outstanding customer service with delivery on promise a board level KPI.
  • Use data to understand and monitor the distribution of order profitability and balance marketing spend, delivery and promotion cost to maximise conversion at the same time as maximising profitability.

Sorcha Harriman-Smith, Digital Experience Director at Childrensalon (shortlisted for Best Small Multichannel Retailer at the etail awards):

  • An outstanding product offer. Know your product and your customer’s tastes, and stay focused on being the best in your target market.
  • Excellent product presentation. Your photographic studio, editorial team and merchandising must understand the needs of your online customer.
  • The digital skillsets – embedded in the company. If you create these connections of skills and knowledge in the company, you can create a beautiful but brilliant experience that constantly improves.
  • Ability to learn and adapt like a start-up. You need to be progressive in your thinking and agile in the way you operate.
  • Truly understanding and caring about your customer. If your business isn’t listening and moving with your customer, they will eventually leave you behind. Our customer is constantly telling us what we’re great at, and how to improve, and we’re acting on that insight all the time. This ethos also manifests as countless individual customer interactions that demonstrate we care, which collectively creates loyalty and trust in our brand.

In summary

A nice mix of perspectives here, and a variety of points raised. Nobody talks about technology specifically being a determinant, although it’s pretty clear that its role as a supporting player is important.

Without focusing on specific tactics I think a fair bit of online success is achieved beyond the digital realm. Martin’s threee pillars, for example, involve an awful lot more than simply having a great online presence.

Although the question specifically mentions ecommerce there is little talk of channels in isolation in the responses, rather more emphasis is placed on the brand experience overall.

Thus, I think it’s important for a business to present itself consistently across its chosen channels of operation. I guess one of the many definitions of omnichannel being bandied around.

The customer is a consistent throughout, along with talk of the strength of brand, although I think it may be too simplistic to suggest those two things alone make a good ecommerce business. Delivery on promise, and understanding which promises to make in the first place derive from understanding the customer interaction with the brand, so again, insight is key.

What’s your take: is this a pretty good blueprint?

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The Perils of Showrooming

From BBC News

Have you ever seen something you wanted in a shop, tried it, checked the price online on your smartphone, found it was cheaper, and walked out? Welcome to the world of “showrooming”.

“The staff at Jessops would like to thank you for shopping with Amazon” read the sign in a shop window shortly after the British camera chain went into administration.

It was a dry reaction to a growing problem for “bricks and mortar”-focused retailers. Showrooming is said to have exacerbated the decline of high-profile brands like Comet.

Gadget stores, bookshops and the cosmetics industry are all losing sales to showroomers, but solutions have proved hard to find.

Kelly Buckle, 23, of Birmingham, sometimes spends more than £200 in a single shopping trip – but never actually gets as far as the checkout.

“I can go in and smell a perfume and then find it online for £30 less,” she says.

Research by design agency Foolproof found that 24% of people showroomed while Christmas shopping – and 40% of them took their business elsewhere.

Jessops
Camera chain Jessops may have suffered the effects of ‘showrooming’

Showroomers are not doing anything illegal. But the process can still be embarrassing.

“I feel bad about it, especially when the staff have been helpful, but it’s my money,” says Buckle.

Bricks and mortar shops have to pay rent, bills and staff salaries. Online retailers can offer cheaper prices because they don’t.

But the online giants get a benefit from the very existence of bricks and mortar shops. It leaves physical retailers in a quandary.

An Australian speciality food shop recently raised eyebrows by charging $5 (£3.37) just for browsing. And some shoe and clothes stores in America and Australia have also tried a “fitting fee”. In all instances the fee is taken off the bill when someone buys something.

Victoria Barnsley, chief executive of HarperCollins, recently suggested the idea of charging a fee for browsing bookshops is “not that insane”.

Steve Pritchard, 61, who runs an independent book store in Crosby, Merseyside, and has worked in the trade for more than 36 years, is not convinced.

“We see them in the corner with their mobile phones, scanning the barcode on a book and finding it cheaper. I can’t blame them,” he says.

“I can’t see a way to stop it. Charging people to browse has been suggested but it’s a daft idea because you still want people to come in.

“You’ve just got to make your retail environment pleasant, have people here who know what they’re talking about and try to embarrass them out of doing it.”

Student browsing in bookshop

If you take a specialist running chain like Run and Become or Runner’s Need you can see this process in action. Staff analyse a customer’s running gait, often on a treadmill and “diagnose” a pair of shoes that will avoid injury.

Those £100 shoes might be markedly cheaper online, but the would-be showroomer has to have a very high embarrassment threshold to walk out with a straight face.

This approach may seem more realistic than either charging a fee for advice or placing other obstacles in the way of showroomers. There have been suggestions that resistance from retailers has included asking suppliers to subtly change the names of products to thwart internet searches.

Coaxing the customer into being willing to pay more is the way, says retail consultant Martin Philpott.

“Shops like Jessops need to become centres of excellence with a limited number of showroom stores in high profile areas, selling high end products.

“I’m a passionate cyclist and I go to a shop that is much more expensive than the internet. But they will build a cycle for you, watch you ride up and down the street or even ride out with you.

“By the time you’ve been there for an hour, their enthusiasm is so overwhelming that you really don’t want to go elsewhere.”

Strangely, online retailers have an interest in the survival of bricks and mortar shops. If web-based retailers lure so many showroomers, what will they do if there are no showrooms left?

Philip Beeching, 53, a web consultant and self-confessed showroomer, thinks online retailers may themselves turn to bricks and mortar – but not necessarily staff and checkouts.

Westfield shopping centre, east London
Will shopping malls become a place to browse, not buy?

“Online retailers do well out of showrooming and companies like Amazon may well decide that they need to open up showrooms,” he says.

Retailer-turned-author Bill Grimsey, former chief executive of Wickes and Iceland, agrees. He believes the future lies in purpose-built showrooms in major shopping centres.

“Things are going to change a lot, the whole thing is about to explode,” he says. “People won’t pay to browse. It may start but it will die quickly. People will expect the service.”

Grimsey believes that even out-of-town retail parks will quickly become redundant, with 20 or 30 huge shopping malls dominating retail by making use of showrooms.

A growing number of retailers allow customers to order online and check or collect their goods in store – avoiding the inevitable missed delivery cards and increasing the chances of them buying something else while they are there.

But for many, the most important factor is still the price.

“My wife asked me to get a new celebrity cookbook which I found in Waterstones for £27. Using my smartphone I was able to search for it and I instantly found it on Amazon for £15,” Beeching says.

“If the price had been closer maybe I’d have done the right thing. But especially in times where a lot of people are strapped for cash – what do you expect them to do?”

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